The Democratic midterm election sweep could result in changes in economic policies related to trade, spending priorities and artificial intelligence.
But the biggest forces shaping the economy aren’t going to change just because the party in power did
Affordability pressures, heavy levels of government spending and growth that is dependent on the artificial-intelligence tailwind are likely to persist, economists say. And all of those factors pose risks to the economy. “It’s in a very kind of fragile place, and I don’t know that it would take a lot to push the economy off the rails, and recession becomes a much greater risk,” said Mark Zandi, chief economist at Moody’s Analytics. “That isn’t the case at the moment, but I don’t think that’s gone away.” Zandi said he had been worried before the election that the economy was under threat from inflation, an underwhelming labor market and geopolitical dangers, and remains concerned now. Democrats romped to upset wins in not only House and Senate races but also governor and other state races.
But economic and foreign policy is largely set in the executive branch, and President Donald Trump remains far apart from his Democratic adversaries, though he said Wednesday he anticipates working with them. “I don’t expect any change in economic policy. The Iran war, the tariffs and trade policy, the heavy-handed immigration policy, all are done under executive order. They’re not legislatively driven,” Zandi said. “The president thought they were good policies before the election.