Tomorrow the Fed will release the FOMC minutes from its September meeting. The minutes should reveal the support Chair Powell has to continue rate increases and at what level. Last week’s strong employment numbers likely heightened the resolve of the Fed for more rate increases. The next FOMC meeting is Nov 1 and 2, with the press conference on the afternoon of November 2.
One of the interesting aspects of the traditional post-FOMC press conference by the Fed Chair is that the Chair knows that three weeks later the minutes of the meeting will be released. It acts as a fact check on comments made by Powell. From comments made by Fed officials since the September FOMC meeting it appears that there is a strong consensus among the FOMC members for continuing the rate policy to lower inflation towards the Fed’s stated goal of 2%.
There will be more data coming out before the next meeting of the FOMC in November including the September CPI number which will be released Thursday morning. The November meeting will occur just days before the midterm elections, and it will be interesting to see if the Chair’s press conference will be influenced by the strong desire of the central bank to be above politics. It could be a real balancing act.
Before I write about the trends in the battle to control the House and Senate, I want to briefly discuss my growing skepticism of polling data. In my political days I worked with polling firms and learned that polling results are only as good as the model used by the pollster to gather the data. In recent election cycles polling has been less accurate and has had a slight tilt to Democrats. No one has had a good explanation for these polling misses.
It is my view that the move from landlines to cell phones has made it more difficult for pollsters to accurately identify the correct voters to get the polling model right. Today, cell phone numbers often don’t accurately reflect where the person is located. There are no reliable directories linking names and addresses to a particular cell phone number. Pollsters are still working on ways to improve their data gathering techniques, but in my view, political polling continues to have data gathering problems that haven’t been resolved. This year’s elections will be another big test as to the new techniques pollsters are developing to gather more reliable data.
Nothing has changed with respect to the consensus opinion that the Republicans are on course to capture the House and the Senate remains too close to call.
House: Since the Civil War the party that controls the White House has lost seats in the US House during the midterm elections, and nothing seems to be happening this year to change that historical trend.
This year both parties have centered their campaigns around themes that they believe will resonate with voters. For the Democrats the national debate on abortion that was prompted by the Supreme Court decision overturning Roe vs Wade has been a rallying cry for most Democratic candidates. Earlier in the year political pundits were surprised that a constitutional amendment vote in Kansas, to restrict abortions, lost by a wide margin of 59% to 41%. There have been reports from across the country that women have outnumbered men in new voter registrations, and this has cheered Democrats. But polling also shows real concern across all voting groups, with inflation and crime—two issues that seem to help Republicans.
Additionally, Democrats are running in a political atmosphere where President Biden has low approval numbers. While his numbers have improved in recent weeks, his approval rating remains well south of 50% (at 44% in the most recent polling).
Senate: With a tied 50/50 Senate, the net change of only one seat could change the balance of power. As in the House, Republicans take heart in the historical trend of midterms giving voters the opportunity to vote against the party in power. However, this year the seats up give an edge to Democrats as only 12 of the 32 seats being contested are currently held by Democrats, and the remaining 20 seats are currently in Republican hands. Republicans also face the problem that incumbent Senators in Ohio, Pennsylvania and North Carolina are retiring. Fighting the historical trend of losing seats for the party in the White House, Democrats have taken some comfort in recent polling that shows their candidates are competitive in states with retiring Republican Senators.
Republicans started the cycle believing that they had several opportunities to defeat Democratic incumbent Senators, but in several of the states the Democratic Senators have opened up a lead; these include NH, AZ, and CO. NV and GA remain the two biggest opportunities for Republicans. In the last week, GA Republican candidate Herschel Walker ran into more headwinds when stories broke of his paying for an abortion and about how many children he had fathered. The two candidates meet in what is their only scheduled debate on Friday, and it could be a make-or-break moment for Walker’s candidacy.
The state where Republicans are most optimistic is Nevada where the changing voting pattern of Hispanics is seen as helping Republican candidate Adam Laxalt as he challenges Democratic incumbent Senator Catherine Cortez Masto. Polls show the race is currently a statistical tie.
Bottom line: control of the Senate is clearly too close to call.