Progressive Michigan Win Makes General Election Challenging, Morgan Stanley’s Salvatore Says

Summary

Morgan Stanley's Ariana Salvatore discusses the US economic backdrop ahead of the midterm elections, noting disinflation, robust consumption, and a benign macro picture. She analyzes the political impact of a progressive win in Michigan's Democratic Senate primary, which makes it harder for Democrats to flip the seat, and highlights the importance of similar races in North Carolina and Georgia. The conversation also draws parallels to the 2022 midterms and the role of turnout dynamics.

• Disinflation expected to continue through year-end.
• US consumption revised up to around 2%, with low consumer sentiment not translating to lower spending.
• Labor market remains sideways, contributing to a benign macro backdrop.
• Polling and prediction markets currently signal a more favorable environment for Democrats in November.
• Progressive candidate win in Michigan Democratic primary makes it challenging for Democrats to flip the seat.
• Key Senate races in Michigan, North Carolina, and Georgia will be pivotal.
• 2022 midterm analogy cited, including the impact of Roe v Wade decision on turnout.