If voters expect a new Democratic Congress to bring down prices, they will probably be disappointed.
House Democratic Leader Hakeem Jeffries (New York) promises the party’s “affordability agenda” will “drive down the high cost of living in every possible area.” But the main forces driving inflation are the Iran war’s impact on energy prices, fallout from the artificial intelligence boom and President Donald Trump’s trade policies. Even if they win control of the House and Senate on Nov. 3, there’s little chance Democrats could terminate the war and end Trump’s tariffs over his opposition — or would want to derail the AI boom.
“There is nothing the next Congress can do about the level of prices,” said Jason Furman, a top White House economic adviser to President Barack Obama. “They will remain very high.”
The midterm congressional balloting is shaping up to be the second consecutive election to turn on popular anger over the rising cost of everyday life. And the source of voters’ disquiet is no mystery: Consumer prices are up 30 percent since the start of the pandemic, three times as much as during the prior six years. While median earnings largely kept pace with inflation between 2022 and 2025, consumer prices over the past year rose more than twice as much as the typical American worker’s earnings, the Bureau of Labor Statistics (BLS) said this week.
Partial relief may lie ahead. By the fall of 2027, prices are expected to be rising at a slower 2.4 percent annual rate, closer to the Federal Reserve’s 2 percent price stability target, according to economists surveyed by Bloomberg.
But even if prices rise more slowly, they will be rising from already high levels. Consumers will feel sticker shock when they shell out for increasingly pricey household needs such as groceries, gas, underwear, newspapers, toys and trips to the dentist. The share of families paying $2,000 or more each month for child care has doubled since 2023, according to Bank of America.
“There’s no question in my mind that what’s driving folks nuts is not inflation, it’s the level of prices,” said Jared Bernstein, who chaired the White House Council of Economic Advisers under President Joe Biden. “What people want is their old prices back. Zero inflation at current price levels would not be comfortable for people.”
In reality, yesterday’s prices are gone for good. Only during deep economic recessions do prices actually fall. In 2008, for example, as the collapsing housing bubble crashed the economy, prices declined by 4 percent, according to the BLS.
Biden’s failure to corral inflation, which peaked at an annual rate of 9.1 percent in mid-2022, helped return Trump to the White House.
During his 2024 campaign, Trump promised to “quickly bring down prices.” But since January 2025, inflation has increased from an annual rate of 3 percent to 3.7 percent. Fully three-quarters of U.S. adults disapprove of Trump’s handling of inflation, according to a recent Washington Post-ABC News-Ipsos poll.
The steady rise in prices has eroded Republicans’ chances of retaining their congressional majority. On the cost of living, U.S. adults now prefer Democrats over Republicans by a margin of 38 percent to 24 percent, the poll found.
The economy’s strongest point — the AI revolution — is among the forces fueling inflation. Massive spending on data centers means enormous demand for computer chips, cooling systems, server racks and power gear, which is driving up the price of components needed to make consumer tech products as well.
Software prices rose more than 28 percent over the past year while the cost of computer peripherals increased by 10 percent.
The AI build-out shows few signs of easing. Goldman Sachs expects the leading hyperscalers, including Alphabet, Microsoft and Meta, to spend a combined $1.2 trillion in 2027, up from around $800 billion this year. And Congress is unlikely to deliberately cool off the sector that is propping up economic growth and the stock market.
“The AI pressures that are coming from a surge in investment are not related to the policy environment per se or the political environment. They’re related to the fact that any technological revolution goes through a first phase, which is highly capital intensive,” said Greg Daco, chief economist for EY-Parthenon, a consulting firm.
The president’s foreign, trade and fiscal policies have made inflation worse. The Treasury Department this month said the federal budget deficit for the fiscal year that ended in September was almost $2 trillion, or more than 6 percent of the nation’s entire annual output. With the economy near full employment, all that additional demand for goods and services contributes to rising prices.
Trump’s policies have been especially counterproductive on energy prices, which he promised to cut in half. Instead, thanks to the war with Iran, Americans are paying far more for gasoline, heating oil and electricity.
Diesel fuel prices, now at a national average of $6.31 per gallon, are up almost 75 percent over the past year, raising the cost of everything that moves by truck.
The president has adopted an unusual strategy for addressing voters’ price concerns. First, he denied that “affordability” was a real issue, calling it a Democratic “hoax.” More recently, he has falsely claimed that prices are falling.
Less than a week after the government announced that inflation had risen to an annual rate of 3.7 percent in September from 3.4 percent in August, Trump said in the Rose Garden: “Prices are coming way down, I’m seeing. Down, down, down. Big improvement from the previous administration.”
For some prices to fall, the president would need to change course. Oil prices, for example, depend upon what happens in the nearly eight-month conflict with Iran. Brent crude, the global oil benchmark, is selling for more than $117 per barrel, up from about $70 on the eve of the war.
This summer, oil prices fell back into the $70 range after the United States and Iran reached a tentative settlement. But that deal collapsed and prices have risen sharply amid recent reports that Trump may resume strikes on Iran after the election.
Buffers that kept prices from skyrocketing are just about exhausted. Global inventories are 509 million barrels lower than before the war, according to the International Energy Agency. Oil reserves held on land are at their lowest level since at least 2016.
Motorists feel the war’s effects each time they fill up, with the national cost of gas topping $4.29 a gallon on average, according to AAA. Airline fares have jumped by 22 percent over the past year. And home heating oil costs have emerged as a major campaign issue in northern states such as Maine.
“Prices are headed higher,” said Robert McNally, president of Rapidan Energy Group, a policy analysis firm in D.C. “We think this crisis is going to get worse before it gets better.”
Energy is an example of the difference between policymakers’ focus on reducing the inflation rate to an annual 2 percent target and voters’ thirst for lower prices. While it is unlikely that oil prices will repeat this year’s historic jump, they are likely to remain higher for longer than analysts once expected, keeping pressure on consumer prices.
Traders expect oil prices to remain elevated for longer than they did this summer. The price of Brent crude delivered in December 2027 is close to $90, up from around $70 at the end of June.
Global trade also is no longer the disinflationary force that it was for most of the two decades before the pandemic. The cost of imported goods in September rose more than 8 percent from one year ago, the fastest increase in more than four years, according to the BLS. Excluding energy costs, import costs were 6 percent higher.
Those figures exclude tariffs, which were responsible for 2.9 percentage points of goods inflation at their February peak, according to a study by economists with the Federal Reserve Bank of New York. Without tariffs, goods prices would have fallen for most of the past 18 months, the study found.
Additional import taxes are in the works. The administration has been investigating China and 15 other trading partners that it accused of deliberately maintaining excess factory capacity to flood global markets with low-cost goods at the expense of U.S. manufacturers.
As Democrats look forward to controlling one or both sides of Capitol Hill next year, Jeffries has spoken of a Democratic Congress repealing the tariffs and clawing back tariff powers from the president.
But trade analysts doubt that will happen. Many of the powers that Trump uses to impose tariffs do not require congressional approval.
“Democratic midterm victories will not change the direction of the Trump administration’s trade policy,” analysts at Capstone, a Washington consultancy, wrote Tuesday in a client note.
So what is the answer to voters’ angst? Time.
“People eventually acclimate to the price level,” Bernstein said.
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