Trump may have lost but don’t bet Democrats can fix the economy
There’s not much they can do over the next couple of years to alleviate angry voters’ stress over prices It was the economy, again. Although Donald Trump largely ignored it, voters’ acute concerns over the rising cost of living fuelled a political upheaval for the ages that is likely to deliver the biggest swing toward Democrats since Watergate, granting them the largest House majority in nearly…
While Donald Trump largely ignored the economy during his presidency, voters' acute concerns over rising costs of living fueled a political upheaval that delivered the biggest swing toward Democrats since Watergate. However, the new crop of Democrats soon face the reality that there's not much they can do within the next couple of years to alleviate angry voters' stress over pricey gas, groceries, mortgages, and healthcare.
Democrats would be wise to remember that the affordability strains that helped them secure power are similar to those that delivered the presidency to Trump two years ago. They could quickly become their enemy again.
Chuck Schumer, Senate majority leader-in-waiting, and Hakeem Jeffries, likely House speaker, pledged to fight for an affordable America, but they might soon find their power limited in undoing Trump's economic blunders and steering an economy driven by forces outside their control. Reining in gas prices would require an agreement with Iran to reopen the strait of Hormuz, but it's unclear if Democrats can achieve this, as Republicans have controlled Congress since Trump's invasion of Iraq.
Cutting war funding is also a challenge, as Democrats lack the 60 Senate votes needed to prevent a filibuster.
Trump's trade war shares similarities with the AI investment boom, with Wall Street already doubting the AI hyperscalers' investments will pay off. The tech-heavy Nasdaq index has fallen by more than 10% in the last month, and Goldman Sachs estimates AI-related firms have raised nearly $500bn in debt so far in 2026. If the AI bubble were to pop, it could deliver an economic downfall even worse than the Great Recession.
While Democrats might offer limited resistance to Trump's destructive impulses, the economy will likely pose a greater challenge for the new Democratic Congress than the Republicans currently in charge. In two years, Democrats could face even greater anger over a worsening economic scenario. They might then embrace their limits of power and hope voters blame the president instead of Congress for their economic unhappiness.
Written by urgent.news from Guardian Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
