Midterm Election Results: Winning on Inflation Is One Thing, Controlling Inflation Is Another

The results of the midterm elections have generated plenty of headlines and speculation about what comes next for the US economy. While the political landscape has shifted, ITR Economics has not changed our economic forecasts as a result of the election.  

Our outlook remains grounded in the underlying economic fundamentals, leading indicators, and business cycle trends that drive economic performance—not election outcomes. Although changes in political leadership can influence fiscal policy, regulation, and business confidence, they do not immediately alter the broader forces shaping inflation and economic growth. As voters express their concerns with rising prices, it is important to distinguish between the politics of inflation and the economic realities that make it so difficult to control.

Inflation is not controlled by a single political party, president, or policy. It results from the interaction of monetary policy, government spending, labor markets, energy costs, global supply chains, housing constraints, productivity, and consumer demand. And while Republicans and Democrats disagree on many economic policies, both parties have historically supported fiscal decisions that contribute to inflationary pressures over time. 

The Economic Election Message Was About Affordability, Not Growth

One of the defining economic contradictions of 2026 has been the disconnect between overall economic performance and consumers' financial experiences. The US economy has continued to expand, employment has remained relatively strong, and investment in emerging technologies has accelerated. Yet households continue to face elevated costs for essential goods and services. The themes of this election cycle reveal a particular dissatisfaction with trade policies and the ongoing conflict with Iran – both drives of pricing pressures.

However, The Incoming Majority May Struggle to Deliver Inflation

Inflation has many causes, and most cannot be fixed quickly. While political messaging casts pinpoint blame, today’s inflation drivers are diverse and cannot be easily remedied. Geopolitical conflict has contributed to high Oil Prices, but overall energy costs are also being driven higher by rising electricity demand from data centers. Tariffs have imposed additional costs on imports, but general macroeconomic demand is also contributing to commodity price rise. Additionally, housing affordability remains a challenge with today’s home prices and interest rates. The still-tight labor market is adding wage inflation. The data center and AI buildout is generating localized demand pressures for skilled labor, construction materials, and infrastructure capacity.

What Should Businesses Watch After the Election?

Rather than assuming that a change in congressional leadership will immediately change the direction of inflation, business leaders should focus on the economic indicators and policy developments most relevant to their operations.
Several areas deserve attention:

• Federal fiscal policy: Changes in government spending, tax policy, and projected deficits
• Interest rates: Federal Reserve decisions, Treasury yields, and financing conditions
• Energy and commodities: Oil, natural gas, metals, and other production inputs
• Trade policy: Tariffs, sourcing decisions, and supply chain disruptions
• Labor and productivity: Wage growth, workforce availability, automation, and efficiency improvements

• Industry-specific demand: Differences between expanding technology-related markets and slower-growing traditional industries

The Bottom Line: Elections Change Leadership, Not the Laws of Economics

The election demonstrated that inflation and affordability remain powerful political issues. Many American households are clearly under financial pressure and the structural and cyclical forces responsible for those pressures remain despite election outcomes. Energy markets, housing shortages, labor constraints, global supply chains, technological investment, monetary policy, and fiscal spending will continue to influence prices regardless of which party holds congressional power. And while Republicans and Democrats may disagree about the appropriate solutions, both parties must confront the consequences of persistent federal deficits and growing public debt.

For business leaders, the lesson is straightforward: election results matter, but economic fundamentals matter more.