Democrats Win Big in Midterms — But Can They Fix the Economy?

Democrats won big in the U.S. midterm elections, taking control of both the Senate and the House of Representatives. Voters across the country said the high cost of living was the number one reason they went to the polls. Nine out of ten voters said prices were a key factor in how they voted. But even with this big win, Democrats may not be able to quickly fix the economic problems that made voters so angry. Many of the forces driving up prices are still controlled by President Trump — or by no one at all.

Reuters economics editor Dan Burns explained why lowering prices won't be easy, even for a party that just won a landslide election. He said major price drivers — like the ongoing war in Iran, Trump's tariff policies, and the booming artificial intelligence industry — are mostly outside of Congress's control. That means voters who hoped for quick relief at the grocery store or gas pump may have to wait. Burns said clearly: 'A lot of the factors driving prices right now don't immediately get handed to Democrats to control.'

One of the biggest reasons gas and diesel prices have gone up is the war in Iran. Farmers in the Midwest were especially hurt by record-high diesel prices, since almost everything people buy gets delivered by trucks that run on diesel. Burns said a peace deal could bring pump prices down quickly, but whether Trump can or will end the war remains a huge open question. Oil markets showed some brief relief after the election results came in, but that kind of short-term calm has happened many times before without lasting change.

Tariffs — taxes on goods brought in from other countries — are another tricky issue. Trump put many of these tariffs in place on his own, without Congress's approval. While the Constitution gives Congress the power to set taxes, lawmakers have handed a lot of that authority to the White House over many decades. Burns said Democrats might be able to use the budget process to push back on trade policy, since the government needs new funding agreements every year.

When it comes to government spending, Burns explained that most of the federal budget is already locked in. Social Security, Medicare, Medicaid, and interest payments on the national debt make up about 70 percent of all federal spending. These programs run almost on autopilot, meaning Congress has very little room to cut costs even if it wants to. On top of that, the government faces a December 11th deadline to pass a new spending deal or risk a shutdown.

The AI boom — the rapid growth of artificial intelligence technology — was also a surprising topic in this election. Democrats won governorships in Texas, Georgia, and Ohio, and all three candidates pushed for stricter rules on data centers. Those three states together are expected to hold nearly 45 percent of all planned new data center construction in the U.S. If the new governors slow down or stop that construction, it could cool off one source of inflation — but it could also slow down economic growth.

Tech billionaire Elon Musk had a rough election night. He spent a large amount of money trying to influence races across the country, but most of the candidates he backed lost. With Democrats now controlling Congress, Musk's companies — including Tesla and SpaceX — could face tough questions and investigations, since they do billions of dollars in business with the U.S. government. The new chair of the House Oversight Committee sent a simple two-word message to corporate executives: 'Lawyer up.'

One clear winner from this election is the Federal Reserve, America's central bank. Because the Senate is now controlled by Democrats, Trump will have a much harder time appointing his allies to the Fed's leadership. Fed Chair Kevin Warsh, appointed by Trump, is now likely to face tough questions from Democratic senators about financial conflicts of interest. Burns said Democrats could block any future Trump nominees to the Fed from even getting a hearing, which helps protect the Fed's independence.

Consumer spending in the U.S. has stayed surprisingly strong despite all the economic worry. With unemployment at 4.2 percent, most people still have jobs and are still spending money on meals out and vacations. However, lower-income and middle-class families have seen their real wages fall behind inflation, meaning their paychecks don't go as far as they used to. The savings rate has also dropped slightly, meaning people are dipping into their savings just to cover everyday costs.

As the country heads toward the next presidential election in 2028, the big question is whether this Democratic wave will translate into real economic change for everyday Americans. Burns said the most significant shifts may not be felt right away — the real impact is more likely to show up next year. Even with control of Congress, Democrats will have to negotiate, compromise, and work around the many economic forces that no election result can simply switch off.