Trump says prices are down and your 401(k) is booming — do you feel it?

Trump tells Congress the economy is booming

President Trump used his Feb. 24, 2026, State of the Union address to tell Congress that prices are “plummeting downward.”

He credited his administration’s policies with rapidly ending the high prices left over from the Biden era. Trump also claimed the “typical 401(k) balance is up by at least $30,000” since he took office.

The speech came as polls showed his approval rating on the economy was slipping ahead of the 2026 midterm elections.

Inflation slowed, but prices still rose

The consumer price index rose 2.4% year over year in both January and February 2026, according to the Bureau of Labor Statistics.

That is down from 2.9% when Trump took office in January 2025, and well below the 9.1% peak in June 2022. But 2.4% is still above the Federal Reserve’s 2% target.

Multiple fact checkers, including PolitiFact, PBS, CBS News, and FactCheck. org, called “plummeting” an exaggeration.

A lower inflation rate means prices rise more slowly. It does not mean they fall.

Groceries cost more than ever

Since early 2020, grocery prices have risen about 29%, according to Consumer Price Index data.

Beef prices surged roughly 15% in just the past year because the U.S. cattle supply sits at its lowest point in decades.

Coffee prices climbed about 18% over the past year, driven by extreme weather in growing countries like Brazil and Vietnam.

Food prices overall rose 3.1% year over year in February 2026, outpacing the broader inflation rate. Egg prices are one exception, down about 59% from their March 2025 peak as bird flu outbreaks eased.

Gas dropped, but electricity and rent climbed

Gasoline dropped about 6% under Trump’s watch through late February, before tensions with Iran pushed prices higher. New and used car prices dipped slightly, less than 1%.

But not everything got cheaper. Electricity costs rose 6.3% since Trump took office.

Housing costs climbed 3.4%, and medical care increased 3.2%.

Apparel prices jumped 1.3% in February alone, the biggest monthly increase since 2018, partly driven by tariff effects. The picture is mixed, not “plummeting.”

The $30,000 claim does not add up

Trump told Congress the typical 401(k) balance had risen “at least $30,000” since his inauguration.

Fidelity Investments, the nation’s largest 401(k) provider, reported the average balance rose about $14,700 in 2025, reaching roughly $146,400. That is about half of what Trump claimed.

An analysis by Money.com found that even applying the full S&P 500 return of 14.9% to the average pre-inauguration balance of $131,700, the maximum gain would be about $19,755.

Fidelity also reported that savings rates held steady at 14.2%, so higher contributions did not explain the gap.

401(k) balances did grow, led by stocks

The S&P 500 rose 16.4% in 2025, its third straight year of double-digit gains. Vanguard reported its average 401(k) balance hit a record $167,970, up 13% from the prior year.

The number of 401(k) millionaires reached a record 665,000 in the fourth quarter of 2025, according to Fidelity. Average IRA balances also rose 7% to $137,095.

Most people with seven-figure balances had been saving for 25 years or longer. Strong stock returns drove the growth, not policy changes.

More workers are raiding retirement savings

A record 6% of Vanguard plan participants took a hardship withdrawal in 2025, up from 4.8% the year before. Before the pandemic, the typical rate was about 2%, so the share has tripled in five years.

The most common reasons were avoiding foreclosure or eviction and covering medical costs. The median hardship withdrawal was $1,900.

Workers under 59 and a half who take a hardship withdrawal face a 10% early penalty on top of regular income taxes.

High earners pulled the average up

Financial analysts describe a growing split between high-income and low-income savers.

While the number of 401(k) millionaires hit a record, the median 401(k) balance was just $34,400 at Fidelity and $44,115 at Vanguard.

The wide gap between average and median balances shows that wealthier savers are pulling the average up.

Hourly workers were far more likely to take hardship withdrawals than salaried workers, according to a Vanguard study. About 19.4% of 401(k) participants had an outstanding loan against their retirement account in 2025.

Wages grew, but just barely beat inflation

American wages and salaries grew 3.3% in the 12 months ending December 2025, according to the Bureau of Labor Statistics. That roughly kept pace with inflation but did not significantly outpace it.

Fact checkers noted that wages under Trump have so far risen faster than inflation, though the margin is slim.

Retirees on fixed incomes get no boost from wage growth, making them especially vulnerable to price increases.

About half of private-sector workers still lack access to an employer-sponsored retirement plan with matching contributions.

Oil prices surged as the Iran conflict began

The U.S. and Israel launched military strikes against Iran beginning in early March 2026.

Oil prices briefly topped $100 a barrel, and average gasoline prices hit $3.50 per gallon by mid-March, up about 19% in just two weeks.

Economists warn that sustained high oil prices could push inflation readings higher in the months ahead. The February CPI data was collected before the conflict began, so it does not reflect the recent price spike.

The Fed and future prices face new pressures

The Federal Reserve is widely expected to hold interest rates steady at its March meeting. Higher energy costs could filter into airfares, food transport, and other everyday expenses.

Economists also note that a government shutdown last fall disrupted Bureau of Labor Statistics data collection, and inflation readings from December 2025 through April 2026 may carry a slight downward bias as a result.

Inflation at 2.4% means a dollar buys slightly less each month, even though the pace of increase has slowed.

Where things actually stand

Inflation has cooled significantly from its 2022 peak, and that trend began under the Biden administration. Under Trump, the rate has continued to edge down, from 2.9% to 2.4%.

But prices are not falling. They are rising more slowly.

401(k) balances are up, but the gains are unevenly distributed, and more workers than ever are tapping retirement funds to cover emergencies.

With oil prices surging and the Iran conflict still unfolding, the near-term direction of prices is unclear.

This article was created with AI assistance and human editing.

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