Citigroup Research predicts that after the US midterm elections on November 3 (vote counting will begin on November 4 Beijing time), the House of Representatives may shift from Republican to Democratic control, while the Senate's fate remains uncertain. Regardless of whether the Democrats control only the House or both houses, the scope for large-scale fiscal policy adjustments over the next two years is likely limited, with the federal deficit expected to remain at approximately 6% of GDP. In the short term, Congress must pass a formal appropriations bill or extend temporary funding by December 11 to avoid another government shutdown; the debt ceiling issue may resurface as a focal point in the spring and summer of 2027. Citigroup believes that if the two parties cannot reach a compromise, fiscal negotiations may drag on until the deadline, potentially reaching a compromise through extending certain Medicare and food assistance spending arrangements. Overall, fiscal policy in 2027 is expected to be largely neutral, with the stimulus from new fiscal spending likely weaker compared to the tax cuts of the Big and Beautiful Act in early 2026.
