26.10.2018

US Midterm Elections: Change of Course ?

The upcoming US midterm elections appear likely to prompt a course-correction in Washington politics that will place limits on President Trump’s economic and political agenda, with a hostile House likely to challenge Trump on multiple fronts. In this brief, we review the current state of play in front of the 6-November elections. We follow that with an analysis of the economic and market implications.

Read Michael Carey's complete analysis

  • Based on recent polls, as we enter final stretch of the campaign, there is a reasonably high probability that the Democratic Party will see a net gain of more than 23 seats and become the majority party in the House of Representatives.
  • The very slim Republican majority in the Senate may be maintained as there are fewer vulnerable Republican seats up for re-election in the current election cycle. Various analyses of the Senate race assign higher odds that the Republicans will hold onto the Senate.
  • From the legislative view point, partisan agendas are unlikely to go very far with a divided government as the House, Senate and President must agree. That leaves Congress likely on a spending path similar to its current budget spending caps for fiscal year 2019.
  • A hostile Democratic House will demand much of the Administration’s attention with investigations and subpoenas into the workings of the Administration and its policy agenda. Assuming the Senate remains under Republican control, President Trump would continue to make important nominations for vacant positions in the judiciary and the Federal Reserve.

Isabelle Job-Bazille

Chief Economist

Isabelle Job-Bazille began her career with Paribas in 1997 as a country risk analyst for the Middle-East-Africa region. She joined Crédit Agricole S.A. in September 2000 as an economist specialising in Japan and Asia before being appointed head of the Macroeconomics division in ...