This year’s US midterms add to an uncertain policy outlook

Midterm voters seem to form their opinion around the economy in the summer and fall. How the economy, and especially the labor market, performs over the next few months will increasingly influence the outcome on Election Day.

• This will increase political brinkmanship around the next deadline to raise the debt limit and constrain the president’s ability to pass additional tax and spending changes, barring an unexpected crisis.
• The generic congressional ballot remains the best predictor of midterm results.
• Stock markets don’t like uncertainty in the leadup to the midterms, but they’re unlikely to be daunted if this year’s elections result in a split government.
• Midterm elections can represent a turning point in a president’s term, and the 2026 contests are unlikely to fare any differently for President Donald Trump.