Consumer confidence in the U.S. economy fell in August, with the Conference Board’s index dropping to 89.4 from 90.2 in July, signaling growing voter concern ahead of the 2026 midterm elections just 70 days away. The decline reflects pessimism about business conditions and labor markets over the next six months, with inflation and cost-of-living pressures cited as primary drivers. Polls indicate Democrats hold a 6-point lead on the generic ballot, according to FiftyPlusOne, raising questions about Republican prospects in November.
Markets brace for policy uncertainty as election nears
Analysts warn that the 2026 midterms, now 10 weeks away, could shift control of Congress from Republicans to Democrats, potentially altering the legislative landscape. A divided government may block major bipartisan legislation while turning routine tasks into protracted negotiations. "One of the things you often hear is the market loves a divided government, and that usually means the extreme positions don't get enacted," said Ed Mills, managing director of Washington policy at Raymond James. "But what we have been cautioning is the biggest market moves from a policy perspective of the last two years have come from executive action."
President Donald Trump has framed his administration’s economic policies as a driver of resilience, with a White House spokesperson noting that "hard data of consumer spending and retail sales have, for months, consistently reinforced that the American consumer remains resilient thanks to the president’s proven economic agenda of tax cuts and deregulation." However, the latest consumer confidence data contradicts this assessment, with the Expectations Index also declining and concerns about inflation, oil and gas prices, and geopolitical conflicts rising among respondents.
Trump’s pro-family agenda gains bipartisan traction amid economic headwinds
Trump has amplified his pro-family agenda in recent weeks, highlighting initiatives such as school choice programs, child savings accounts, and restrictions on critical race theory in schools. Some Democratic leaders, including Gov. Gavin Newsom (D-CA), have praised elements of the agenda, with Newsom calling the child savings accounts "a revolution" and expressing enthusiasm for the program. The administration’s One Big Beautiful Bill Act introduces a $1,700 federal tax credit for donations to scholarship-granting nonprofits, set to begin next year.
Republicans argue these policies empower parents and restore educational standards. "The Trump administration and House Republicans are putting parents back in control by expanding school choice and giving families more freedom over their children’s education," said Mike Marinella, a spokesman for the National Republican Congressional Committee. However, the broader economic anxiety threatens to overshadow these efforts, with voter frustration over inflation and the cost of living dominating midterm discussions.
Potential outcomes and market volatility
A shift in congressional power could lead to legislative gridlock, including prolonged debates over the debt ceiling and increased reliance on executive actions. Analysts caution that executive orders have driven significant market volatility in recent years, and a divided government may not mitigate this trend. "After the midterms, if Democrats gain control of either chamber, we could see more whipsawing executive actions and potential volatility if there’s a protracted wait for election results," Mills added.
The Consumer Confidence Index report noted that respondents’ write-in responses cited prices, war/conflict, food/groceries, trade, and jobs as key concerns, with references to oil and gas remaining elevated. The data suggests that economic sentiment is increasingly influencing voter behavior, though the White House maintains that the president’s policies have bolstered consumer resilience.
As the midterms approach, the interplay between economic anxiety, policy agendas, and voter sentiment will shape the electoral landscape. Democrats see an opportunity to expand battleground races, while Republicans face the challenge of countering negative polling with their legislative and executive achievements.