US housing affordability crisis and AI anxiety erode Trump support despite strong economic growth
US economic growth hit nearly 4 per cent in the third quarter of 2026, yet Donald Trump's approval rating is falling and his Republican party risks losing both houses of Congress. Voters cite soaring housing and energy costs, mortgage rates above 7 per cent, and widespread fear of AI-driven job loss
US economic growth accelerated to nearly 4 per cent in the third quarter of 2026, yet President Donald Trump's approval rating is plummeting and his Republican party is haemorrhaging support. Betting markets see a live possibility that the party could lose control of both houses of Congress next month — a defeat that would be the first under such favourable economic conditions since the 1950s.
The disconnect stems from a boom many Americans experience as the wrong kind: driven by the wealthiest consumers and heavy investment in artificial intelligence, which the electorate has come to hate and fear more intensely than any previous tech breakthrough. Affordability is the primary grievance, with the share of voters citing cost of living as the most important issue rising sixfold in recent years to a record high above 25 per cent.
Housing and energy prices are causing the most pain. Mortgage rates now top 7 per cent, making US housing less affordable than at any point in the past two decades. Petrol prices are up more than 40 per cent in the last year, with the Iran war restricting oil supplies, and overall consumer prices have been rising at well over 3 per cent. Power-hungry data centres are widely perceived to be pushing up utility bills, and nine in 10 Americans do not want one in their town.
AI is the first widely hated product of the digital age. While solid majorities once saw computers and the internet as societal pluses, most Americans now say they are more concerned than excited about AI. Anxiety is rising most sharply among people in their 20s, who increasingly worry about a jobless future. The White House and many congressional Republicans have responded by urging voters to accept AI as necessary to compete with China, an odd lecture from a party that won on bashing globalist elites.
Wage growth adjusted for inflation has turned negative in recent quarters, except for workers with AI skills who command wages up to 120 per cent higher than their peers. Investment is growing around 25 per cent a year in AI-related industries but by less than 1 per cent elsewhere. Construction is contracting on average yet growing at double-digit pace for data centre projects. The wealthiest own the most stocks, and AI-driven gains are creating a reverse Robin Hood effect: the 0.1 per cent gain more than the 1 per cent, who gain more than the 10 per cent, and so on down the income ladder. Mortgage delinquency rates are rising fastest in the least wealthy neighbourhoods.
The share of Americans who say the country is heading in the right direction collapsed from around 40 per cent to 20 per cent over the past year. Historically, when growth has accelerated towards 4 per cent before an election, the incumbent rarely lost control of either house of Congress and lost control of both only once, in 1954. Should the Republicans be swept aside, Trump — who rebuilt the party as a vessel of anti-incumbent anger — will have turned his party into a target.
