The Democrats secured a decisive victory in the 2026 US mid-term Congressional elections. Prior to the polls, President Donald Trump urged voters to evaluate him based on his record — and evidently, many did.
Preliminary figures from the University of Florida Election Lab indicate approximately 124 million individuals participated in the voting process. This represents an increase from 112 million voters in 2022 and 118.6 million in 2018. Despite the rise in total votes, the percentage of eligible voters who turned out in 2026 was still lower than both previous mid-term elections, meaning that over half of those qualified to vote chose not to take part in what became a significant defeat for Trump and the Republicans.
Among the less than 50% who did vote, the Democrats experienced a substantial shift in their favor. Nationally, they led by an impressive margin of approximately 13 percentage points—the largest since 1982. This marked the most decisive congressional win in five decades and the toughest blow to Republicans since the 1974 Watergate aftermath. Democrats are projected to hold up to 255 seats in the House of Representatives, their strongest majority in almost 20 years (with 218 needed for control). They will also secure 55 seats in the 100-member Senate, gaining control of both chambers.
Democrats commanded leads across every state and demographic. This was especially pronounced among voters aged 18-29. While a small majority of white males favored Republicans overall, white males under 30 supported the Democrats by 57-40. In all other categories, Democrats enjoyed even greater leads, with a remarkable 96% of Black females under 30 casting their ballots for the party.
Additionally, NBC’s exit polls reveal that one-third of all voters under 30 identified as “democratic socialist,” a figure triple the number of young voters who aligned themselves with Trumpist-MAGA supporters.
The key concerns driving votes were clear. Data from the Pew Research Center in October 2026 shows 84% of voters prioritized the economy, followed by 47% concerned about the Iran conflict initiated under Trump’s administration. Healthcare remained a significant issue as well. Democratic support was fueled by opposition to Trump’s unwarranted war with Iran, rising living costs for essentials like food and energy, harsh immigration policies, and widespread frustration over his corruption, dishonesty, and bombastic behavior. Polls showed Trump’s approval ratings dipped to historic lows for a US president.
With Democrats now controlling Congress, they have the authority to scrutinize and oppose Trump’s actions and policies, as well as propose alternatives. Leftist liberal economist Daren Acemoglu described the Democratic win as “a lifeline for US democracy.” Still, he cautions it’s merely a lifeline, as those who voted Trump into office in 2024 but turned against him in 2026 might return if Democrats fail to tackle the “obscene levels of inequality in this country, with the real affordability crisis and with the vexing problem of creating good jobs for Americans of all skills..” Acemoglu argues that “neither progressive Democrats’ reliance on taxes, transfers and traditional regulations, nor centrists’ attachment to the status quo, nor the wishful thinking of those banking on AI-driven ‘abundance’ is radical enough.” According to him, conditions are set to worsen amid the growing AI-driven economy.
What is the solution, according to this Nobel laureate? Americans require “well-paid, career-building jobs for all workers, and especially those without a college degree, who have been left behind in the postindustrial economy of the last half century.” He advocates for a “workable plan for redirecting AI, so that this promising technology isn’t shaped by the dreams of a small cadre intent on artificial superintelligence and automation of most of what humans do. We must instead articulate why it is feasible and desirable to build pro-worker AI and how this can create jobs and decent incomes for workers.”
At the same time, the ‘affordability crisis’ is severe worldwide, not limited to the US. Globally, families grapple with rising living expenses spurred by conflicts and the lingering effects of the Covid-19 pandemic, while wages struggle to keep pace with persistent inflationary pressures. Commodity prices have remained high for several years, initially driven by pandemic-related supply chain disruptions, then compounded by wars in Ukraine and Iran. The Middle East conflict that began last February has pushed the global inflation rate close to 5% annually, well above the 2% target favored by many central banks. Essential goods like food and energy have seen especially sharp price hikes. Since the 2020 pandemic-driven downturn, the global food price index surged 42%. Over the last year alone, crude oil prices climbed 57%, with diesel rising 50%. Inflation risks accelerating further if Middle East hostilities persist beyond this year. Supply chains already face renewed strain, and international trade growth is slowing.
In the US, costs related to health, education, and childcare have outpaced wage growth for the past two decades. Post-pandemic, inflation for essentials such as food and fuel is also surging faster than incomes. A year ago, the annual consumer price increase in the US stood at 2.7%, while average hourly wages rose 4%. Currently, prices are growing at 3.5% year-over-year, with wage increases slowing to 3.2%. Real wages, adjusted for inflation, turned negative in April. Over the year leading to the election, average real hourly earnings declined by 0.7%.
Mortgage rates have more than doubled since the pandemic ended, surpassing 7% annually. Consequently, housing markets in the US and Europe have faltered. The IMF’s mortgage affordability index—which calculates the ratio between actual and necessary income for a typical home loan—has dropped sharply. In the US, the index slid from roughly 150 down to the mid-80s, with values above 100 indicating affordability.
Meanwhile, under both Biden and Trump, the wealthiest 10% of households saw their median net worth increase from $2.8 million to $3.67 million—an $872,000 or 30% gain between 2022 and 2025. Conversely, the bottom 40% by income lost ground. Trump further bolstered this inequality by signing his ‘big beautiful’ bill, delivering the largest tax cuts to the ultra-wealthy.
It is hardly surprising that Americans rejected Trump’s Republicans. But what lies ahead? With Democrats now controlling Congress, what plans do they have? Can they effectively address inflation and the soaring cost of living? Will they seek an end to the ongoing conflicts in the Middle East and Ukraine, which have fueled the affordability crisis?
The Democratic agenda includes rolling back Trump-era tariffs, reversing Medicare cuts, reducing healthcare and housing expenses, and increasing regulation of technology sectors like AI. However, there are no cuts planned for the exorbitant defense budget; in fact, support for Ukraine’s conflict with Russia is likely to be stepped up. In his book, Twilight of American Imperialism, Jack Rasmus details a staggering growth in US defense expenditures—more than doubling from $1.5 trillion in 2019 to an estimated $3 trillion next year.
The Democrats appear to rely heavily on the Federal Reserve to combat inflation by raising interest rates—a tactic that increases the risk of recession. Moreover, there are no clear plans aimed at reducing the growing disparity in wealth.
Many pundits and mainstream economists highlight that the US economy is performing well. While true that US real GDP growth surpasses that of Europe or Japan, these comparisons set a relatively low bar. Real GDP expanded at an annual rate of 3.4% in Q3 2026, recovering from a weaker Q2. However, the year-over-year growth rate is decelerating; at 2.1% in Q3, it neared pandemic-era lows. The US economy is still growing but at a modest pace, barely exceeding 2% annually.
Furthermore, the US’s real GDP growth, investment levels, and corresponding job creation are largely dependent on the AI investment surge. Former White House economic advisor Jason Furman highlighted that “The only big real construction increase in the United States over the last year has been data centers, up 64 percent. The power plants that feed them are up a more modest 4 percent, and everything else is down—with a particularly large decline in manufacturing, down 24 percent, which is off what had been a very high peak in 2024.”
These enormous investments have boosted output per worker, with labor productivity rising 3.6% in the third quarter. This growth aligns with the long-term postwar average and significantly surpasses the 1.5% growth rate observed from 2007 to 2019.
But will this momentum continue? Signs suggest the AI investment boom, or bubble, is starting to deflate—at least in Asia. Recently, the Democrat victory triggered a sharp sell-off in broad tech and AI stocks, with the Nasdaq plummeting 5.5% in a single day as investors grew concerned that a Democrat-led Congress might slow or halt new data center construction.
The key question now is whether concerns about overinvestment and dwindling AI profit potential will spread. Unless these substantial outlays on data centers, chips, software, and other AI-related infrastructure begin to yield increased profitability, a market downturn could be imminent.
Original article: thenextrecession.wordpress.com
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