Throw the Bums Out
“You have sat too long here for any good you have been doing.”
—Leo Amery, quoting Oliver Cromwell, House of Commons, May 7, 1940
I hope you were not too surprised.
For months now we’ve been writing about angst across the economy. Depending on the writer or the economic report, Americans are described as workers, labor, youth, baby boomers, Gen Xers, Millennials, consumers, the elite, MAGA, liberals, centrists, etc. As you’ll see below, the Bureau of Labor Statistics refers to families as “consumer units.”
This week many of those cohorts voted in unison, for one reason: discontent.
It may be hard to imagine, but lots of people don’t follow markets or politics (though it has been hard to tune out of the latter in recent years - the media won’t give you a break). They go about their days and weeks taking care of the kids, getting together with family and neighbors, and increasingly, working two or even three jobs. What they cannot ignore is how much money they are spending on basic goods, and what little (if anything) is left at the end of every month.
From the Bureau of Labor Statistics on October 29:
On average, consumer units spent $27,790 on housing in 2025, which was 33.9 percent of total average annual expenditures. The next largest shares of total expenditures were transportation (16.5 percent), food (13.0 percent), and personal insurance and pensions (12.4 percent).
This is up 4.3% from 2024. Just take the first three: housing, transportation, and food. That’s 63.4% of their total spend. And we know those costs have only gone up in 2026.
It’s no wonder people showed up to voter booths looking for change.
This week we are all hearing pundits give their reasons for the change. What I said above is what I believe to be the number one reason, but there are certainly many others. After reading dozens of explanations, my favorite comes from DC insider Bruce Mehlman. Full quote below:
American voters are unhappy with the governance of their country, especially with respect to the economy. They’re frustrated, anxious & angry. So they keep voting to “throw the bums out” and bring in new bums, hoping for real change. Rinse & repeat.
Tuesday was a referendum on the party in power, same as 2022, 2018, 2014, 2010 & 2006. 12 of the past 14 elections were “change elections,” as neither party has figured it out yet. In the days & weeks ahead we’ll hear many theories on what happened, why & what it means. Don’t overthink it.
It should be an interesting next two years.
What does that mean for investors?
A divided government does not necessarily mean a falling stock market.
BlackRock’s analysis of midterm elections since 1970 found that the S&P 500 delivered an average total return of 14.1% in the six months following the vote. But results varied with the political outcome: the average gain was 10.4% when a party lost unified control of Washington, versus 16.1% when unified control was gained or Congress remained divided. [1]
Those are historical averages, not a forecast. And as we've seen many times, what happens in Washington is only one of many factors influencing the stock market.
Voting for Change
Stocks could rise over the next two years. The economy could continue growing. Both would be welcome. There’s a difference between an economy that makes a few people spectacularly wealthy and one that gives ordinary people a fair shot at a comfortable life.
About 35 million American households owned their homes outright in 2024, roughly four in ten homeowners, with no monthly mortgage payment. Among those with mortgages, more than half had rates below 4% as of the third quarter of 2025.[2]
On the other side, only about one-third of homes listed for sale were affordable to a household earning the median income in June 2026, even assuming a 15% down payment.[3]
Same housing market. Very different economies.
But what if the economy continues to grow, the stock market keeps rising, and more Americans find themselves falling further behind? What happens to young families who spend another four years saving for a home, only to find that home prices have risen faster than their savings? Or couples who put off having children because they can't afford a larger place to live?
To me, that's the bigger concern. Not whether the market rises or falls following an election, but whether the economic conditions that brought so many frustrated voters to the polls actually improve.
I don't see an easy fix. I've been around long enough to know that changing which party controls Congress won't be enough. Which brings us back to Bruce Mehlman's observation.
The question isn’t whether Americans will demand change again. It’s whether either party can deliver enough improvement in their everyday lives to break the cycle. Otherwise, two years from now, we may find ourselves having this same conversation. Different politicians. Same frustrations.
Rinse and repeat.
----
This Sunday I head to Washington DC for our second annual meeting of the Inner Circle. Bruce Mehlman will be there, along with several other special guests: David Bahnsen, Renè Aninao, a few folks I’m not at liberty to disclose, and one of the most insightful authors I’ve read in the past few years, Martin Gurri. I’m looking forward to meeting him in person. And of course, John Mauldin, Olivier, and the rest of the usual suspects.
It should be a great week. I’ll find some time in between meetings to continue sharing my thoughts on what I experienced in China. Next week’s focus will be on Shanghai. Peter Boockvar calls it China’s New York. I have to agree, though from what I saw, it is a lot cleaner than NYC these days.
Thanks for reading.
Ed D’Agostino
Partner & COO
[1] https://www.blackrock.com/us/financial-professionals/insights/2026-midterm-elections-and-market-performance
[2] https://www.redfin.com/news/mortgage-rates-q3-2025/ ; https://www.census.gov/newsroom/press-releases/2025/acs-1-year-estimates.html
[3] https://www.redfin.com/news/affordability-homebuying-2026/
Ed D’Agostino
Publisher & COO
If you prefer to listen to Global Macro Update, you can do so here:
Get Ahead of Big Market Trends—with Global Macro Update
Today’s most successful investors share one thing in common: They spot major trends early and move quickly to take advantage of them.
Twice a week, Ed D’Agostino—our publisher and COO—shares macro insights and analysis, along with exclusive interviews with leading economic, geopolitical, and investment experts to help you get ahead of major trends and market shifts.
By opting in you are also consenting to receive Mauldin Economics' marketing emails.
You can opt-out from these at any time. Privacy Policy
Your "Inner Circle" just doesn't seem to be that prescient to me. Have they ever shared the performances of their actual brokerage accounts with you? I will happily make Schwab's evaluation of my account public if members of your Inner Circle will do the same. Let all of us see what your Inner Circle is actually made of. I am guessing that it is not all that much.
Ed,I always enjoy reading your weekly Global Macro Update. However, may I offer that I think you are a bit too Pollyannaish in describing your experience in China. Yes, the Chinese have succeeded well in many ways, especially in the development of infrastructure. But once you go inland from the big cities along the coast, the majority of Chinese people are still poor, and of course Chinese everywhere do not have basic human rights. Plus we should consider how horribly the Han Chinese have treated minority ethnic groups such as the Tibetans and Uyghurs.
In any event, keep writing those good articles.
Best, Tocher
We get the government we deserve. Politicians are bad at a lot of things but they are expert at understanding what voters want and giving it to them. For a very long time, longer than we have been voting for change, voters have been addicted to debt, handouts, loopholes and living beyond our collective means. The “change” we have been voting for has merely been a different way of providing us something for nothing. At some point, we are going to realize our addiction to debt etc. must end. It probably won’t be a voluntary realization.
Shooting wars and trade wars are inflationary. Fact
Stop now.
I expected an anti-data center (pull the plug on AI until someone takes this seriously) but got an election that effectively proved women and minorities are in abundance as best available candidates From the POTUS to the Cabinet to the party to the Pres should be ashamed for working so hard to eliminate so much talent from leadership.
Who cares what pundits say after the fact? Where were they the day before, saying "Brace yourself folks, Republicans gonna be clobbered." I partly credit young democrat millennials for showing up, perhaps inspired by waves of young people making their presence felt from Serbia to Brazil to Paris--somebody is mad as hell and they are not going to take it anymore. I mean is anybody really stupid enough to think you can wipe out a civilization like Persia from the other side of the world? Ask those farmers who stayed home rather than vote, cursing the price of diesel all the live-long day. I mean in some ways we get it, gotta stop China somehow, or at least slow them down by containing their proxies. Now that is over for probably a generation, which is too late. Get used to low growth and a mixed bag of unemployment, inflation, and a bag of debt and liquidity crises across "The West." Through it all pundits will have plenty to say and little to offer.
Most change is NOT improvement, and, with perhaps very rare exceptions, there were no options on the ballots across the nation that have any potential to offer improvement. Federal spending and deficits are going to continue to rise, and most of the benefits will go to insiders who have connections to the government teat.
Meanwhile, those in charge behind the scenes will continue to stir things up to keep us at each other's throats and keep us from noticing what is really important.
What can really be expected from a congress that consistently the last few years has an approval rating under 20% no matter which party is in control ?
Things will get better for Joe and Josephine Average if tariffs are eliminated or at least reduced substantially, because tariffs are regressive: the average and the poor pay a disproportionate percentage of their income to purchase essentials, while the rich pay less income tax. If the Democrats are smart they'll bring in a VAT with carve-outs for lower to medium income families. I don't see a fairer way to give those folks a break.
The voters look at a ballot like I do chicken fried steak on a midwest-America menu. I may order one, but I seldom get what is pictured in my mind. We vote our whimsey then eat the surprise. Socialism will deliver lots of selfies and tangled debates. Lots of enmity, and strife. Lots of bilious bluster. Don't leave a tip for the lousy service you are about to receive. 😁