Trump’s Economic Chaos Continues to Batter Working Families’ Budgets

Trump’s Economic Chaos Continues to Batter Working Families’ Budgets

Federal Reserve contacts report any increase in sales was due to higher prices, not volume, as Americans are forced to spend more to get less in Trump’s economy 

This week, the Federal Reserve released its July 2026 Beige Book, offering a snapshot of economic conditions across all 12 Federal Reserve Districts. The report shows that the economic fallout from the conflict in the Middle East continues to spread through the economy: Federal Reserve contacts reported that families are cutting back, businesses continue to raise prices, and the rapid buildout of AI is reshaping hiring and increasing costs.

Trump’s economic chaos has made daily life more difficult for working Americans. Low-wage and rural workers in Chicago and Minnesota report it’s getting more expensive to get to and from work, as the president’s war in Iran rages on and drives up fuel prices. July’s Beige Book further reveals demand for food assistance has surpassed COVID levels in many parts of the country, as President Trump and Republicans in Congress slash federal food aid programs. In Philadelphia, contacts reported that any increase in sales reflects higher prices, as consumers spend more on essentials and cut back wherever possible.

Working families are desperate for relief, the report offers little comfort for Americans struggling to make ends meet in Trump’s economy.

Groundwork Collaborative’s Chief of Policy and Advocacy, Alex Jacquez, reacted with the following statement:

“The president’s choice to renege on his own shaky ceasefire agreement means working families are paying the price for his war in Iran. This month’s Beige Book reflects increasing pressure on business owners, who are choosing to protect their own profits by passing operating expenses onto consumers in the form of price hikes. Across the economy, Americans are cutting back and making sacrifices to keep up with Trump’s high prices.”

BACKGROUND

The Federal Reserve’s Beige Book plays a critical role in informing monetary policy decisions by highlighting regional economic conditions gathered from each Federal Reserve District’s contacts at businesses, banks, and community organizations shaping the U.S. economy. In the July edition of the Beige Book, contacts reported:

• Families are forced to make difficult tradeoffs and tighten household budgets as prices for essentials continue to rise. Persistent inflation and cuts to federal assistance programs are placing the greatest strain on middle- and low-income families struggling to pay their monthly bills.
  • More low- and middle-income families in the Dallas District are turning to food assistance as federal support is cut and living costs continue to rise. A nonprofit in the District shared that the “demand for food assistance has surpassed levels experienced during the financial crisis and the pandemic.”
  • Families in the Atlanta and Boston regions are increasingly using “buy now, pay later” financing and credit card debt to cover everyday necessities.
  • A St. Louis nonprofit said demand for meals rose roughly 30% over the past two months, as declining purchasing power and SNAP cuts left more families needing assistance.
  • One Southern California contact noted that high prices are forcing families to cut back on their typical grocery list in order to buy fewer and less-costly items.
  • Community contacts in the New York District reported that more families are becoming rent-burdened, with many families “doubling up” or “living in hotels” as a result.
  • In the Kansas City District, one home furnishing company noted that consumers are choosing low-cost imported goods, sacrificing higher-quality items manufactured in the United States.

• Higher fuel costs from the Middle East conflict are continuing to spread through the economy, further straining business and household budgets. Contacts across Districts described rising energy prices feeding into the prices for freight transportation and commuting, as well as depressing retail spending.
  • Chicago District contacts said higher gas prices are making it more expensive for low-wage workers to commute to work.
  • In northeast Minnesota, one contact said, “it is more expensive to get to and from work,” as higher fuel costs have made long-distance rural commuting significantly more expensive.
  • Contacts from across the San Francisco district reported that elevated energy prices pushed up transportation and freight costs, with more vendors adding fuel surcharges.
  • Meanwhile, one agriculture business in the St. Louis District noted that it expects costs to rise through 2027, as high fertilizer inflation due to the War in Iran makes its way through the supply chain.
• Even amidst depressed sales, many businesses are passing higher costs on to consumers to protect their profits. Businesses reported raising prices, and many are planning additional increases for the future, signaling that higher prices are here to stay.
  • A retailer reported to the Philadelphia Fed that “any reported increase in sales was due to higher prices, noting that the volume and frequency of customer visits remained down.”
  • In the Memphis area, vendors are actively looking to lock in higher prices by preemptively indexing long-term supplier contracts for inflation, a practice that was previously “uncommon.”
  • Construction prices increased in the Boston District, driven by further increases in input costs. Manufacturers blame rising cost pressures as the source of the pass-down to consumers.
  • Kansas City District firms reported preserving profit margins partly by raising prices.
• The race to build AI is driving up prices and leaving workers behind. Federal Reserve contacts described AI driving up infrastructure costs while changing hiring practices and reducing demand for workers.
  • Several firms across the Cleveland District said they are using or planning to use AI and automation to reduce staffing needs.
  • In the Kansas City region, job seekers said AI hiring screeners have made it harder to get applications in front of employers, even with career assistance.
  • Atlanta Fed contacts reported that AI infrastructure buildouts pushed up prices for steel, transformers, and other critical equipment.
  • A technical consulting firm in upstate New York reported that  data center construction drove steep price increases for memory and storage components.
  • Noting the continued strength in data centers and AI-related manufacturing, one  Philadelphia District contact said the economy “is now a capital expenditure-driven economy rather than a consumer-driven one.”