“With Democrats about to seize control of Congress following a sweeping midterm election victory, profound change is coming to the balance of power in Washington, D.C. In a stunning rebuke, voters unseated Republicans in traditionally conservative strongholds across the country, giving Democrats a powerful check on President Donald Trump’s agenda during his final two years in office.
Ahead of this seismic shift in U.S. political leadership, Capital Group professionals share their views on what the outcome could mean for markets and investors:
Trump lost his coalition, but don’t assume a 2028 Democratic trifecta
Matt Miller, political economist
The midterm result was an epic repudiation of President Trump’s policies on tariffs and the Iran War, which voters blamed for higher gas prices and other costs. Voters also took aim at what they viewed as self-dealing and self-enrichment, along with distractions like the White House ballroom and Trump’s triumphal arch. The main takeaway for me is the ongoing volatility we are seeing from election to election. People are persistently unhappy with the status quo, which has resulted in changes in power in 10 of the last 11 elections. That’s why it would be a mistake to assume a Democratic trifecta in 2028. This election showed how quickly a party can squander the coalition that put it in power.
Healthcare in the crosshairs
Diana Wagner, portfolio manager
Healthcare is coming into focus as Democrats take control of Congress. With several centrists in power on the Democratic side, forthcoming bills may be more moderate and aimed at expanding the Affordable Care Act, lowering prescription drug costs and rolling back changes to Medicaid enacted under the One Big Beautiful Bill Act of 2025.
Election outcome won’t curb U.S. government spending
Tom Hollenberg, portfolio manager
Part B and Part D premiums and average cost sharing are projected to consume a larger share of Social Security benefits, which means retirees will have less money left over to cover other retirement expenses. By 2050, an estimated 38 cents of each average Social Security dollar will go toward Medicare costs.
The U.S. economy can stay resilient
Cheryl Frank, portfolio manager
The U.S. economy should be able to navigate heightened political and policy uncertainty over the next two years. Labor markets remain resilient, corporate profits remain solid and business investments have picked up. Consumers also remain a source of strength and continue to spend on cruises, travel and other experiences.
Enterprise adoption of AI feels like an unstoppable freight train that could last as long as 20 years, although there may be bumps along the way. I think the 2028 election could be about data center NIMBYism among both Democrats and Republicans, which could slow the buildout. That’s one reason why there’s such a big push to get as much built as possible ahead of the presidential election.”
While the policy response remains uncertain, retirees should view healthcare as an important and growing component of their retirement budget.”
Elections create headlines, but long-term results come from a sound strategy. If you’d like a second opinion on your portfolio, schedule a complimentary consultation with us!
Click here to read the full article from Capital Group.
And as always, your weekly market update is here.
