What the Democrats' midterms win means for the US economy and Trump

Soaring gas prices played a key role in the outcome of the midterms Image: Patrick T. Fallon/AFP

For the millions who cast their ballots in the US midterm elections , one issue ranked above all others: the economy.

So what does the Democrats' stunning capture of both the US Senate and House of Representatives mean for the economy and economic policy, given that President Donald Trump still has two years of his term to go?

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Markets have rebounded after initially trending negatively. Global stocks rallied as investors appeared to take heart from the Democrats' victory.

With Democrats now holding comfortable majorities in both houses of Congress and Trump still in the White House, it could lead to gridlock in Washington. Trump has already said he would become "Mr Veto," meaning he would block any legislation the Democrats advance.

"The magnitude of the gains for the Democrats in the midterms does not change too much for the near-term policy outlook, given the party still lacks a filibuster-proof majority in the Senate and President Trump has veto power to block legislation," Stephen Brown, chief North America economist with Capital Economics, said in a note.

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