Breitbart Business Digest: Bleak Economic Sentiment Haunts Republican Midterm Hopes

The Economic Fundamentals Look Strong

Republican Electoral Optimism Versus Consumer Sentiment

When it comes to politics, Republicans are incorrigible optimists. But bright smiles and hope may not be enough to avoid a calamity in the midterm elections that are already underway.

The latest polling from YouGov for the Economist indicates that 71 percent of Republicans expect the Grand Old Party will retain control of the Senate in the midterm elections. Just nine percent expect the Democrats to control, less than half as many as the 19 percent who say they are unsure. Sixty-four percent of Republicans expect to retain control of the House of Representatives, with 12 percent saying they expect Democrats to control the House and twice that many unsure.

That’s considerably more optimism about the prospects for the GOP than investors responding to Bank of America’s fund managers survey showed. Thirty-one percent expect a Democrat sweep, 44 percent expect Democrats to take the House while Republicans hold the Senate, and just four percent see the Republicans keeping both.

Our friends in Republican politics point to the buoyant economic numbers as justifying their confidence. The economy is growing at a rapid rate, with the Atlanta Fed’s GDP estimate showing a five percent growth rate for the third quarter. Unemployment has fallen to 4.1 percent, a level below the Federal Reserve’s longer-term estimate of full employment. Jobless claims are running at the lowest levels since the late 1960s. Business investment is soaring. Manufacturing output and employment are rising. The purchasing managers’ indexes suggest a broad economic boom. Profits are soaring and the S&P 500 is up nearly 12 percent for the year. Consumer spending has remained robust, defying predictions that high gasoline prices would dampen buying elsewhere.

Unfortunately, American voters are not happy with the economy. The University of Michigan’s consumer sentiment survey plunged seven percent in September and is down 12.7 percent from a year ago. The Conference Board’s consumer confidence reading fell to a 12-year low this month, the third consecutive decline.

These declines cannot be written off as pure partisanship. The University of Michigan’s survey showed that sentiment among Republicans is crashing, down 21 percent from the start of the year. Some of this can be written off to fears that Democrats will derail the economic progress accomplished in the first year-and-a-half of Trump’s second term, pushing down the expectations measure among Republicans. But Republican confidence that they’ll hold the House and the Senate suggests this is not that big of a factor. What’s more, Republican views of the current economic situation have declined sharply, falling 11 percent from the start of the year.

Republicans are optimistic about their political prospects but significantly less optimistic about the economy.

Democrat Views of the Economy Are Divorced from Reality

Would sentiment be higher if Democrats were not fanatically opposed to Trump and convinced that the economy is in dire straits because of his leadership? Most certainly. Democrats have adopted views of the economy that are completely divorced from reality. Fifty-five percent say the economy is currently in a recession, according to the Economist survey. Of the remaining 45 percent—20 percent of whom said we are not in a recession and 25 percent said they weren’t sure—most believe it is likely that we will be in a recession in the next 12 months. Just six percent of Democrats say we are neither in a recession nor likely headed into one. While the future can be hard to predict, there is no chance we are in a recession now and little chance we will be in one over the next 12 months.

Democrats have become immune to evidence that doesn’t comport with their political convictions. The Economist survey found that just 24 percent of Democrats have any trust in government economic data, with 35 percent somewhat distrusting the data and 34 percent completely distrusting it. Sixty-four percent of Democrats say the unemployment statistics are understating joblessness.

Yet Republicans Are Pretty Down Also

But even if we ignore Democrat views as based in irrational fear and loathing, it is harder to ignore how down about the economy and its prospects Republicans have become. It’s not just the University of Michigan and Conference Board measures we mentioned earlier. The Economist poll showed that 59 percent of Republicans rate the economy as poor or only fair, with just 38 percent giving it a favorable rating. Just 30 percent say the economy is improving, with slightly higher numbers saying it is getting worse or staying the same.

Obviously, a huge driver of this is inflation—especially gas prices. The latest consumer price index showed gas prices up 27.4 percent year-over-year, including a 3.9 percent increase in August. Thirty-one percent of U.S. adults say inflation is the most important political problem today, more than twice as much as the runner-up, the economy, at 15 percent, according to the Economist poll. And as much as Republican strategists and pundits want to write this off as Democrat propaganda about “affordability,” it is resonating with GOP voters. Among Republicans, the share saying inflation is the top problem rises to 33 percent, slightly higher than the 31 percent of Democrats and 30 percent of independents who agree.

And even beyond rising prices, the economic news is not all good. Historically, one of the best variables for predicting electoral outcomes is real per capita disposable income. But this has gone nowhere under President Trump. It is up just 0.81 percent since January 2025 and is down 0.17 percent from the beginning of this year. This is not entirely separate from inflation—nominal incomes are up 5.83 percent since Trump took office and 1.87 percent this year—but that might only make it worse. Purchasing power has barely grown even while incomes jumped. These figures give a concrete economic basis for dissatisfaction.

It may already be too late to change many minds. A reliable rule of thumb is that views of the economy begin to harden around Memorial Day and by Labor Day they have have been cemented in place. Seventy-four percent of voters say they have already made up their mind about who they will vote for in the Senate and the House.

Of course, we shouldn’t take an overly deterministic view of the relationship between economic sentiment and electoral outcomes. Sentiment is not only divorced from the underlying economic fundamentals; it is not reflected in consumer behavior. Consumer spending has continued to rise at a healthy pace despite dire sentiment readings. So perhaps the midterms will also demonstrate a gap between stated perceptions and voter choice.

But that is, admittedly, a thin reed on which to hang hopes of the Republican majority surviving the midterms.