The economy is usually the key issue in any election, and 2026 does not look to be an exception. 

Unemployment led President Reagan to lose 26 House seats in the 1982 midterms and President Obama to lose 63 seats in 2010. Record-high inflation was one of the key factors that cost President Carter his reelection in 1980 as well as Democrats’ loss of the Senate, and it had negative consequences again for President Biden and the Democratic Party in the last election. 

The electorate’s intent in November 2024 was to change the direction of the economy and elect a president and Congress that would effectively address inflation. When Kamala Harris said in an interview that she couldn’t think of anything she would do differently from what Joe Biden had done, the outcome of the presidential election was pretty clear. 

President Trump was handed a well-defined objective: deal with inflation and help the country tackle the cost of living. During an interview with Politico’s Dasha Burns released this week, Trump gave his economy a grade of “A-plus-plus-plus-plus-plus.”

But voters will ultimately decide what counts as a successful report card. 

So what goes into voters’ report card as they head into next year’s election? And what have we seen recently that is driving the grade they give him and his congressional counterparts? 

Prices vs. wages

First, the inflation rate rarely goes below 0, so the idea that all prices collectively will go down is unlikely. The key is slowing the rate of increase so that wages are rising at a faster rate, and that relationship is what determines whether people think things are improving. 

When wages outpace inflation, people have more purchasing power and can do more. But under Biden, over his four-year term, prices went up 21.4 percent, while weekly wages went up 16.7 percent. That is a significant loss of purchasing power. Losing almost 5 percent of your earnings to inflation, when many families were already living paycheck to paycheck, was an overwhelming motivator for a policy change. Biden’s peak for year-to-year inflation was in June 2022, when it hit 9.1 percent, the highest in four decades. 

When Trump took office, the CPI was 3.0 percent, and in the recent September report it was still 3.0 percent. However, while prices have increased 2.2 percent since he was inaugurated, weekly wages have gone up 2.6 percent — meaning weekly wages have increased more than prices. 

State of inflation 

The second factor is whether the wage increase is reducing concerns about the impact of inflation. Currently, it has not been enough of an improvement for the electorate in helping them deal with the cost of living. 

In the most recent Winning the Issues survey (Nov. 15–17), 57 percent said inflation was getting worse, as opposed to 20 percent who said it was getting better. Among independents, 63 percent said it was getting worse, while only 12 percent said it was getting better. So the current slight outperformance of wages over inflation has not been enough. 

When people buy groceries, they have a personal understanding of what is happening to prices. Biden and Harris learned the hard way what happens when political leadership tries to “spin” what voters are actually seeing. The president has not helped himself or Republicans in Congress by referring to the issue of affordability as a “con job” by Democrats. 

Another concern has been the recent slowdown in job creation and the implications for wage growth. Since Trump has taken office (starting with February), the country’s average monthly number of jobs created is 72,000, although the September number, a gain of 119,000 jobs, was a significant improvement over the prior four months. 

Trump’s handling of the economy 

Finally, how have those first two factors shaped the electorate’s views of Trump’s handling of the economy and inflation?

Given their view that inflation has gotten worse, the outlook is negative, with 33 percent approving of how he has handled inflation, versus 59 percent disapproving — a very large margin. On how he has handled the economy, 37 percent approve and 56 percent disapprove, according to the Winning the Issues survey.

Independents are much more critical. On inflation, 23 percent approve and 68 percent disapprove, while on the economy 28 percent approve and 64 percent disapprove. Just to give a sense of the scale, independents who disapprove of how Trump has handled inflation represent 22 percent of the electorate. If independents voted based on their presidential job approval on inflation, it would make the 2026 elections extremely difficult for Republicans. 

The most recent elections showed how that could be a major problem. In both Virginia and New Jersey, independents voted for the Democratic gubernatorial candidate by a wide margin, exit polls show. In New Jersey, they made up 31 percent of the electorate and voted for Democrat Mikie Sherrill by a margin of 13 points (56-43). In Virginia, they made up 33 percent of the electorate and favored Democrat Abigail Spanberger by a 19-point margin (59-40). 

The importance of the Virginia outcome is that Spanberger was able to recreate Biden’s 2020 independent margin of 19 points in the state, which was indicative of his 13-point margin among them nationally. In the 2022 election, Democrats won independents by 2 points and Republicans won 222 House seats. In 2024, Democrats won independents by 1 point and Republicans won 220 seats. In 2018, Democrats won independents by 12 and Democrats won 235 seats. 

Trump is about to engage in a more robust focus on what some of his policies are going to do to improve the electorate’s ability to handle cost-of-living issues. His policies on regulation, energy and taxes should have a positive impact, but they need to be emphasized on a more consistent basis. 

But will Trump sustain an economic message? Back in 2018, according to the exit polls, voters’ attitudes about the economy improved after Trump’s win in 2016, going from 36 percent excellent/good to 68 percent. Yet he focused on the immigration “caravan” despite getting a remarkably positive jobs report the Friday before the election.

Looking ahead to 2026, laser focus on the economy and cost of living is job one for Republicans. 

David Winston is the president of The Winston Group and a longtime adviser to congressional Republicans. He previously served as the director of planning for Speaker Newt Gingrich. He advises Fortune 100 companies, foundations and nonprofit organizations on strategic planning and public policy issues, as well as serving as an election analyst for CBS News.