The News / Published on .
The Democrats took the House of Representatives and lost a few seats in the Senate. In a certain sense, the outcome is a victory for Donald Trump, who had a great deal to lose.
As a result, the two parties will share power, a situation that has been fairly common since the 1980s and caused gridlock for the Obama administration during most of his presidency.
Source : History, Art & Archives, Unites States House of Representatives
Looking at each two-year segment showing the outcome of the term and mid-term elections, we see that since 1980 the Republicans have controlled Congress seven times, the Democrats have dominated six times, and they have shared control seven times. Since 1900, the proportions are as follows: Republican 33%, Democrat 52% and shared 15%. This preponderance is due to the long period from 1955 until 1980 when the Democrats had a majority.
That being said, what is the impact of the results of November 6? Until the next election, we can expect a great deal of dithering but little in the way of change (legislative, budgetary, etc.). So, we see no impeachment on the horizon (it depends on the Senate) and tight negotiations over the annual budget (it depends on the House). But Trump can continue to manage tariffs as he sees fit and put forward deregulation proposals.
Ultimately, the U.S. economy is continuing to expand, which is supporting the equity markets. Paradoxically, the paralysis within the government is creating a degree of stability (little chance of partisan surprises), which is positive for the stock market. Even so, the immense deficit caused by tax cuts and the ever-increasing debt in a context of rising interest rates is a situation that calls for careful monitoring.
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