As President Donald Trump approaches the one-year anniversary of his second inauguration on January 20, 2026, the economic scorecard of his administration reads like a study in contradictions. The stock market has delivered historic gains, yet consumer sentiment remains mired near recessionary levels. Unemployment has ticked higher, but corporate earnings continue to impress.

The Market's Stunning Run

Since Election Day on November 5, 2024, the S&P 500 has delivered a total return of 21.5%, defying skeptics who predicted that policy volatility would derail the bull market. The journey, however, was anything but smooth.

When the administration announced sweeping tariffs on April 2, 2025, markets recoiled. The S&P 500 plunged nearly 20% over seven weeks, testing investor resolve and prompting fears of a broader economic slowdown. But as Trump's team began signaling a more measured approach to trade policy, sentiment shifted dramatically.

From its April low, the S&P 500 has surged nearly 40%, leaving the index near all-time highs as the inauguration anniversary approaches. The Russell 2000 index of small-cap stocks has been particularly strong, currently riding a 10-day winning streak against the S&P 500—the longest such streak since 1990.

The Approval Paradox

Despite the market's impressive performance, President Trump's approval rating has sunk to just 36%, according to recent polling—the lowest of any president at the end of their first year in the past five decades. The disconnect between Wall Street exuberance and Main Street discontent has become a defining feature of the economic landscape.

"2026 is shaping up to be a decent year—not a boom, not a bust, just solid trend growth."

— Olu Sonola, Head of US Economic Research, Fitch Ratings

The Legislative Wins

The administration's signature economic achievement came in July 2025, when Trump signed the One Big Beautiful Bill Act (OBBBA) into law. The legislation extended the 2017 tax cuts while introducing new provisions, including eliminating taxes on tips for service workers and expanding the child tax credit.

The fiscal impact has been significant. The Congressional Budget Office projects the legislation will expand federal debt by $3.4 trillion over the next decade, but economists expect taxpayers to receive a boost of $30 billion to $100 billion in refunds during the first half of 2026.

Employment Concerns

The labor market has shown signs of softening. The unemployment rate rose to 4.6% in November 2025, the highest level in more than four years. While still historically low, the uptick has fueled concerns that the aggressive tariff policies may be taking a toll on hiring.

Weekly jobless claims, however, remain near historic lows at 198,000 for the most recent reporting period, suggesting that while hiring has slowed, layoffs have not accelerated significantly.

Inflation's Slow Fade

Perhaps the administration's most underappreciated achievement has been the continued moderation of inflation. The Consumer Price Index posted a 0.2% monthly gain in December for core prices, with the annual rate holding at 2.6%—well below the peaks seen in 2022 and 2023.

The Federal Reserve, responding to this progress, has cut interest rates by 175 basis points since September 2024, bringing the benchmark rate to a range of 3.50% to 3.75%. Markets expect at least one additional cut in 2026.

Looking Ahead

The next twelve months will test whether the administration can convert market gains into broader economic improvements that resonate with everyday Americans. Consumer sentiment, while ticking higher to 54 in January, remains "exceptionally weak," hovering below levels seen during the Great Recession.

Bank of America CEO Brian Moynihan captured the cautious optimism prevalent among corporate leaders: "With consumers and businesses proving resilient, as well as the regulatory environment and tax and trade policies coming into sharper focus, we expect further economic growth in the year ahead."

For investors, the key question is whether the fourth consecutive year of stock market gains—should it materialize—will finally translate into the kind of broad-based prosperity that lifts approval ratings alongside portfolio values. History suggests that markets can remain disconnected from political sentiment for extended periods, but the 2026 midterm elections will provide the ultimate verdict on whether Trump's economic policies have won over skeptical voters.