How midterm elections impacts United States economy

• The US is experiencing economic fragility at the time of the midterm elections.
• American citizens are suffering from rising interest rates and a geopolitically tense winter.
• The outcome of Tuesday’s election will decide the composition of a Congress that has the power to pass laws that have the ability to profoundly alter the fiscal landscape.

The United States is experiencing economic fragility at the time of the midterm elections on Tuesday. The majority of recession projections now focus on “when” rather than “if,” and inflation is still persistently high.

American citizens are suffering from rising interest rates and a geopolitically tense winter.

The outcome of Tuesday’s election will decide the composition of a Congress that has the power to pass laws that have the ability to profoundly alter the fiscal landscape.

Here is a look at the policy topics that investors will focus on as they analyze the results of the election.

Tax reductions: If Republicans do take control of Congress, it would be challenging to achieve any significant tax reductions without support from Democrats or Vice President Biden, which might result in a lot of showmanship but little actual action.

Debt ceiling: The federal debt ceiling was last raised in December 2021, and the Treasury will probably hit it at some time in 2019.

It will therefore need to be raised once more in order for America to be able to borrow the funds required to run its government and maintain the smooth running of the market for US Treasuries, which currently stands at about $24 trillion.

It appears that Republicans and Democrats are getting into a dispute. Markets may suffer if the government becomes divided and the brinkmanship continues.

Spending: According to Goldman Sachs economists, Republicans are more likely to forego pricey relief measures in the case of a recession, whilst Democrats are more inclined to expand the federal government’s fiscal reaction.

Social Security: Well-known programmes like Social Security and Medicare are facing long-term solvency difficulties, and the subject has become divisive on both sides of the political spectrum.

Even debating adjustments, according to analysts, might have an effect on consumer confidence because the issue is so keenly watched.

The Federal Reserve: In an effort to combat inflation, the Federal Reserve has begun raising interest rates at an accelerated rate.

Democratic Senator Elizabeth Warren has urged Fed Chairman Jerome Powell to decrease the rate of hikes, along with Sherrod Brown, John Hickenlooper, and others. Republicans are now participating. After the elections, both parties will be under closer scrutiny.

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