Voters will judge Trump on the economy - how is it doing?

But they also attributed the overall increase in growth to the huge sums being spent investing in the rollout of artificial intelligence (AI). James Knightley, chief international economist at ING, said that as consumer spending cools, "investment linked to tech and AI has clearly become the main engine of growth in the US". November's elections are on a knife edge, and the success of Trump's Republican party will depend largely on the now familiar political line: "It's the economy, stupid." But while headline growth figures are positive, Americans are much more likely to vote based on the cost of living. Trump's strikes on Iran, and the subsequent closure of the Strait of Hormuz, have driven oil prices up, with a barrel of Brent crude, a major oil benchmark, hitting a four-year high of $126 on Thursday. It has since fallen back to $111 but it was trading at around $73 before the war broke out at the end of February. This led to Americans paying $4.30 (£3.17) for a gallon of fuel of April, according to American Automobile Association data, compared with less than $3 in February. That contributed to a sharp jump in inflation, with March's reading for average annual price increases coming in at 3.3% , a near two-year high and a significant uptick from February's 2.4%. The impact of the Iran war, in particular March's inflation figures, dashed any hope of an imminent interest rate cut Reserve. The central bank kept its base rate, which affects mortgage and other borrowing costs for Americans, at the 3.5% to 3.75% level on Wednesday. Before the war, economists had expected a series of interest rate cuts.

Since US strikes on Iran began, the average interest rate for a 30-year mortgage has risen from 5.98% to 6.3% , according to data from Freddie Mac. Samuel Tombs, chief US economist at Pantheon Macroeconomics, has said higher oil prices and expectations the US will maintain its blockade of Iranian ports for the long haul, could see rate cuts delayed until 2027. Despite the turmoil, Americans with money in the stock market have fared well during the war. The major US indices - the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite - have all more than made back losses seen in the early days of the campaign, and have continued their pre-war upward trajectory. The Nasdaq has gained around 10% since the start of the conflict, the S&P is around 5% higher while the Dow has risen 1%. Increases in the major indices are good news for investors, but also a boost to those with pension pots tied up in stocks, such as 401ks. With the Republicans on course to lose control of the House and at risk of losing the Senate, November's elections will depend massively on the state of the economy voters head to the polls. While headline GDP growth and stock markets rallying will offer some comfort to Republican strategists, the spiralling cost of living will continue to be a cause for concern. How much Trump can or cannot do in the time he has remaining as president will be influenced in large part conflict in Iran plays out, whether the Strait of Hormuz is reopened and whether this feeds through to lower fuel and grocery prices for American voters. US economy Donald Trump Iran war United States