The US Economy and the Midterm Elections

The US economy's strength should boost Republicans' prospects in congressional elections this November. But polls currently show that Democrats will retake one or both chambers of Congress, which means that even if the economy doesn't affect the election, the election will affect the economy.

STANFORD – The US economy is growing, inflation has finally hit the US Federal Reserve’s 2% target, and unemployment is quite low – and at an all-time low for African-Americans and Hispanics. For the first time in memory, there are more job openings listed by US companies than there are unemployed people. Such conditions usually foreshadow rising real (inflation-adjusted) wages, which would indicate that American workers, many of whom were left behind in the anemic post-crisis recovery, might finally reap benefits from the strong economy.

Electoral models predict that a strong economy favors the party in power, and that a weak economy dooms it to crushing losses. And yet, with the economy in its best condition in over a decade, most polls show a substantial Democratic Party lead in the run-up to the 2018 midterm congressional elections this November. Moreover, most political pundits predict that the Democrats will take back control of the House of Representatives. And some even foresee a “blue wave” in which Democrats also retake the Senate, despite having to defend far more seats than the Republicans. In several recent special elections, Republicans have held on by far narrower margins than in past elections for the same congressional seats.

There are a number of plausible explanations for this anomaly. For starters, the pollsters and pundits could simply be wrong, as many were in the 2016 election. At the same time, President Donald Trump may be hurting his and his party’s electoral prospects, especially among suburban women, by launching personal attacks against those who criticize him – including the popular basketball star LeBron James. And it is possible that, despite high ratings for his handling of the economy, many voters may not attribute the economy’s strength to Trump’s policies.