Washington, D.C. — A new analysis from the Center for American Progress finds that the Trump administration’s economic agenda is dragging down growth, eliminating millions of jobs, and driving up inflation, costing the U.S. economy roughly $300 billion in lost output each year.
Using a leading macroeconomic model, the analysis estimates that real gross domestic product (GDP) would be nearly 1 percent higher in both 2025 and 2026 if key Trump administration policies had not been implemented. Tariffs, mass deportations, federal job cuts, and the war with Iran are generating a degree of stagflation, with slower growth accompanied by higher inflation and interest rates.
“The Trump administration’s policies are raising costs for families,” said Jared Bernstein, senior fellow at CAP and author of the analysis. “This economy could be delivering lower inflation, more jobs, and stronger growth, but instead, it’s being dragged in the wrong direction by this president’s policy choices.”
CAP’s modeling finds:
- $300 billion in lost economic output each year. Real GDP would be nearly 1 percent higher in both 2025 and 2026 absent the administration’s policies, equivalent to roughly $300 billion annually in foregone economic activity.
- Millions fewer jobs due to weakened labor demand. The economy has roughly 1.2 million fewer jobs in 2025 and 2 million fewer jobs in 2026 as a result of the administration’s policies, reflecting significantly weaker hiring.
- A weaker job market despite stable unemployment. While the unemployment rate appears relatively unchanged, both labor demand and labor supply have fallen, leaving a job market with fewer opportunities and less resilience against downturns.
- Higher inflation driven by tariffs and war-related energy costs. Tariffs pushed inflation nearly a full percentage point higher in 2025, while rising energy prices tied to the war with Iran are adding further upward pressure in 2026.
- Higher interest rates are increasing borrowing costs. Interest rates, including mortgage rates, are roughly 60 basis points higher than they otherwise would be, raising borrowing costs for households and businesses and dampening investment.
- Long-term growth is at risk. Beyond the immediate impacts, reduced investment in workers, research and development, and public goods is likely to weigh on economic growth for years to come.
This analysis makes clear that the current trajectory is the result of the Trump administration’s policy choices. While all counterfactuals carry uncertainty, the administration’s agenda is holding the economy back from what it otherwise could be.
Read the analysis: “The Trump Administration’s Policies Have Hurt Growth, Jobs, and Prices” by Jared Bernstein.
For more information or to speak with an expert, please contact Christian Unkenholz at [email protected].