How could the midterm results impact economic growth?

Divided government is unlikely to redirect economic trends, so earnings, inflation, Federal Reserve policy and AI investment should matter more to markets after the 2026 midterms.

• Democrats won both chambers of Congress while a Republican president remains in office, creating divided government that Levitt expects to preserve existing economic trends over the next two years.
• The historical sample is limited across government combinations: the S&P 500 begins in 1957, the Dow Jones Industrial Average reaches back to 1900, and the 2008 crisis heavily skews the record for a Republican president with a Democratic Congress.
• US economic composition has remained broadly similar since 1956, with government spending, business investment and consumption retaining comparable shares of GDP regardless of the party in office.
• Dow returns have historically been strongest in the third year of the presidential cycle, averaging 16.8% from 1947 to 2025, compared with 8.2% in year one, 6.0% in year two and 6.3% in year four.
• Political sector calls have often missed their targets: from November 2020 to November 2024, the oil and gas refining and marketing index gained 246% while the Clean Energy Transition Index fell 32%; from November 2024 to October 2026, MSCI ACWI ex-USA gained 47% against 35% for the S&P 500.

Takeaway: Investors should focus on economic growth, earnings, inflation and Federal Reserve policy while remaining invested through political changes; the article expects moderating inflation and continued AI data-center investment to support risk assets, especially equities.