Democrats Take Control of Both Houses of Congress in Midterm Elections
Key Facts
Democrats took control of the Senate and House of Representatives in Tuesday’s midterm elections, shifting the balance of power in Washington during the final two years of President Donald Trump’s term. Reuters reported that the party won both chambers, without providing a final seat count in the available report. Before the election, Republicans held a narrow majority of 218 to 214 seats in the House and 53 to 47 in the Senate. Reuters said Democrats needed to gain four net seats in each chamber to overturn those majorities. The result gives Democrats a greater role in legislation and oversight of the administration, but does not by itself mean they can pass all of their proposals.
As an indication of voters’ motives, 70% of those surveyed in exit polls said they wanted Congress to provide more checks and balances on the president, according to Reuters. The Associated Press cited frustration over high prices, the war with Iran and concerns about government corruption among the sources of voter discontent. Democratic gains extended to Texas: James Talarico won the state’s Senate seat, while Gina Hinojosa defeated Republican Gov. Greg Abbott in the state’s gubernatorial race. The agency described the results as a breakthrough for the party in a state where Democrats had not won a statewide campaign since 1994. The results add a broader political dimension to Republicans’ loss of control of both chambers, with two new Democratic candidates emerging in the state.
Before the vote, Republicans held narrow majorities in both chambers, making the few seats that could change hands decisive in the contest for control of Congress. Institutional constraints will remain after the majority changes hands: The Associated Press quoted a Capital Economics analyst as saying Democrats do not have a Senate majority large enough to overcome a filibuster, and that Trump can veto legislation. This limits the scope for rapid legislative change, even with Democrats leading both chambers. Their victory, however, gives them more room to open investigations and conduct oversight of the administration. Investors and observers are watching to see whether the shift will change the course of economic and foreign policy, while the election result alone does not settle what those policies will be.
The result also came on a day of relatively broad gains in global markets. The Associated Press said most global stocks rose on Wednesday and U.S. futures posted modest gains, while oil prices fell. In currency markets, Reuters reported that the dollar index fell to a one-month low of 101.41 points on Wednesday. The index tracks the U.S. currency against a basket of six rivals. Reuters’ coverage linked investor moves to the possibility of tighter regulation of artificial intelligence and its effect on growth. A currency strategist quoted by the agency said continued dollar weakness would depend more on yields, AI trading and upcoming economic data than on the election alone. The coverage did not confirm a specific move in Nasdaq futures or the dollar in the first moments after the results emerged.
U.S. factory orders offer recent economic context on industrial activity: They rose 1.8% in September, after August’s increase was revised up to 0.3%, Reuters reported. The September reading was above the 1.2% increase forecast by economists surveyed by the agency. Reuters attributed the rise to bookings for aircraft and orders for a range of other goods. On an annual basis, orders rose 7.2% in September. The figures put the strength of industrial demand among the data investors will monitor alongside political developments, while Democrats’ win alone does not determine the course of economic activity or the dollar.
Attention now turns to the schedule of economic data and monetary events set for Friday, November 6. The U.S. Bureau of Labor Statistics is scheduled to release its October employment report at 08:30 a.m. Eastern time. St. Louis Federal Reserve President Alberto Musalem is also expected to speak about the important role of the Federal Reserve Banks in central bank independence, in a conversation hosted by Greater St. Louis Inc. Politically, the new Congress is scheduled to convene on January 3, 2027, when the House will vote to choose its speaker. The Associated Press said Hakeem Jeffries is poised to take the post and that his election would make him the first Black lawmaker to lead the chamber. Jeffries has pledged a first-100-days agenda focused on lowering the cost of living and launching oversight and investigations into the Trump administration.