Commentary: What to watch for in the US midterm elections

Commentary This week will tell us many important things about the future of American politics, says Rana Foroohar for the Financial Times. US President Donald Trump campaigns ahead of the midterms in San Antonio, Texas, US, on Oct 7, 2026. (File photo: Reuters/Callaghan O'Hare) 03 Nov 2026 05:59AM (Updated: 03 Nov 2026 06:18AM) NEW YORK: The American midterm elections always matter, but this week’s vote carries a weight that we haven’t seen in decades.It’s a referendum not just on individual candidates, but on the system itself. Will it hold after years of gerrymandering and ever more polarised politics? Will there be unrest at the polls, or denial of the results from the White House? And what will the voting tell us about where America may be heading longer term politically and economically?On that score, there are five key issues I’ll be watching for. WILL IT BE A BLUE WAVE?First, will the Democrats sweep both the House and the Senate? I thought (wrongly) a blue wave was coming in 2024, but this time around, Polymarket on Sunday (Nov 1) put the odds of Democrats taking the House at 95 per cent and the Senate (historically a tougher battle) at 73 per cent. Given that presidential approval ratings are the best indicator of midterm outcomes, and 61 per cent of the country disapproves of Donald Trump, I think Democrats have a good chance of a sweep, even if it’s narrow. The second issue is what message we should take from a blue wave: that politics is fundamentally realigning in the US, or that people are simply fed up of inflation? I’m betting more on the latter, given that 84 per cent of the population sees the economy as the most important election issue.Trump’s approval ratings have moved inversely to petrol prices following the Iran war, and Democratic Senate odds have risen alongside the price of diesel. Some 68 per cent of the country disapproves of Trump’s handling of inflation, which is now outpacing wage growth.The cost of living crisis will help Democrats in heartland swing states (Pennsylvania, Ohio), and may even turn reliably red states such as Iowa - where farmers are suffering from higher diesel and fertiliser prices as well as tariffs - blue. The inflationary effects of tariffs in other battleground states with large export and agricultural economies, such as Michigan, Georgia and North Carolina, favour Democrats as well.Finally, electricity price rises from data centres (which the White House supports) could hurt some Republican incumbents. WILL AGE MATTER?But within this “it’s the economy, stupid” meta-narrative, there are more subtle trends. A third issue I’m watching is how voting breaks down along age lines. We know that young people are more progressive. One early 2026 study found 28 per cent of young adults were moving left in recent years, versus 15 per cent moving right. There is a narrative that says older and more conservative voters, who hold most of the country’s wealth, will inevitably be pitted against younger and more progressive ones, with each side duking it out for their share of a shrinking pie (social security versus education spending, for example).Yet rising housing costs affect pensioners and young renters alike, as does healthcare inflation. Higher interest rates increase the price of mortgages and student debt. That might bring voters of different ages together around an affordability agenda. This would likely still favour Democrats, since Republican incumbents must justify why they are not to blame for the current inflation picture.But it will be important to see which candidates win where, and why. Will midterm winners be populists arguing for higher taxes on the rich and corporations to improve the social safety net, or moderates from either party focused on faster housebuilding and targeted tax credits?Likewise, will we see a bigger “horseshoe” effect of both the far left and far right winning on a message of economic populism? And will class concerns finally trump culture?There, I’ll be watching whether a Muslim economic populist like Michigan Democratic Senate candidate Abdul El-Sayed can win over voters wary of his identity with a Medicare for All platform, or whether a local Pennsylvania firefighter, Bob Brooks, can convince guys in the union hall to vote progressive again, even if they don’t like national party leadership. The answers to these questions will help decide whether Democrats can regain their hold over working people, which Republicans disrupted from 2016 onwards. WILL GEOGRAPHY SWAY VOTES?The final point to watch will be the urban/rural divide. Republicans typically do better in the countryside, while Democrats dominate most of the highly populated and richer coastal areas.This time around, progressives are trying hard to broaden their geographic appeal by moving away from identity politics. It will be important to track whether they still win mainly in cities or whether they can appeal to white and Hispanic rural voters concerned about the cost of living in places such as North Carolina, Wisconsin, Iowa and Texas, or those worried about the growth of data centres in areas such as Pennsylvania and Ohio.Pundits and pollsters will be parsing the results for weeks to come, as they will help shape where each party goes in advance of the 2028 presidential election. But from an investor perspective, economic cycles still matter more than election cycles when it comes to asset performance. Trump warns Democratic victory will trigger a new Depression. But equities have rallied following each midterm election for the past 80 years no matter which party is in charge. Perhaps the market knows best. Source: Financial Times/sk