So, a Democrat sweep would be seen as "inflationary" if it meant the possibility of a major spending hike.Īny other scenario – Republican sweep or a split Congress – would mean some degree of gridlock and a smaller likelihood that a major new spending bill gets passed. All else equal, government spending tends to goose aggregate demand and contribute to inflation. ![]() ![]() But, government spending and policy also plays a role. Midterms Could Impact Inflationįederal Reserve monetary policy tends to have the biggest impact on inflation, and the midterm elections should have no impact on the Fed. Let's consider some possible implications the midterm elections could have for investors. As of late September, forecasting site FiveThirtyEight gives the Republicans a 69 in 100 chance of taking the House in the midterms and the Democrats the exact same odds of keeping the Senate. It's still early, but this third scenario would seem the most likely. ![]() West Virginia Senator Joe Manchin and Arizona Senator Kyrsten Sinema have effectively served as brakes on some of the Biden administration's more ambitious plans.Ī split Congress in which Republicans take control of one house (likely the House of Representatives) and the Democrats maintain control of the other (likely the Senate) has a good chance of paralyzing the government for the next two years. 10 High-Paying Dividend Stocks Yielding 5% or MoreĪ Democrat sweep of Congress would leave the legislative agenda in that party's hands, but unless they were to pick up at least two Senate seats – which is not out of the question by any means – we wouldn't be likely to see significant, groundbreaking legislation over the next two years.
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