How could Tuesday’s election impact your wallet?

ST. LOUIS, Mo. (First Alert 4) - The election’s blue wave could mean a sea of change for the economy, as voters showed out for Democrats promising to lower the cost of living.

But what could those efforts look like, and what impact could they have on your wallet?

First Alert 4 talked with Washington University economist Dr. John Horn.

It’s been a wild ride in the stock market, rising and falling, since Tuesday’s election. But economists say the S&P 500 has gained an average of 13.7% over the first year after every midterm election since 1980 because businesses like a divided government.

“When you kind of know that anything that gets proposed by one party in Congress could get vetoed by the administration,” Horn explained, “you pretty much know there aren’t going to make radical changes, and that makes it easier to make investment decisions.”

As many Democrats have promised to end the war in Iran, Horn says any economic impact will depend on how long it could take and which country ends up controlling the Straight of Hormuz and the flow of oil.

“I think it’s not as simple as the war ending, but also how the war ends that’s going to influence how much gas prices come down and how quickly,” said Horn.

If gas prices come down, that could reduce the cost of transporting food and goods next year.

What if there are efforts to lower tariffs?

“Most of these tariffs have been put in place by executive order. So just because Congress passes a law, it’s going to be up to the President and the administration to decide what they’re going to do. And that could lead to more legal fights and more judicial cases,” he said.

Horn says a big question is whether the current Congress will finalize the budget or kick the task up to the new Congress, which could take up much of their time. Current government funding ends December 11th.

Horn says any changes to interest rates could take a while, too.

“It’s going to be hard for the Federal Reserve to lower interest rates if inflation continues to be elevated,” he said.

“I think the fastest way interest rates could come back down is if there is an expectation inflation will be under control,” he added.

And while gas and food prices tend to go up and down depending on market conditions, inflation on other consumer goods doesn’t tend to be reversed. But the rate at which prices are rising can be slowed down.

“Eventually, wages will start to pick up and start to compensate, so consumers will feel like their wages and income will allow them to buy more stuff,” said Horn.

Horn adds that he believes mortgage rates could go down if there are any policies to increase the housing supply to help meet demand and lower the price of housing.

In summary, he says consumers can likely expect some economic changes, but they won’t happen overnight.