Working Families Shouldering Consequences of Trump’s Illegal War in Iran, Says Groundwork’s Jacquez
Working Families Shouldering Consequences of Trump’s Illegal War in Iran, Says Groundwork’s Jacquez
President’s illegal war has driven up prices and further stifles slowing growth
Today’s Personal Consumption Expenditure (PCE) report from the Bureau of Economic Analysis (BEA) shows that the PCE Price Index climbed to 3.5% between March 2025 and March 2026. The BEA also released its advance estimate for GDP growth in the first quarter of 2026, which came in at 2%, following just 0.5% growth in the fourth quarter of 2025, for an average of just 1.25% in the past half-year. Much of the gain came from front-loaded imports, a rebound from the fall government shutdown, and AI capex.
As grim as the state of inflation and stagnation are, the worst is yet to come. The fallout of Trump’s war in Iran continues to ripple through supply chains and energy markets. Gas prices have climbed to their highest level since the war began and the Strait of Hormuz remains closed.
Groundwork’s Chief of Policy and Advocacy Alex Jacquez released the following statement:
“The data is clear: Trump’s illegal war in Iran is a disaster for Americans’ budgets at home. Paychecks are lagging behind prices, and economic growth remains sluggish thanks to the president’s gross mismanagement. Working families looking for relief certainly won’t find it under this administration. It’s no wonder Trump’s economic disapproval ratings are at an all-time high.”
BACKGROUND
Americans’ wallets feel the pressure as Trump presses forward with his chaotic tariffs and war in Iran. PCE inflation rose 0.7% in March alone and 3.5% over the past year, well above the Fed’s 2% inflation target.
- Tariffs continue to push up prices. Prices for durable goods increased by 0.4% last month after increasing 1% in the month prior. In the first quarter of 2026, durable goods prices spiked by 6.7%, compared to 0.8% in the previous quarter. PCE categories most directly exposed to Trump’s tariffs, such as clothing and footwear, rose 1% last month alone. Trump’s war in Iran has fueled the flames of already-hot inflation. Increases in energy prices drove the bulk of the increase in March inflation. Gasoline and other energy goods prices rose 21% last month as Trump’s war in Iran pushed crude oil above $100 a barrel and gasoline above $4 a gallon. AAA reports that gas prices are now at the highest level since July 2022.
Households are running ahead of their paychecks to keep up with rising prices. Spending growth outpaced income growth. PCE rose 0.9% in March against just 0.6% for disposable personal income.
- Trump’s tariffs and war in Iran are causing households to pull back on purchases. Growth in real consumer spending barely budged at just 0.2% in March, and slowed by 16% from the fourth quarter of 2025.
- Paychecks are not keeping up with price increases. Disposable personal income rose just 0.6% in March, trailing PCE inflation last month, as families’ purchasing power erodes. Real disposable personal income dropped by -0.1% in March. The Bureau of Labor Statistics also released the latest Employment Cost Index this morning, which measures the wages and benefits that employers pay out, trailing PCE inflation of 4.5% in the first quarter of 2026, rising just 0.9% in the same period.
- Families have less cushion against Trump’s price increases. The personal saving rate fell to 3.6% in March, down from 4% the prior month and the lowest level since October 2022.
The headline growth rate of GDP is masking an economy that is stalling under Trump.
- GDP growth is still highly dependent on AI and data center capex rather than broad-based expansion. Businesses are increasing inventories ahead of further tariff and war escalations. Imports in the first quarter of 2026 surged to 21.4%. GDP subtracts imports, so when they fall, the headline number rises even if underlying demand remains weak.
- The housing market is struggling. There was an 8.1% decline in residential investment in the first quarter of 2026, a steeper decline than the 1.7% drop in the prior quarter.
