Democrats Pledged to Fix the Economy, but What Can They Really Do

what happened

Voters who helped Democrats win the US midterm elections expect concrete economic action, including limits on electricity bill increases, lower drug prices and better healthcare access. However, the Wall Street Journal reports that Congress has limited tools for this: taxes and spending change slowly, and the president keeps the power to veto legislation.

US inflation reached 3.7% over the 12 months through September, while average earnings rose 3.1% through October. The main lever against inflation remains with the Federal Reserve, which raised its benchmark rate by a quarter point in September, and investors expect another increase next month. Mortgage rates near 7% keep many would-be homebuyers on the sidelines.

The Nasdaq fell on the day of the report as investors worried that the incoming Democratic Congress could curb the AI boom that has driven the market.

why it matters

For investors, the key question is not the legislative proposals themselves but their impact on inflation, Fed rates and AI investment. Limits on data centers and a slowdown in AI projects could hit the technology sector, which currently sets the tone for the stock market.

market impact

Nasdaq and tech stocks: fears of curbs on the AI boom weigh on the indexes

• ▼Nasdaq pressure down — fears that Congress will curb AI development and data center growth

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