Heading into the November 3 midterm elections, U.S. voters report a focus on the economy amid rising prices and the eight-month war between the U.S., Israel, and Iran. While macroeconomic indicators show a 4.2% unemployment rate in September and 3.4% annualized growth last quarter, consumer surveys from the University of Michigan show sentiment near a record low. Voters surveyed by Reuters/Ipsos and Pew Research Center cited tariffs and the conflict with Iran as factors contributing to inflation.
President Donald Trump’s approval rating fell to 30% in early October, the lowest of his second term, according to Pew Research Center. Among registered voters, 44% characterized their vote for Congress as being "against" the president, while 19% said it was "for" him. In national House of Representatives preferences, Democratic candidates held an 8-percentage-point lead over Republicans as of early October, with Democratic supporters reporting higher levels of motivation to vote than their Republican counterparts.
Economic data presents a mixed landscape for the administration. The unemployment rate has remained at or below 4.5% for five years, the longest such period on record, and weekly unemployment insurance claims are near a 57-year low. However, inflation has recently outpaced or equaled wage growth. Since January 2025, both consumer prices and average hourly earnings have risen by approximately 5.5%, leaving workers' purchasing power flat. Housing costs have also increased, with 30-year mortgage rates exceeding 7%.
The Federal Reserve raised its policy rate in September to address price stability, with another increase expected in December. Fed Chairman Kevin Warsh described these actions as "monetary medicine" intended to lower inflation without triggering mass layoffs. Meanwhile, business investment rose at a 12.7% annualized pace last quarter, driven largely by the artificial intelligence sector. However, recent lower-than-expected earnings from companies like Intel and Amazon have led some economists to warn of a potential "reset" in AI expectations that could slow future growth.
The outcome of the November 3 elections will determine which party controls the U.S. House and Senate, impacting the federal government’s ability to pass tax, trade, and energy legislation. A shift in control could lead to changes in tariff policies or the debt ceiling, while the current administration’s Treasury Secretary, Scott Bessent, argues that existing policies have created a strong environment for corporate and consumer behavior. Financial markets remain sensitive to these political shifts, particularly as investors weigh the sustainability of the artificial intelligence boom against rising oil prices and interest rates.
What happens next: Voters will cast ballots on Tuesday, November 3, to decide control of Congress. Following the election, the Federal Reserve is scheduled to meet in December to consider a further increase in borrowing costs. Economists will continue to monitor whether the Nasdaq Composite’s recent decline and cooling corporate earnings signal a broader period of "stagflation," a condition where economic growth slows while prices continue to rise. Immediate focus remains on the eighth-month conflict with Iran, which continues to influence global fuel prices and domestic inflation rates.