The GOP picked up 2-3 Senate seats and avoided a Blue Wave outcome. Even so, while Democrats retaking the House was expected, it is still remarkable: adjusted for economic and market conditions, the 2018 midterm election represents the worst House retention by any President in 100 years1. There have been large midterm swings before, but usually when markets were bad, when the economy was bad, or both. The chart tells the story: midterm House seats lost since 1910 are shown alongside changes in inflation, employment, equity markets and home prices. Based on the hand the GOP started with, they should probably have been able to retain the House. Sometimes, however, money can’t buy you love.

Michael Cembalest
J.P. Morgan Asset Management

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