But since readers seem to enjoy these biennial predictions, I’ll once again go out on a limb. The bottom line is that my Democratic friends will be happy.
Since so many Democratic seats are up, it will be a big defeat if Republicans stay at 51 seats in the Senate. And the loss of more than 45 seats in the House is approaching bloodbath territory.
This outcome is why I advised my GOP friends that it might have been better to lose the 2016 presidential election.
Now let’s consider the potential economic implications, which is what I care about.
The first-order effect is that we’ll have gridlock and that’s not a bad outcome as far as I’m concerned. Simply stated, that means less legislation, which presumably means less mischief from Washington.
But not all gridlock is created equal. Here’s a chart published a couple of days ago by the Washington Post. I’ve highlighted in green relative stock market performance when there’s good gridlock with a Republican Congress and not-so-good gridlock with a Democratic Congress.
I don’t think S&P performance is the best indicator of prosperity, and the “sample size” produced by American elections it rather small, so I caution against over-interpreting this data.
Unfortunately, as I warned the day after the 2016 election, Trump is no Reagan. As such, I wouldn’t be surprised if the net result (assuming my predictions are remotely accurate) is that the already-excessive growth of spending becomes an even bigger problem.
P.S. There are some very important ballot initiatives that will be decided today.