Economic Dissatisfaction and Inflation Flare High – Roadblock for Democrats?

YEREVAN (CoinChapter.com) – The midterm elections constitute a pivotal point in Joe Biden’s presidency, as surveys show an atypical economic dissatisfaction among US voters – the highest since 2010. While Democratic and Republican candidates battle each other for Congress majority, voters face higher bills at the checkout counter due to the ongoing inflation.

Midterm elections; Are Democrats losing?

The mentioned survey was conducted by NBC News, which does not have a distinct affiliation with either party. The results show that 81% of respondents were either somewhat dissatisfied or very dissatisfied with the state of the economy, while only 19% were satisfied.

The survey also asked the respondents’ opinions on Biden as a leader, his actions, previous statements, and policies. The results could dishearten Democratic voters, as the trust in President Biden had declined since 2020 when he first took office.

As CoinChapter reported earlier, the dip in President’s approval ratings was reflected by the Reuters research as well.

Moreover, the gloomy economic outlook could have big repercussions for Democrats on Election Day. The last time Americans were this unhappy with the economy ahead of an election was in 2010. At the time, 84% of voters expressed economic dissatisfaction.

That year, Republicans claimed 63 seats in the House of Representatives. According to CNBC, it was the biggest single-party flip since the late 1940s.

Meanwhile, as the voters’ economic dissatisfaction grows, so does their conservatism, giving Republicans more hope. But will they deal with the crisis more effectively?

Republicans for Congress Majority; What to Expect?

According to the Bureau of Labor Statistics, inflation still runs at 8.2%, despite the Fed’s three consecutive 75 bps interest rate hikes. Morgan Stanley’s top-ranked strategist Michael Wilson commented on the situation in a note on Nov 7. He asserted that Republicans claiming majority could become a “potential catalyst for lower bond yields” and higher equity prices.

The Fed, on the other hand, showed no signs of slamming the breaks on hawkish policies. The smaller rate hikes could come either in December or at the subsequent meeting in February 2023, noted Chair Jerome Powell. However, at the November press conference, he asserted that any assumptions concerning dovish policies were “very premature.”

The economic crisis could continue regardless of which Party takes the Congress majority. However, Wilson asserted that a “clean sweep” by the Republicans could slam the breaks of fiscal spending and reduce the historically high budget deficits. That, in turn, could fuel a rally in 10-year Treasuries and push the stock market higher.