Growth, Inflation, Contraction, Costs, and What It Means for Families
PRAY FIRST for economic discernment for all who are in authority to understand the complexities of the economy so they can respond wisely.
The discerning sets his face toward wisdom, but the eyes of a fool are on the ends of the earth. Proverbs 17:24
Is the U.S. economy growing, slowing, or simply shifting? The answer depends on where you look. As of mid-2025, the nation has experienced modest GDP (Gross Domestic Product) growth, historically low unemployment rates (hovering around 4%), and sustained consumer spending. Yet, these indicators coexist with rising housing costs, persistent inflation, and significant concern over affordability.
Economic growth is typically defined by the increase in Gross Domestic Product (GDP), which reflects the value of all goods and services produced. However, for most Americans, economic health isn’t measured in quarterly reports. It is about whether rent is manageable, groceries are affordable, and jobs are reliable. A stable economy for everyday citizens means predictable costs, steady income, and a sense of control over financial decisions.
Wages, Cost of Living, and Affordability
Wages in the U.S. have increased in recent years, but not always fast enough to keep up with inflation. According to the U.S. Bureau of Labor Statistics (2024), real wages—wages adjusted for inflation—have remained mostly flat since 2020. This has strained many working- and middle-class families, especially as housing and health care costs have surged.
Younger workers and lower-income earners are particularly affected. Rent prices in major urban areas continue to climb, and homeownership remains out of reach for many. This disconnect between earnings and expenses contributes to the perception that, despite economic growth, everyday life is becoming less affordable.
Federal Response to Housing
In response to these affordability challenges, lawmakers and regulators are exploring ways to make homeownership more accessible. A recent proposal in Congress—the American Housing and Economic Mobility Act of 2025—seeks to expand access to homeownership through down payment assistance and reforms to credit evaluation. Complementing this, the Federal Housing Finance Agency has introduced a policy allowing rent payment history to be factored into mortgage eligibility decisions. This change could benefit millions of renters, particularly younger and lower-income individuals, by recognizing consistent rent payments as a sign of creditworthiness—potentially bridging the gap between renting and owning in an increasingly expensive housing market.
Taxes, Tariffs, and Public Perception
Federal tax revenue primarily comes from income taxes, payroll taxes, and corporate taxes. These funds support everything from Social Security to national defense. Nevertheless, rising costs and economic pressures have led many to question whether current tax structures are sustainable or fair.
The Tax Foundation (2024) reports that many middle-income households feel overburdened, particularly in states with high sales and property taxes. Tax brackets are adjusted for inflation, but wage stagnation often places families in a gray area—earning enough to be taxed, but not enough to thrive. The process for setting tax rates involves both Congress and the Internal Revenue Service (IRS), but the complexity of tax codes often leaves citizens feeling disconnected from how policies are shaped.
Tariffs—taxes on imported goods—can have wide-ranging effects. While intended to protect domestic industries, they often raise prices for consumers. Recent tariff increases on imported steel, aluminum, and electronics have led to higher costs in construction, manufacturing, and tech sectors.
Some American industries benefit from tariffs in the short term, but others suffer from retaliatory trade barriers or disrupted supply chains. For farmers, increased tariffs from trade partners have limited exports. Meanwhile, manufacturers that rely on imported components have faced delays and price hikes. This has prompted wider discussions about how to support domestic industries while maintaining constructive global trade relationships.
When taxes or tariffs rise sharply, businesses, especially small U.S. businesses, often struggle to absorb the costs. This can lead to layoffs, reduced hiring, or closures. Policymakers must weigh revenue needs with growth incentives.
Historically, poorly timed tax hikes or restrictive trade policies have deepened recessions. The Smoot-Hawley Tariff Act of 1930, for instance, is widely believed to have worsened the Great Depression.
Many Americans struggle to connect national policy with personal finance. According to Pew Research Center (2024), only 36% of adults say they understand how tax or trade policies affect their daily expenses, yet perceptions influence behavior. Fear of higher taxes may lead to reduced spending or investment, while confusion about tariffs can result in misinformed public opinion.
Transparency and trust are key. Citizens are more likely to support policies they understand and believe are equitable. Economists and lawmakers alike argue for more transparent communication between federal agencies and the public, especially as economic policies grow more complex.
Why It Matters and How We Can Respond
This is not just about dollars and cents. It’s about how people live. When we engage thoughtfully with economic realities, we advocate not just for lower taxes or fairer wages but for systems that support all Americans and give everyone the opportunity to succeed.
From a Christian perspective, stewardship is not only personal. It is collective. Proverbs 11:1 says, “A false balance is an abomination to the Lord, but a just weight is his delight.” Fairness in economic dealings reflects God’s heart for justice and integrity.
Your response:
– Be inquisitive about where tax money goes.
– Support local or small businesses that prioritize people over profit.
– Engage in civic processes that affect tax and trade policy. – Pray for clarity, compassion, and competence among policymakers.
HOW THEN SHOULD WE PRAY:
— Pray for economic integrity and for lawmakers and institutions to be led towards honesty and equity in tax and trade decisions. Better is a little with righteousness than great revenues with injustice. Proverbs 16:8
— Pray for economic decisions to uplift all who are in need and serve the common good. Let each of you look not only to his own interests, but also to the interests of others. Philippians 2:4
CONSIDER THESE ITEMS FOR PRAYER:
- Pray for God to equip families to make wise decisions in times of economic uncertainty.
- Pray for transparency in economic leadership.
- Pray for all Americans to pursue policies that consider both prosperity and mercy.
Sources: Council on Foreign Relations, Pew Research Center, Tax Foundation, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, U.S. Congressional Research Service
