What the 2022 midterm election results mean for small businesses

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With the 2022 midterm elections looming, there is no uncertainty about who controls the House of Representatives (Republicans) or the Senate (Democrats). But what this means for small businesses remains to be seen, and in this article, we take an in-depth look at the election results and how they could affect the economy and small businesses.

2022 midterm elections

The most relevant data point currently emerging from the 2022 midterm elections is that we have a divided government – where one party remains in control of the executive branch, or the Presidency, and a different party controls at least one of the legislative branches (the Senate and the Senate). or home).

In fact, historically, it is not unusual for a country to operate with a divided government. divided governments tend to To be more productive than unified governments, even if much deadlock ensued.

Highlights of the 2022 Midterm Elections

  • Election Day ends on November 8, 2022, with all 435 US House of Representatives seats and 35 of the 100 Senate seats up for re-election.
  • The key race continues in Georgia, with the US Senate runoff election between the Republican nominee, Herschel Walker, and Senator Raphael Warnock expected to conclude on December 6, 2022.
  • The Democrats, who control the Senate and the Republican Party (GOP), have the 218 seats needed to win a majority in the House.
  • Inflation was listed as the most important campaign concern for small business owners.
  • After the election, entrepreneurs reported another optimistic Outlook on the economy and the risk of recession.

How do midterm elections work?

Elections held in the middle of presidential election terms, such as the most recent election on November 8, 2022, are called midterm elections. The results affect the agenda of the incumbent president, Joe Biden, as they determine whether the presidential party will retain control of Congress. If the president’s party does not win a majority of seats in both houses during the election, their president’s agenda may be more difficult to follow. Ahead of the 2022 midterm elections, President Joe Biden’s Democratic Party controls both chambers of Congress.

Lok SabhaThe House of Representatives, called the lower chamber of the federal Congress, hosts 435 seats that are re-elected every two years. Seats are designated for each state in the United States based on population size, so well-populated areas such as California have more seats than less populous states such as Arizona. The seats in the House have no term limits, so re-election every two years does not mean all-new faces in the House.

executive committee The upper house of the federal Congress is called. In the Senate, there are two seats for each state, so there are 100 seats in total. Terms of office are six years, and during even-numbered years, like 2022, about one-third of seats are up for reelection in Senate races.

The third political office affected by the midterm elections is that of governor. While they are not part of Congress, each governor’s political party has the potential to influence future elections.

How the results of the 2022 midterm elections affect the economy

Over the past three years, Americans have faced a global pandemic, a war between Russia and Ukraine supply chain disruption, and record-high inflation rates. Many individuals, business owners, investors and lawmakers look to the 2022 midterm elections to improve the current economic situation in our country. Leading up to the 2022 midterm elections, areas of focus in the economy included the following.

federal loan

The national debt ceiling, or debt cap, determines how much money the US Treasury Department can borrow. Money borrowed by the federal government supplements revenue collected through income taxes so that the government can cover its operational obligations, which include military pay, tax refunds, Social Security and Medicare benefits, and service the national debt. The national debt currently exceeds $29 trillion. In December 2021, the federal debt ceiling was increased by $2.5 trillion, allowing the United States to avoid defaulting on its outstanding debt.

The limit would need to be raised again to ensure that the United States can continue to borrow the money it needs to function. Since the revelations of the 2022 midterm elections were made public, there has been an ongoing conflict between the Republican and Democratic parties over the debt ceiling. House Republicans have Signal that they are pushing to raise the debt ceiling again and will offer a reduced spending budget in return.

If the debt limit is not raised, however, financial analysts worry it could hurt the country’s credit rating. CNN The report noted that in 2011, during President Obama’s tenure, the country experienced a similar impasse, resulting in America losing its ideal. standard and poor (S&P) rating. Shares fell more than 5% due to the loss of the AAA credit rating.

social Security

While the debt ceiling affects the amount of money the federal government has for Social Security benefits, it’s not the only factor that matters. Consumer confidence, which controls consumer spending, is directly affected by benefit program initiatives. In both Republican and Democratic conversations, there is concern about long-term solvency issues for programs such as Social Security and Medicare. Democratic Senator Joe Manchin stood apart from his Democratic colleagues in the 2022 midterm elections as he sought a compromise regarding Social Security and referred to the program as “going bankrupt”. Republican Senator Rick Scott also spoke out about Social Security, proposing that the programs undergo a renewal vote every two years.

federal Reserve

The Federal Reserve continues to be a hot topic in the news during 2022 because Fed continues to raise interest rates, Policymakers at the US Central Bank raise the federal funds rate as a means of fighting inflation, which raises interest rates. Higher rates slow momentum in the economy and limit borrowing power, but they also have a negative effect on consumer spending and the cost of living.

Rate hikes imposed by the Federal Reserve were a point of debate for both political parties. Democratic senators, such as Elizabeth Warren and John Hickenlooper, are pleading with Fed Chair Jerome Powell to slow the pace of growth. Republicans, led by Senator Pat ToomeyThe Federal Reserve also weighed in on a rate hike, asking Powell to stop buying government debt.

Investment

Both Democratic and Republican leaders, as well as voters across America, were concerned about how the 2022 midterm elections would affect the stock market and other investments, such as the bond market. after market report october stock slump, the overall activity in the stock market is declining. Under the Biden administration, the S&P 500 has declined 1.2%. According to cfraThe stock market hasn’t been so bearish since former President Jimmy Carter was in office, independent market researcher.

While the party that controls the US House does not determine future activity in the stock market, it can influence it. Depending on how investors feel the president’s party is leading the economy, having a divided government can help or hinder the stock market. Ultimately, it comes down to whether individual companies and investors believe that alternatives to the government will be good for them.

taxes

Before the November election, President Joe Biden announced a possible windfall tax On the big oil companies who were profiting from the high fuel prices. Republicans are generally not in favor of tax increases for corporations and wealthy individuals, so the results of the midterm elections will determine whether Biden can impose new taxes. Individuals were also hopeful that the outcome of the November election could bring tax cuts and additional tax credits to the American people, which is even less likely if the House is controlled by Republicans.

How the Results of the 2022 Midterm Elections Affect Small Businesses

Whenever a midterm election occurs, the direction of federal policy changes as bipartisan control of Congress shifts. With an election and a divided government as a result, small business owners can expect to see the biggest impacts in the areas of inflation, the labor market and supply chain.

inflation

a third of voters voted Prior to the midterm elections he listed inflation, or the economic trend of rising prices, as his most important campaign concern. Small business owners are certainly among those concerned. Inflation and how it will affect profits during the next year. while many entrepreneurs informed of While revenue increased during the first three quarters of 2022, they also reported a decrease in profits. Declining profits are due to rising costs of goods, services and shipping. In addition to rising operating costs, entrepreneurs with variable interest rate loan Experiencing higher monthly payments.

Inflation Reduction Act (IRA) of 2022. Was signed into law by President Joe Biden on August 16, 2022. The legislation entered budget reconciliation by Senate Democrats, so it only needed a Senate majority vote to pass the law. This law was created as an effort to fight inflation, reduce the debt deficit, and cut health care costs for senior citizens. Since the passing of the law, Biden Qualities Slow price increases as a sign that the economic plan is working as intended. buoyed by the bipartisan results of the midterm elections, Biden said that “I will work with anyone, Democrat or Republican, on ideas to provide more breathing space to middle-class and working-class families.”

labour market

The midterm elections sparked much discussion about wages in the United States. whereas many politicians While both the Democratic and Republican parties believe that the wage is not high enough to combat the increased cost of living, many others disagree and feel that increasing the minimum wage would counteract efforts to fight inflation. Voters in Nebraska, Nevada, and Washington DC each saw ballot issues addressing wage increases in their states, with Nebraska and Washington DC winning. The consequences for Nevada are not completely settled, but are reported that 54% Votes indicating approval.

It can be difficult for small business owners to meet the demands of increased wages, often being forced to decide between layoffs and increasing wages. In 2022, many businesses still face labor shortages due to insufficient labor force in the economy, employees not accepting current market wages, and willingness to work remotely without losing wages or benefits.

supply chain issues

NFIB It was reported that 32% of small business owners said that supply chain issues had a significant impact on their business. Supply chain represents all the manufacturers, producers, suppliers, distributors, shippers and sellers. The current supply chain issues began as a result of labor shortages and plant closures as a result of COVID-19. Raising prices for small business owners soon became a way for suppliers to offset their rising costs.

Supply chain disruptions affect inflation as rising prices contribute to higher consumer price index (CPI) and overall higher inflation rates. The completion of mid-term elections and the formation of a divided government will affect political leaders supply chain issues Still unknown. are economists hopeful As rising costs slow down, supply chains will start operating at pre-pandemic speeds. However, even before the pandemic, there were labor shortages in some areas of the supply chain, including the trucking industry.

ground level

Former Vice President, Mike Pence probably said it best when he told ABC News, New York, “Elections are about the future.” As small business owners prepare for their future, there are steps they can take to protect their bottom lines Be prepared for a possible recession and facing supply chain and inflation issues.

If business cash flow is a concern due to increased operating expenses and decreased sales, consider a fixed interest small business loan. Biz2Creditlike an entrepreneur Danny Starr was able to secure.

How to get quick access to financing

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