Midterm voters fed up with the cost of living delivered several key victories for Democratic candidates, many of whom pledged on the campaign trail to make Americans’ lives more affordable. But it may take a while before they see rising prices stabilize.
States are still counting votes, though it’s clear Democrats will regain control of the House and Senate on Jan. 3. A blue wave swept through the nation as exit polls revealed widespread frustration over Republican and Trump administration decisions voters believe drove up prices. An NBC exit poll found 75% of voters said the economy was either “not so good” or “poor.”
Economists say voters hoping for quick relief from high costs should temper their expectations. Even if Democrats control Congress, they’ll have to get President Donald Trump, or “Mr. Veto” as he nicknamed himself in an interview with the New York Post, to sign off on legislation.
And experts who spoke to USA TODAY said although incentives may exist for both parties to work together, especially on housing and health care affordability, bipartisanship in Congress alone is likely not enough to bring the U.S. economy’s high inflation under control.
“Affordability issues and price issues don’t have easy fixes,” Mike Skordeles, Truist Advisory Services’ head of U.S. economics, said. “That’s the difficulty.”
War, Tariffs and AI Have Boosted Prices
High consumer prices predate Trump’s second term. Annual inflation has remained above the Federal Reserve’s 2% target for more than five years. After spiking during the pandemic, prices never dropped, but the rate at which they were increasing was mostly trending down until inflation spiked again this year.
In 2026, it has accelerated in large part due to the war in Iran, as well as the AI buildout and tariffs.
“The extent to which the new Congress will be able to substantially revert any of those causes seems to be quite low,” Francesco D’Acunto, an associate professor of finance at Georgetown University, said.
What’s Next for Iran?
The Iran war has been a major driver of inflation this year.
Blockades in the Strait of Hormuz, combined with conflict in the Red Sea and the Russia-Ukraine war, have limited the global oil supply and pushed up prices at the gas pump for everyday Americans. That limited supply has also caused diesel prices to soar − an increase that impacts every business relying on the fuel to transport goods and can therefore lead to higher prices in general.
Consumer prices were up 2.4% over the year in February before the war began. In September, they were up 3.7% over the year, outpacing worker pay growth.
For prices to stabilize, economists agree there needs to be some de-escalation in the conflict. For that to happen, Trump likely needs to be on board.
“Irrespective of the fact that formally after 60 days of war activities, there needs to be some backing of Congress, we have seen in the past that other administrations have actually kept following their agenda when it comes to many of these foreign operations,” D’Acunto said.
A deal to end the war would almost certainly lead to lower oil prices in the long run, though Iran may be hesitant to return to the pre-war status quo and shippers may face fees for what used to be free travel through the strait, D’Acunto added.
In the short term, the blue wave has already brought oil prices down. They fell about 9% on Nov. 4 as investors assessed the possibility of de-escalation after Republicans lost the midterms.
What’s Next for AI?
Data centers are pushing up prices in select categories, but Democratic wins on the state level may slow the AI buildout.
Ohio, Texas and Georgia elected Democratic governors who campaigned on data center moratoriums and halting the construction of new sites. Voters in dozens of jurisdictions across the country passed bans or restrictions on their development.
Beyond environmental and noise concerns, Americans worry about how data centers will affect their wallets. Increased demand for semiconductors, memory chips and computer hardware has driven up their prices. Slowing the AI buildout may provide some price relief for those products and the consumer electronics that they feed, Skordeles said.
Americans also blame data centers for higher utility bills. In places where they are most common, the large amount of electricity needed to power them increases demand, and, in turn, prices.
But state lawmakers may work to shift more of that financial burden onto the data centers.
“In Ohio, utility prices are up 15% year over year,” Skordeles said. “If you’re the data center and you require all these redundancies and upgrades and what have you, they probably should be bearing more of the cost. …That’s probably where things are heading, especially when you talk about it on a state level because accountability is a lot closer to home.”
What’s Next for Tariffs?
Tariffs, a cornerstone of Trump’s economic policy, have also contributed to a rise in inflation since the president imposed import taxes on most of the country’s trading partners last year.
For the most part, they are unlikely to go away anytime soon, according to Blake Harden, a trade policy expert at Ernst & Young and former Customs and Border Protection attorney.
Trump is relying on existing statutory authorities, including Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962, which grant the executive branch power to impose tariffs without new congressional approval.
“There will be more oversight. There will be more scrutiny,” Harden said. “But in terms of actually changing the tariff rate, that is not something Congress is going to be able to do. It would have to pass legislation to reform those authorities, and that’s pretty unlikely.”
However, she and Skordeles are hopeful that the United States and Canada may strike a new trade deal soon.
“There was some increased pressure leading up to the election for states that do a lot of trade with Canada, and so now that the midterms have come and gone, you sort of lose that as an action-forcing event, but my sense is that the talks will continue,” Harden said.
Reach economy reporter Rachel Barber at [email protected]. Follow her on X @rachelbarber_ and on LinkedIn.
Reporting by Rachel Barber, USA TODAY.
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