Are the Democrats facing trouble?

The United States will hold its midterm elections on 8 November 2022. At this point in time, the midterm stands not only as an indication of where American confidence lies but provides insight into whether political power may swing back into the Republicans' hands.


The Biden presidency has been struggling to control the US economy in recent months. While COVID-19 has presented a range of supply side and demand side issues due to quarantine, it is still caught in an economic struggle with 2Q'22 showing that the US economy contracted by -0.9% annualised, making the second consecutive quarter transaction.  As of July, inflation sits at 8.5% with Real Wages down 3% and unemployment with at 3.7%. Indeed, votes will use the midterm elections to voice their dissatisfaction with the current economic situation.


A recent Gallup poll shows that 40% of respondents think America's top issue is the handling of the economy. Within this overarching concern are concerns surrounding the cost of living, such as increased rent and higher grocery bills. Aside from strict economic concerns, there exists a wider concern surrounding government leadership. This impacts the Biden Administration directly as the President sits at the lowest level of popularity so far during his term, which may weigh down other Democrats on the ballot.


Percentage Graph of Americans with Economic Issues

Source: Christopher Vecchio


The 2022 US midterms are pointing towards a divided parliament. While this may appear insignificant, there are currently 11,831 bills and resolutions before congress which could help to bolster support for the Republicans, especially as it may hinder efforts by Democratic lawmakers to push for an investigation into the 2021 Capital Riots.


Despite the data, there are a string of favourable events that could swing confidence in Biden's favour:


  • The Inflation Reduction Act
  • The CHIPS Act
  • Bipartisan gun reform
  • Constant concern surrounding Roe v Wade
  • Recent drama concerning former President Trump and the FBI

These may accumulate to increase confidence in the President but must be in conjunction with economic promises.

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Disclaimer: This article does not constitute financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.

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