The US economy is experiencing a remarkable surge, outpacing Australia's growth despite Donald Trump's approval ratings hitting a new low. According to the US Bureau of Economic Analysis, the American GDP expanded at an annual rate of 4.4% in the third quarter of 2025, a significant improvement from Australia's 2.1% growth rate. This robust expansion marks the fastest pace in two years, driven by strong consumer spending and a significant rebound in exports. The US Labor Department's recent data reveals that annual inflation has decreased to 2.4%, a positive trend. In contrast, Australia faces a challenging battle to control its inflation rate, which stands at 3.8%, well above the Reserve Bank of Australia's target range. The RBA responded by hiking the cash rate to 3.85%, a move that sets Australia apart from its peers in reversing the downward cycle on interest rates. The US, along with Canada, New Zealand, and much of Western Europe, remains in an easing cycle, with the Federal Reserve expected to make further interest rate cuts this year. However, Aussie mortgage holders face a grim outlook, with most banks predicting a rate hike to 4.1% in May. The key to the US's economic success lies in its higher productivity, which has grown by 1.9% annually, compared to Australia's 0.8%. Experts attribute the stagnant Aussie figure to a range of causes, including a boom in non-market sector jobs with lower measured productivity. Macrobusiness Chief Economist Leith van Onselen highlights the importance of strong productivity growth, stating that Australia's economy would face capacity constraints without it, leading to higher inflation and interest rates. The US's productivity advantage is further emphasized by its higher exposure to AI and related investments, as well as a more dynamic and less regulated economy with lower government spending. However, former RBA economist Martin Eftimoski warns that the US economy also has its drawbacks, such as a growing disparity between rich and poor and massive federal debt. Trump's approval rating continues to sink, with a recent poll showing just 36% approval, down 4% from January. The American jobs market delivered surprising growth in January 2026, with employers adding 130,000 jobs, helping to lower the unemployment rate to 4.3%. This positive trend comes after a poor showing in 2025, the weakest year for new jobs since the pandemic. Despite conservative commentators' attempts to boost Trump's economic record, many voters remain unhappy with immigration raids. The midterms, held at the midpoint of a president's term, are crucial for determining control of Congress and the president's agenda. Many Republican candidates are closely tied to Trump, and his approval rating could significantly impact their chances at the polls.
