Short-term gains, long-term problems in the US

Macro 10 minutes to read

Christopher Dembik

Head of Macro Analysis

Summary:  In a short-term, pre-midterms sense, the US economy is pretty much as robust President Trump claims it is. Once you dig into the details on the real estate and deficit fronts, however, the picture grows decidedly cloudier.

• The Republicans could win the midterm elections.
• The US economy is not as great as it seems; housing and autos are experiencing a significant downturn.
• The rising deficit is the US' main long-term issue.

A big win for Trump?

Anyone who has ever participated in an election campaign knows perfectly well that the last weeks of the campaign are decisive. This proves to be the case once again in the US midterms. If I had written this analysis three weeks ago, I would have certainly asserted that Democrats are likely to win a majority of seats in the House of Representatives and that the Senate should remain controlled by the Republicans. 

Over the past few weeks, the situation in the Senate has not changed.  But, to everyone’s surprise, the latest polls indicate that Republicans may be able to fend off Democrat efforts to take back control of the House. Democrats are not certain to win a majority anymore. Of the 69 seats still undecided, Republicans have reduced the voting gap to a small margin in almost all of them. Victory will depend on the outcome of the election in less than four to eight districts. 

The Democrats made a big mistake betting that the midterms would end up as a referendum on Trump. The President has done surprisingly well with a job approval close to its highest level, around 44%, while Democrats lost ground because they were unable to address local issues. 

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (
- Full disclaimer (

Saxo Bank A/S - Representative Office
Boulevard Plaza - Tower 1
30th floor, office 3002
Dubai Downtown, Burj Khalifa area


Trade responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.