My girlfriend often treats fantasy books as her escape from reality, usually something from the likes of Rebecca Yarros or Sarah J. Maas, the latter of whom released a brand-new book the week before the election (much to my girlfriend’s happiness and joy). Me? I prefer to let my mind get swept into a fantasy of my own making: wedging myself into historical events while I read about them. As if me, Sterling Rettke, being there for the betrayal of Julius Caesar, or for the debates at the White House surrounding the dropping of atomic bombs on Japan in the 1940s, or being in the Situation Room when SEAL Team 6 got Bin Laden, or even being in those places and knowing every future World Series and Super Bowl winner up to this point, would have any effect on anything (except the last one making me a very wealthy man due to the foresight to become a sports gambling tycoon). But it is something I like to do, and it keeps me spry!
The most recent place I’ve dreamcast myself is 1968, a tense year in a tense decade in America. It was a presidential election year between Richard Nixon and, at the time, Lyndon B. Johnson (Johnson would later drop out). Nixonland by Rick Perlstein is an amazing book, and I think there are a lot of parallels between what happened to Democrats in 1968 and what happened to Republicans on Tuesday, November 3rd.
Democrats won (no, steamrolled their way to victory) in both chambers. The Senate flipped seven seats (Iowa, Kansas, Maine, North Carolina, Ohio, South Carolina, Texas) from red to blue, and the Democratic caucus now sits at 54 with two races still uncalled. In Mississippi, Democrat Scott Colom leads Cindy Hyde-Smith, and in Alaska, Mary Peltola is leading Dan Sullivan. The House is at 254 Democrats to 162 Republicans as of Saturday morning with 19 races uncalled (Democrats are on pace to win at least 6 of those 19 and have 260 House seats), making it larger than the Democratic majority from the night Obama won the 2008 election. On the state level, Democrats also flipped six governorships (Alaska, Georgia, Iowa, Nevada, Ohio, Texas).
Texas is the main headline on a long list of headlines. James Talarico beat Ken Paxton by about 12 points (!!!) to win what used to be Lyndon B. Johnson’s seat in the Senate and Gina Hinojosa beat Greg Abbott by 5, in a state Trump carried by almost 14 just two years ago. Beyond that, Kansas elected its first Democratic senator since 1932, almost a century, South Carolina its first since 1998, and Maine finally retired the unbeatable Susan Collins.
Roughly four in ten voters named the economy as the top issue. 90% told CNN that cost of living was a major factor in their decision. Three-quarters said the economy is in rough shape, and about two-thirds of those blamed the administration’s policies for making it worse. Trump’s approval among people who actually voted was around 40%.
So the simplest reading is also the right one: this was a referendum on the party in power during a period of continued high inflation, $4-plus-a-gallon gasoline, and a very costly war with Iran, and the party in power lost it. Midterms have historically punished the president’s party. This one punished it harder because the thing voters were angry about was the thing they buy each and every week.
That reading is correct but also incomplete. Voters threw out Republicans. They did not, in the same election, sign up for the entire policy menu of the people who are replacing them. The following are just a few examples. My old home of Washington State kept its progressive millionaire income tax while simultaneously voting to keep transgender girls out of girls’ sports. Colorado passed a similar measure requiring school sports by biological sex and voted to ban gender surgeries for minors, while also rejecting a more conservative voter ID expansion. North Carolina elected Roy “Neva Lost” Cooper but approved voter ID, as did Ohio, which elected Sherrod Brown and Amy Acton by large margins. Wisconsin elected its first Black governor, Democrat David Crowley, by eight points while also voting to add an anti-DEI amendment to its constitution. California killed its billionaire tax by double digits and passed a constitutional ban on future wealth taxes, while its biggest city, Los Angeles, elected what might be the country’s farthest-left big-city mayor in Nithya Raman. Massachusetts killed a housing bill that every planner in the state supported, without much organized resistance, just good ol’-fashioned liberal NIMBYism, while statewide Democrats trounced Republican opposition about as badly as one could ever imagine. Forty-one cities voted on data center issues, and the data centers lost in all but one of them.
The election is a mandate in the sense that it is a repudiation of Trumpism and MAGA, but it also shows that people don’t want to just return to the politics of yesteryear, filled with a lot of non-deliverables and politics of performance for their constituents. But the lesson for the President: you cannot lie to voters’ faces and wallets when you are running the show.
What It Means for Trump
As stated above, this is the largest rebuke of Trump’s doctrine in his 10 years on the public stage. He is officially a lame duck nationally, but is he still the head honcho in his own party? That is the part that will be most interesting going forward from his standpoint over the next few years.
His first reaction on Tuesday night came on—surprise, surprise—social media, saying that he was not on the ballot, that he would have won in a landslide if he had been, and that Fox News bore responsibility for putting Democrats on its channel. He then took some unsolicited phone calls from reporters who have his number (a genuinely endearing quality of his), and by Wednesday morning he had told the New York Times he was “absolutely willing to accept” the results (to the surprise of many), congratulated Democrats in an interview with Fox, and then promptly posted an image of a hat that said VETO.
On Friday, though, he signaled he is going to continue to be combative, maybe now more than ever. As Susie Wiles departs as chief of staff, he is installing longtime ally and top Democratic foe Stephen Miller in the job, a move that has not gone over well with many of the victors of Tuesday’s proceedings.
To be fair, he hasn’t seemed too interested in congressional happenings much at all up to this point. They did not pass much legislation prior to the midterms—outside of the BBB in July 2025, I implore people to think about what this outgoing Congress has done and passed—but he still does need them for some things. For example, he needs the Senate to confirm judges or new cabinet secretaries, and a Democratic near-supermajority should and likely will be very demanding in the quality of candidates it accepts over the next two years (specifically if a SCOTUS seat becomes available).
What he also loses is control of oversight. A Republican Congress, for example, did not subpoena his family’s crypto or other money-making ventures, and did not hold hearings on the current cost of the Iran war. A Democratic Congress will do both. Oregon Senator Ron Wyden tweeted a single word when Senate control flipped: “Subpoenas.” Oversight does not change law, but it changes the news cycle and the staffing of the administration.
What he keeps is everything he can do alone—which is a lot: tariffs under emergency powers, troop deployments, executive orders, the agencies, pardons. Some can be overturned with bipartisan legislation, and Republicans may be more willing to work across the aisle given their current standing, but that is yet to be seen. What losing both chambers means for certain, though, is no more judges on a party-line vote and no more cabinet confirmations without Democratic votes. Any vacancy that opens from January 2027 onward, including on the Supreme Court, is now negotiated.
What It Means for the Economy
The economy going into this election was stronger on paper than it felt. Third-quarter growth came in at 3.4% annualized, up from 2.2% the quarter before. Unemployment was 4.2%. Those are not recession numbers, but voters don’t care about growth rates or the math of yields; they care about how much groceries cost and how much a gallon of gas is. They don’t care too much about the mechanisms of achieving these things as long as they get achieved.
Prices were the problem. Inflation was 3.6% in the last report. Bloomberg’s own price index put underlying inflation, stripped of energy costs, near 2.2%, which means almost the entire gap between what the Fed wants and what people are paying is oil. Gasoline was up roughly 40% year over year because of the war and the attacks on shipping around Hormuz.
Then came the stock market this week following the election. Wednesday was the best post-midterm day for the Dow in 44 years: up 1,569 points (or 3%), its best session since April 2025. The 10-year yield fell six basis points to about 4.88%, the dollar slipped to its lowest since September, and oil dropped below $100 a barrel for the first time in two months. The trade seemed simple: divided government passes less and borrows less, and a Congress trying to end the war makes the war shorter.
Thursday erased that simplicity! The Dow gave back those gains and fell 1,833 points, the S&P 500 lost 4.4%, and the Nasdaq dropped 5.5% into a correction, the worst single day for all three since… you guessed it, April 2025 (remember that month?). Roughly $2.5 trillion in market value went away in one trading session. Nvidia fell 9% and the Philly Semiconductor Index ($SOX) was down more than 12%. The reason given was the same election, read differently: Democratic statehouses in Texas and Georgia could slow data-center permitting and power approvals, and doing this would drive down hyperscaler capability, which so much of our economy’s back is built on (whether that’s a good thing is another debate), forcing an economic slowdown. A yucky result that might not be good for the winners of Tuesday’s shindigs.
Friday split the difference. The October jobs report came in at 165,000 against a forecast of 65,000, unemployment ticked down to 4.1%, and the odds of a December rate hike rose to roughly 75%. The Nasdaq bounced 1.1%, the S&P 500 added 0.3%, and the Dow slipped again. For the week the S&P 500 lost 2.7% and the Nasdaq 3.4%. Wall Street spent three days trading the same result three different ways and ended the week still confused.
The above-mentioned hyperscalers tell the clearest version of the story. On Wednesday Amazon and Microsoft were up about 7% and Alphabet about 4%, while the data-center builders and the neoclouds fell around 12% on average. The logic was that if new construction slows, the capacity that already exists becomes more valuable, and the companies that own it win while the companies that build it lose. By Thursday the market stopped drawing that distinction and sold everything with AI in the description.
What the election did not settle is the part that matters. Tariffs are an executive action and the executive did not change, so anyone who bought Wednesday expecting tariff relief by statute bought the wrong thing. The deficit runs near 6% of GDP, and divided government is historically the configuration that touches neither taxes nor spending; the bond market cheered gridlock in 2010 and 2018 too, and the debt grew both times. And the war, the biggest input to inflation and to the Fed’s inability to cut, is not something a Congress is realistically going to be able to end via a vote.
So: a hot labor market, a Fed leaning toward rate hikes, inflation that rises and falls with the Strait of Hormuz, and a Congress elected on the cost of living with almost no tools that touch it. Let’s ride!
What It Means for 2028
The Republican side of 2028 was going to be a coronation for JD Vance had things gone well, and since they didn’t, it won’t be. The field was built on the premise that Trump’s coalition transfers, and Texas, Kansas, Iowa, and Ohio just tested that premise without him on the ballot. Prediction markets took seven points off Vance’s nomination odds overnight. He still leads every poll and every market, usually by double digits over Marco Rubio. He is no longer the presumptive nominee, and Ted Cruz has spent months making sure everyone knows it.
Behind Vance the field is thin. Ron DeSantis was term-limited, ending an eight-year run in Florida, and retires as a very popular governor in that state. He also broke with Trump the day before the election; he also already ran once, and his 2024 campaign spent well over $100 million to finish a distant second to Trump. Georgia Governor Brian Kemp was also term-limited, and his state elected a Democratic successor as his replacement, but he remains one of the only Republicans who beat a Trump hand-selected candidate in a primary and then won a general election. Glenn Youngkin, who will have been out of office for a few years by 2028, was also replaced by Abigail Spanberger, a Democrat, in Virginia, and the suburbs that elected him originally seem to be trending more blue. Tucker Carlson continues to say he is not running, but polls near 10%. The two names the party actually polls behind Vance are Rubio and Cruz.
The Democratic field got longer on Tuesday, not shorter. Jon Ossoff won reelection against Mike Collins after Republicans spent two years (foolishly) calling his seat their best pickup, and he leads the nomination markets at roughly 21% despite pledging (with a wink) to serve his full term. Josh Shapiro won Pennsylvania, the most important swing state in the country, 60 to 38, and in a normal world would be the overwhelming favorite. The young gun, James Talarico, is 37 years old, beat the sitting Attorney General by 12 points in a state Trump carried by 14, and, before even being sworn in, is the most famous freshman senator in the country. The pull toward 2028 will be enormous. Roy Cooper flipped North Carolina, never trailed in a poll, and at 69 years old with a ton of experience behind him is exactly what the party nominates when it is nervous. Gavin Newsom—term-limited in January—has been openly running since Harris lost to Trump in 2024, and he currently sits second in the markets at about 15% and can now point to his state killing a billionaire tax as proof California is not communist. And then of course there is the previously mentioned Kamala Harris, who would be hard to beat given how the map math and momentum work.
Someone else could also snag the nomination. AOC is third in the betting markets at 14%, and the left of the party just had its best cycle in a decade, including Abdul El-Sayed winning Michigan’s Senate seat by seven as an open progressive. Pete Buttigieg, the best communicator in the party, is also likely going to be in the mix. New governors Amy Acton, Keisha Lance Bottoms, and my favorite ex-Prada runway model, Rob Sand, each flipped a governorship in a state the party had once written off, and governors of states like that are how Democrats found both Jimmy Carter and Bill Clinton.
My honest read is that neither party has a serious frontrunner. Republicans have a pseudo-favorite who just watched his party face-plant and is now the butt of a lot of jokes. Democrats seem to have more options, but that’s sometimes the curse of choice.
Closing Thoughts
I will be brief here: the voters voted for a resounding change of direction for the country. What they want is to be able to afford groceries, gas, and housing. They don’t really care who does it or the mechanisms that cause it to get done; they just want it to happen.
There are also lessons here that each group must take into consideration, if only for two-year increments. Winners who over-celebrate and believe they have won the generation—as many in the GOP did after 2024—end up looking silly and overzealous when things swing the other way, especially as much as they did on Tuesday. I would hope the winning Democrats—for those who remember—after rightfully celebrating this win, remember how 2010 felt, when a result as cataclysmic as Tuesday’s happened to them.
Losing makes you reconsider your entire playbook. The coalitions you thought were sturdy end up not being as reliable or as favorable to your politics as you believed. This has played out many times for each party since the turn of the century.
The average voter is just that: average. That makes them both the most obvious case study in political dialogue, if you use the hindsight of election results as your guiding light, and the most confusing and misunderstood, because of how elastic their votes end up being. But their needs aren’t elastic.
As the next two years play out, and as we get into the 2030s, we will see if any lessons were learned or if this cycle continues to play out as it has for the better part of a century in American politics.
Suggested Citation: Rettke, Sterling. “2026 Midterm Thoughts.” sterlingrettke.com, November 7, 2026.
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