Part 6/11:

This gridlock can be beneficial for markets, as it limits the scope of unpredictable policy changes and provides a form of political stability. Moreover, a divided Congress might shift President Biden's focus from domestic policy initiatives to international affairs, potentially reducing domestic policy risks during an already challenging economic period.

Domestic and International Economic Impact

Despite the potential for a political deadlock, the overarching challenge remains the United States' fight against inflation. The Federal Reserve's continued interest rate hikes aim to cool down economic activity, but this approach risks pushing the economy into a recession—an eventuality that could happen swiftly once the current momentum fades.