November 09, 2025

The Trump administration has to possible policy options that could engineer an improvement in the affordability index. However, these options have different economic implications: One maintains the size of the economic pie while reducing the average cost of living index through a deflationary policy. This option is not a compelling one for those voters who are not in your camp. Since it does not expand the republican electorate nor does it not expand the economy’s real GDP, it is not a compelling story. If the administration fails to improve the affordability index without improving the economic pie, it will be in big trouble come the midterms. The second option expands the economic pie while leaving the cost-of-living index unchanged. The pie expansion is likely to attract new voters to the Republican tent and improve the administration chances at the midterms. The political pressure , the pronouncement of President Turmp and some of the recent polices undertaken by his administration suggest that there is a high likelihood that President Trump will purse variation of this Option 1. If his administration opts for Option 1 , even if the fed plays ball, the economy will suffer, the affordability index will continue to deteriorate and the democrats are going to have a great midterm. Under current path , the Trump administration will need an across-the-board tax rate cut Hail Mary in order to secure a midterm victory.

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