The Trump administration’s economic policies will exacerbate affordability problems by raising inequality and slowing income growth for typical families, according to a new Economic Policy Institute report. This will hold true even if it does not lead to recession or spiking inflation in the near term.

Despite the strength of the economy the Trump administration inherited, their subsequent policy agenda has weakened growth in spending by households, businesses, and governments. Federal workforce cuts, deportations and a slowdown in immigration, and chaos in trade policy have all suppressed demand growth, raising the risk of a near-term recession. Many of these weaknesses have so far been obscured by strong spending associated with AI investment. But this AI investment could be a shaky foundation for future growth, and if it contracts, the weaknesses generated by the administration’s policy choices so far could become glaring.

In the long run, these policies—as well as deficit-financed tax cuts—will also erode the economy’s ability to supply goods and services without inflation. For example, the administration’s mass deportations agenda is slowing the growth of the future U.S. labor force.

Most of all, Trump administration policies will raise inequality—the worst blow to families’ affordability. The 2025 Republican-led tax cuts favor the rich, while the spending cuts included in the same Republican megabill will sharply lower incomes for the bottom half of U.S. households in coming years. At the same time, the administration’s assaults on typical workers’ bargaining power and leverage—and its support for corporations with significant market power—will push income away from low- and moderate-income families and toward the top.

“Disastrous policy choices that led to excess unemployment, slower growth in the economy’s productive capacity, and rising inequality have made life less affordable for typical families in recent decades. The Trump administration’s policies double down on the worst policy decisions of this period and will make ordinary families reliably poorer in the future, even if an outright recession or spiking inflation does not happen,” said Josh Bivens, EPI chief economist and author of the report.