As is usually the case during mid-term election years under a new President, the polling data for the upcoming mid-term elections has shown a consistent lead for the Democratic party in this November’s elections, which are now less than 150 days from now. While the lead has been steady, towards the end of May, the lead for the Democratic party began to really narrow such that by the end of the month the lead was the narrowest it had been since the polling data began in early 2017. Had the GOP managed to close the gap entirely, it would have put serious pressure on the Democrats ahead of the elections. While the narrowing gap in polling data may have provided quite a scare, Democrats can start to breathe a little bit easier based on the trends we have seen since the start of June.
The chart below shows the Real Clear Politics Generic Ballot Poll for the 2018 Midterms. While the gap really started to narrow in late May, we have seen a resurgence on the popularity of Democrats since the start of June, rising from 43% up to 46.0%, while the popularity of the GOP has started to fade. At current levels, the spread for the Democrats has widened back out to its highest level since late March!
While the reversal in favor of Democrats has been swift, the chart above may not even do it justice. That’s because of all the latest polls that have at least partly taken place in June, Democrats are trouncing the GOP. The graphic below is from Real Clear Politics and shows each of the six national polls for the generic ballot that ended in the month of June. Of the six, the smallest margin lead for Democrats is 6%, while two have the lead in double-digit percentages. On average, the lead is 8.3%.
If the trend of polls for November continues, look for the word gridlock to start trending. The big question is, how do the shifting dynamics in polling impact market prospects? It’s been often argued that political gridlock is good for stock prices, but then again, the last year and a half of full GOP control have also been pretty impressive.
To help answer the question of what to expect in the November mid-terms, both in terms of how the elections and markets may shake out, we recently published a report for clients looking at historical trends in midterm years. We strongly suggest you check it out.