The Democratic midterm election sweep could result in changes in economic policies related to trade, spending priorities and artificial intelligence. But the biggest forces shaping the economy aren't going to change just because the party in power did.

Affordability pressures, heavy levels of government spending and growth that is dependent on the artificial intelligence tail wind are likely to persist, economists say. And all of those factors pose risks to the economy.

"It's in a very kind of fragile place, and I don't know that it would take a lot to push the economy off the rails, and recession becomes a much greater risk," said Mark Zandi, chief economist at Moody's Analytics. "That isn't the case at the moment, but I don't think that's gone away."

Zandi said he had been worried before the election that the economy was under threat from inflation, an underwhelming labor market and geopolitical dangers, and remains concerned now.

Democrats romped to upset wins in not only House and Senate races but also governor and other state races. But economic and foreign policy is largely set in the executive branch, and President Donald Trump remains far apart from his Democratic adversaries, though he said Wednesday he anticipates working with them.

"I don't expect any change in economic policy. The Iran war, the tariffs and trade policy, the heavy-handed immigration policy, all are done under executive order. They're not legislatively driven," Zandi said.

"The president thought they were good policies before the election. I don't know why he'd change his mind after the election," Zandi added. "So I think they will continue to be policies that restrain growth and add to inflationary pressures and interest rates."

Zandi sees the AI hyperscaler buildout as a key to economic growth, but also a source of potential peril.

"The risks are decidedly to the downside because the growth is so dependent on AI, and the AI growth effects are so dependent on the equity market, and the equity market is so dependent on the valuations," he said. "It just feels like kind of a very fragile place, and the labor market is not well functioning."

Local opposition to data centers was a fairly significant issue in the election, particularly for Democrats, according to CNBC polling, so that could be a further economic headwind, though the issue ranked below cost of living, corruption and several others.

Two economies

The election happened amid a dichotomy in economic views.

Top-line numbers such as gross domestic product, consumer spending and the unemployment rate tell the story of an economy growing briskly while consumers spend and most Americans who want jobs are at work. GDP accelerated at a 3.4% annualized pace in the third quarter while consumer spending grew 3.8%. The unemployment rate is at 4.2% while layoffs are around their lowest level since 1969.

However, rising prices have overshadowed those otherwise solid metrics.

The inflation rate in September as judged by the consumer price index was 3.7% — up sharply from 2.3% in April 2025 when Trump announced an aggressive round of so-called reciprocal tariffs against U.S. trading partners. The Iran war has only aggravated those conditions. The CPI was at just 2.4% when the U.S. and Israel launched attacks on Iran in late February, a war that has caused gas prices to soar.

And wages aren't keeping up with rising costs. Wage growth when adjusted for inflation has turned negative, down 0.7% from a year ago in September, according to the Bureau of Labor Statistics.

One area where the two sides of the political divide could come together is tariffs.

Congressional Democrats haven't been reflexively opposed to tariff efforts aimed at leveling the playing field. But the Trump tariffs have been criticized for their sweeping nature.

Gary Cohn, who served as director of the National Economic Council during Trump's first term, said Wednesday that he sees room for movement on trade issues.

"There's become a much more universal view on tariffs and what they're good for," Cohn said during a CNBC interview. "Protecting U.S. workers and protecting manufacturing, protecting jobs in the United States, specifically from China, more than anything, is good and has been good policy."

While Cohn noted that "shutting down the borders between Canada and Mexico and the United States has probably not been so good for policy," he thinks "there's a compromise that could be reached where we actually have tariffs put through the legislative system and they become law. They wouldn't become executive orders that can be rescinded the minute the next president walks off the podium."

Addressing affordability

Democrats would also likely look to roll back spending cuts to SNAP food stamp benefits and Medicaid that were approved by the Republican-controlled Congress under the One Big Beautiful Bill Act, Morgan Stanley analysts said in a client note. But other policies that Democrats oppose would be harder to reverse.

"We think policy uncertainty since the beginning of President Trump's second term has been tied to executive, not legislative, action," the firm said. "Policies on tariffs, geopolitics, trade ... deregulation, and export controls are all likely to persist, meaning we should expect a certain level of policy uncertainty to continue."

High levels of government debt and budget deficits also are likely to remain.

The national debt currently stands at $40.5 trillion, up more than $4 trillion since Trump took office in January 2025. Net interest on the debt totaled $1.05 trillion in fiscal 2026, higher than spending on any other category except Social Security and Medicare.

The U.S. ended the year with a deficit just shy of $2 trillion, or about 6.1% of GDP. Morgan Stanley expects that level to persist even with some Democratic officials preaching fiscal discipline.

While there are concerns that the change in power could result in standoffs over the debt ceiling, "Democrats are likely to leverage [an impasse] to win policy concessions," Jan Hatzius, chief economist at Goldman Sachs, said in a note.

"It is not yet clear what Democrats will seek in return, but limiting the war with Iran, tariff rollbacks, the reversal of spending cuts, and expanded health benefits appear to be high on the list of priorities," he said.

Despite the various headwinds and political uncertainty, most of Wall Street expects the growth in the economy to continue — if not without hiccups and lingering issues over the cost of living.

"My sense is that the economic expansion will continue to roll on, featuring above trend growth near 2½ percent," said Joseph Brusuelas, chief economist at RSM.

Brusuelas also sees the opportunity to "reset" the trade agreement between the U.S., Mexico and Canada after a year and a half of tension from the Trump tariffs and reprisals.

"We only have a 15% probability of recession over the next 12 months," he said. "The outcome of the election was immaterial to that estimate."