It’s becoming increasingly difficult to expect a soft landing for the U.S. economy. Inflation is the highest it’s been in 40 years. As a result, the Fed is likely to implement a set of monetary policies — increases in short-term interest rates and reductions in its balance sheet (quantitative tightening) — that eventually tip the economy into recession. Most likely the recession will start between late 2023 and the end of 2024. And if that happens, the Democratic Party may find itself at the gates of political hell.
At present, the most likely outcome in this year’s midterm elections is that Republicans will take back the House of Representatives and get a Senate majority with around 53 seats. But 2024 could be much worse. The Democrats have been blessed for the past generation with never having to defend the presidency in a bad economy. President Clinton ran for reelection in 1996, when the economy was much improved from his predecessor’s recession and “jobless recovery.” President Obama ran for reelection in 2012 with an economy that hadn’t fully healed from the Great Recession but was much improved.
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