The results of the US midterms are unequivocally good news for anyone concerned about the US economy – and by extension, that of other developed countries including the UK.

That’s not an anti-Trump statement, or an anti-Republican one, or indeed a judgement about what a Congress controlled by the Democrats might or might not do. It’s simply an observation about what the American people have signalled by their votes as to what they want – and absolutely don’t want – from their political leaders. That is a huge lesson for politicians across the globe. 

It’s for the political commentators to pick apart the detail of the results and that will take several days, but from an economic perspective three things are already clear.

First, people hate inflation, and therefore will punish governments that bring in policies that increase it. In the US, the fuel price at the pumps has been a particular grind, and to a large extent what has happened is the result of the Middle East war. But you can extend that to other areas, for example levies on businesses that push up the prices, including tariffs on imported goods.

This will help build support for central banks which have to put up interest rates, the principal weapon they have to bear down on inflation. The Federal Reserve and the European Central Bank have already started pushing up their rates. The Bank of England is expected to make its first move upwards today, increasing the Bank rate to 4 per cent. It has no option but to do so, given that City forecasters now expect inflation to be well over 4 per cent early next year. The main question now is how many further interest rate rises are likely during 2027. 

This is important, because while increases in the cost of money do not cut the cost of oil or gas, they do curb the extent to which prices rise, as higher interest rates tend to make everyone a bit more cautious about what they spend their money on. It is these second-round effects that economists fear most, because once inflation become embedded it becomes even more painful to get it back under control.

If voters demand price stability, politicians have to deliver it, and that is good news for the business community worldwide and therefore, at one remove, the entire world economy.

Second, voters have signalled they hate chaos. It has been exhausting for all of us trying to follow the twists and turns of US tariff policy over the past two years. But think what it is like to run a business when your suppliers have to keep changing their prices, or you have to find new export markets because you have effectively been shut out of a key one. The communities in the US more directly affected by tariffs – those doing a lot of business with Canada, for example – have been particularly harsh in their reaction to the administration in these elections. 

Voters have signalled they hate chaos. It has been exhausting for all of us to follow the twists of US policy – think what it is like to run a business

Maybe it’s over-optimistic to hope that congressional opposition will lead to a more orderly approach to trade policy in the White House, but it is hard to see it making matters worse. 

Third, voters don’t like governments that waste their money, whether it is for fighting wars or building a ballroom. Donald Trump has pointed out that his name is not on the ballot sheets, but actually this vote was, in part at least, about the way taxes have been spent under his leadership.

This is not about the fiscal deficit as such, or the size of the US national debt – now more than 100 per cent of GDP, the highest level since 1964. From an economic perspective that is pretty near the top of things that has to be tackled. But Congress holds the purse-strings and now it will be dominated by the Democrats it will know that it can tap into voter concerns and run a much stronger line against waste. 

What this really about is better government: less capricious, more orderly, hopefully less ideological. Having a Congress that is dominated by the opposite party to the one in the White House is dubbed “gridlock”. But under gridlock, at least it is harder to do harm. If the US system can, for all its faults, start to deliver lower inflation, more orderly trade policies, and make a start at a more responsible fiscal policy, then that is good for the rest of us too. 

The markets thought so on Wednesday, marking up share prices on both sides of the Atlantic. My guess is that this judgement will turn out to be on the button. 

If this is right, then it could well be another solid year for global equities. The point is that in the next 12 months after the midterms in every year since 1950, the S&P500 share index has ended higher. That was true even in 1987, which took in the Black Monday crash of October 1986, though the index ended only 1 per cent up. On average the rise is around 15 per cent. The reason, vastly oversimplified, seems to be that the midterms generally cut the power of the president and markets like that. 

There were some wobbles in high-tech shares on Wednesday but overall the mood was upbeat. Anyone who follows the market will be aware that some enterprises associated with AI slumped, but that particular corner of the forest did look vulnerable already, and while there is little doubt that this is a very mature bull market, maybe there’s a bit of a way to go.

It’s a practical issue for UK savers. The FTSE100 companies, taken as a whole, are a bit of a safe haven for anyone who wants to be in global equities but does not want to be in the high-tech sector. The Footsie is dominated by banks, oil companies, consumer goods, miners and so on. Since it gets some 80 per cent of its revenue from outside the UK, either through exports or earnings of overseas subsidiaries, it is essentially a sterling-based bet on the global economy. 

If I am right, and the overwhelming probability is that shares on both sides of the Atlantic (and certainly here) will be higher a year from now, then this is of course good for savers. I think, too, it would be good news for the economy generally. I feel uncomfortable about the housing market on a two or three-year view, for I fear higher mortgages will keep it flat, but a reasonable rise in share prices will at least help top up pension pots. 

Beyond all this, I am really interested in the impact on politicians. It’s a tough job and it will get tougher if voters demand lower inflation and more fiscal responsibility. Do they understand that simply promising voters more services (ahem, more handouts) just won’t work any more, if what they want more is stable prices and less government waste? 

Let’s see how the US develops under gridlock, but meanwhile I feel it is a “phew” moment that we should recognise and applaud.