Consumer Confidence and the U.S. Midterms

The U.S. consumer market exhibits a growing divergence as lower-income households face increasing pressure from high gas prices and selective spending habits, while higher-income segments remain relatively resilient. Trade policy offers a potential tailwind, with headline tariff rates expected to stabilize or slightly decline between 8% and 9% as temporary authorities are replaced. Although a recent memorandum of understanding between the U.S. and Iran has eased oil market concerns, significant execution risks remain regarding the reopening of the Strait of Hormuz and potential congressional pushback during fall defense appropriations. Simultaneously, the focus on artificial intelligence has shifted from internal corporate efficiencies to the broader macro impact of industrial build-outs. This expansion supports employment and consumption but faces emerging political scrutiny, as local opposition to data center construction begins to elevate into a national bipartisan policy concern ahead of the 2026 midterm elections.