U.S. Midterm Election Outlook:
- Americans are very unhappy with the state of the US economy ahead of the midterm elections.
- US President Joe Biden’s popularity is at its lowest point in his presidency, threatening to squeeze the Democratic no vote.
- Democrats are likely to lose control of the House of Representatives to at least Republicans unless gasoline prices fall further and US inflation falls sharply.
The U.S. economy has struggled in recent months after making a record comeback from the depths of the coronavirus pandemic. The US GDP report for 2Q’22 showed the economy contracting -0.9% on an annualized basis, the second consecutive quarter of contraction. Recession or not, the fact that the U.S. economy is slowing plays a big part in voter concerns.
The state of the US economy is of paramount concern. voter In the 2022 midterm elections, 40% of respondents to a recent Gallup poll conducted in June 2022
Embedded in these concerns about the U.S. economy are concerns about rising costs of living.Decades of high U.S. inflation have eroded Americans’ living standards, from rent increases to food bill records high price with a gas pump. As 2022 progresses, Americans are becoming more and more concerned with inflation and the American economy.
It’s not just the state of the American economy that worries American voters. The biggest non-economic concern among voters is “government/poor leadership”. U.S. President Joe Biden’s popularity is at its lowest point during his term and threatens to overwhelm other Democrats in the ballot, from governors to senators and representatives.
History is not kind to incumbents
The fact that U.S. President Biden has the worst approval ratings in presidential history is worse than at this point in the presidency of former President Donald Trump and former President Barack Obama — before what happens historically. , a big problem for Democrats in the Senate and Congress. A difficult election cycle for the incumbent party.
On average, in the first midterm elections of a president’s first term, the president’s party loses 26 seats in Congress. Democrats have his five-seat advantage in Congress. This, combined with history and President Biden’s declining approval ratings, means Republicans will regain control of the House this fall. A slightly favorable election map favors the Democrats to retain control of the Senate, but as of Aug. 8, 2022, his FiveThirtyEight election predictions for 2022 show Republicans as likely to control the House. Sex is 80% of him.
Tides Can Turn
The 2022 US midterm elections point to a return of impasse to a divided government, Washington DC. , could help restore the popularity of President Biden, and could limit the power Republicans can gain in the midterm elections.
But if recent polls are accurate, the single most important thing that will change the formula for the 2022 US midterm elections is inflation, especially gas prices. Gas prices have fallen in recent weeks, according to GasBuddy, with the US national average he dropped to $3.99 a gallon by early August.
Unless gasoline prices fall further in the coming weeks and U.S. inflation falls sharply, Democrats could at least lose control of the House of Representatives to Republicans, creating a split in Congress and a deadlock in Washington, D.C. I have. This scenario has serious implications. It will affect both US fiscal and monetary policy over the next few years, directly impacting the US dollar, US stocks, US Treasury bonds, gold prices, oil prices, and cryptocurrencies.
— Written by Christopher Vecchio, CFA, Senior Strategist