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Macroscope
CommentWorld
Tai Hui
Tai Hui

Macroscope | How Joe Biden’s midterm election performance could affect the US stock market

  • Losing control of the House or Senate would make it harder for Biden to pass his agenda of reform on taxes, energy and welfare
  • Policies can still be pushed through via executive order although this would add to uncertainty for investors and businesses

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US President Joe Biden delivers remarks on infrastructure construction projects from the NH 175 bridge across the Pemigewasset River in Woodstock, New Hampshire, on November 16. Photo: Reuters
Tai Hui
It has been a year since the US presidential election and we are one year away from the midterm elections. Many had hoped that Joe Biden’s victory would restore some political normality to both the United States and the rest of the world. This has happened to some extent.
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However, recent data and events show that US voters remain divided, and it is increasingly likely that Biden’s legislative agenda could come to a standstill in the second half of his term.

The midterm elections will be held on November 8 next year. All 435 seats in the House of Representatives and 34 of the 100 Senate seats are up for grabs.

The Democratic Party may have a majority in both chambers, but it is very thin. Democrats hold 221 seats to the Republican Party’s 213 in the House. The Senate is split 50-50 and Vice-President Kamala Harris casts the tiebreaker vote.

Midterm elections have never been kind to the incumbent party. Since 1942, the party in office has lost midterm seats in the House in 18 out of 20 elections, including double-digit losses on 15 occasions. The results are similar for the Senate, where seats were lost in 14 of 20 midterm votes.

Democrats celebrate on the House floor on November 5 after winning hard-fought approval for a US$1.2 trillion package of infrastructure projects. Photo: House Television via AP
Democrats celebrate on the House floor on November 5 after winning hard-fought approval for a US$1.2 trillion package of infrastructure projects. Photo: House Television via AP

This suggests Biden and the Democratic Party are facing an uphill battle, made more challenging by recent events. Biden’s approval rating declined after the post-inauguration honeymoon period – normal for any president in recent history.

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