The U.S. midterm elections, scheduled for November 3, are just three weeks away. All 435 members of the House of Representatives and one-third of the 100 Senate seats, totaling 35, will be elected. The election results are expected to determine how effectively the Trump administration can push its policies in the remaining two years of its term. Currently, the Republican Party controls both the Senate and the House, but there is speculation that the Democrats could gain a majority in at least one chamber.
Historically, midterm elections have been unfavorable for the ruling party. Since World War II, the party in power has lost an average of 26 seats in the House and three in the Senate during these elections. The only exceptions were in 1998 and 2002. In 1998, the Republicans attempted to impeach President Bill Clinton, and in 2002, the midterms occurred a year after the September 11 attacks. Both years featured extraordinary circumstances that influenced the elections.
If there are no surprises this time, the Republican Party is likely to face defeat. As of October 12, data analysis firm Decision Desk HQ estimates a 76% chance that the Democrats will gain a House majority and a 56% chance for a Senate majority. According to the prediction market platform Polymarket, the likelihood of Democrats securing majorities in both chambers is 60% for the Senate and 89% for the House.
Low approval ratings for the Trump administration also bolster the outlook for a midterm election defeat. A regular poll conducted by The Economist and YouGov from October 2 to 5 found that President Trump’s approval rating stood at 38%, with disapproval reaching 60%, resulting in a significant 22-point gap.
The economy remains a significant weakness. Rising oil prices due to the prolonged Iran conflict and a resurgence of inflation have worsened the public's perception of the economy. In the same poll, 69% of respondents indicated that the Trump administration is mishandling inflation, while 65% said the same about the economy.
Global investment bank JP Morgan presented three potential scenarios for the election outcome in a report titled "US Midterm Elections: More of the Same, for Now," released on October 8. The first scenario suggests that the Republicans lose the House majority but maintain control of the Senate. The second scenario predicts that the Democrats gain majorities in both the House and Senate, while the third scenario envisions the Republicans retaining majorities in both chambers.
According to JP Morgan, the most likely scenario is the first one. If the Democrats gain the House majority, it is expected to significantly weaken the Trump administration's ability to push its policies. Challenges are anticipated, particularly in fiscal and budgetary matters, as Congress will need to approve government funding and raise the debt ceiling before it is reached in 2027.
However, JP Morgan believes that the current political landscape is unlikely to change significantly. Whether the Democrats take the House or secure both chambers, the U.S. political arena is likely to remain gridlocked. Overriding a presidential veto would require more than two-thirds of the seats in both chambers, which is currently a difficult task.
While criticism and scrutiny of the president may intensify, JP Morgan notes that Trump is likely to continue exercising significant power through executive orders. Additionally, as autonomy over domestic policy diminishes, his actions on the international stage may become bolder, potentially leading to a greater focus on trade conflicts with Canada or issues in the Middle East.
Nevertheless, JP Morgan advises investors not to overreact. Increased political turmoil may lead governments worldwide to implement fiscal stimulus measures, which could prevent markets from being overly influenced by political noise. Since 1950, the S&P 500 index has risen approximately 15% in the 12 months following midterm elections, with an average quarterly return of 6.6% in the fourth quarter of election years.
* This article has been translated by AI.
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