Download the Schwab app from iTunes®Get the AppClose

Midterm Election Outlook: House of Representatives

Click to show the transcript

MIKE TOWNSEND:  The midterm elections are just around the corner, and today we’re looking at the battle for control of the House of Representatives.

First, a little historical perspective.  Traditionally, midterm elections have been terrible for the president’s party. In fact, if you go all the way back to the Civil War, in the last 38 midterm elections the president’s party has lost seats in the House of Representatives 35 times.  Since 1934, the average loss has been 30 House seats.  This November, Democrats need to pick up 23 seats to win a majority in the House, so from a historical perspective it’s very possible.  We think it is likely that history will repeat itself in 2018. Democrats are strong favorites to win back the majority in the House this November.

There’s a political analyst here in Washington named Charlie Cook, who is perhaps the most respected analyst of House races.  Each week he puts out a big chart that ranks all 435 House races on a spectrum.  On one side are all of the seats that are sure things for the Republicans, on the opposite side are all the seats that are sure things for Democrats. In the middle are the seats that are pure toss-ups, and just outside the middle are the seats that lean slightly to one party or the other based on polling, the profile of voters in the district, and other factors. Recently, Cook had 68 House races ranked as either pure tossups or slightly leaning to one party or the other. Sixty-five of those races are seats currently held by a Republican.  Just three are for seats currently held by a Democrat. In other words, the momentum is clearly running against Republicans, and Democrats are strongly favored to win the majority.

I think that a Democratic victory in the House is what the markets are expecting, and I don’t expect a big market reaction to the outcome. If Democrats win a majority in the House, expect a lot of investigations in 2019 of the president and efforts to roll back some of his legislative accomplishments of the past two years. But keep in mind that those efforts are not likely to succeed because of a narrowly divided Senate and the fact that the president still wields the veto pen. That’s why I think the markets are anticipating more gridlock in 2019, and I don’t expect a big market reaction to the election outcome.

To watch future Stock Market Reports, just subscribe to the Charles Schwab YouTube channel.

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

Please note that this content was created as of the specific date indicated and reflects the author’s views as of that date. It will be kept solely for historical purposes, and the author’s opinions may change, without notice, in reaction to shifting economic, market, business, and other conditions.

Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Supporting documentation for any claims or statistical information is available upon request.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

(1018-8NK0)

Thumbs up / down votes are submitted voluntarily by readers and are not meant to suggest the future performance or suitability of any account type, product or service for any particular reader and may not be representative of the experience of other readers. When displayed, thumbs up / down vote counts represent whether people found the content helpful or not helpful and are not intended as a testimonial. Any written feedback or comments collected on this page will not be published. Charles Schwab & Co., Inc. may in its sole discretion re-set the vote count to zero, remove votes appearing to be generated by robots or scripts, or remove the modules used to collect feedback and votes.