Here’s what the Democratic election rout could mean for the U.S. economy

The Democratic midterm election sweep could result in changes in economic policies related to trade, spending priorities and artificial intelligence. But the biggest forces shaping the economy aren’t going to change just because the party in power did.

Affordability pressures, heavy levels of government spending and growth that is dependent on the artificial-intelligence tailwind are likely to persist, economists say. And all of those factors pose risks to the economy.

“It’s in a very kind of fragile place, and I don’t know that it would take a lot to push the economy off the rails, and recession becomes a much greater risk,” said Mark Zandi, chief economist at Moody’s Analytics. “That isn’t the case at the moment, but I don’t think that’s gone away.”

Zandi said he had been worried before the election that the economy was under threat from inflation, an underwhelming labor market and geopolitical dangers, and remains concerned now.

Democrats romped to upset wins in not only House and Senate races but also governor and other state races. But economic and foreign policy is largely set in the executive branch, and President Donald Trump remains far apart from his Democratic adversaries, though he said Wednesday he anticipates working with them.

“I don’t expect any change in economic policy. The Iran war, the tariffs and trade policy, the heavy-handed immigration policy, all are done under executive order. They’re not legislatively driven,” Zandi said.

“The president thought they were good policies before the election. I don’t know why he’d change his mind after the election,” he added. “So I think they will continue to be policies that restrain growth and add to inflationary pressures and interest rates.”

Zandi sees the AI hyperscaler build-out as a key to economic growth, but also a source of potential peril.

“The risks are decidedly to the downside because the growth is so dependent on AI, and the AI growth effects are so dependent on the equity market, and the equity market is so dependent on the valuations,” he said. “It just feels like kind of a very fragile place, and the labor market is not well functioning.”

Local opposition to data centers was a fairly significant issue in the election, particularly for Democrats, according to CNBC polling, so that could be a further economic headwind, though the issue ranked below cost of living, corruption and several others.

Topline numbers such as gross domestic product, consumer spending and the unemployment rate tell the story of an economy growing briskly while consumers spend and most Americans who want jobs are at work. GDP accelerated at a 3.4% annualized pace in the third quarter while consumer spending grew 3.8%. The unemployment rate is at 4.2% while layoffs are around their lowest level since 1969.

However, rising prices have overshadowed those otherwise solid metrics.

The inflation rate in…