Don't worry. Total gridlock is Washington's natural state

The 2022 midterms signaled a sea change in Washington, breaking Democrats’ control over the House of Representatives. With the ushering in of the 118th Congress, which has been nothing short of rocky, one thing is clear — we are returning to a period of divided government.

Divided government is typically viewed as a good thing from a market perspective because it provides more certainty by removing the possibility of significant policy changes becoming law.

This means there is little chance of additional fiscal stimulus should the U.S. economy enter a recession since a Republican controlled House would be less likely to support more government spending after linking it with 40-year-high inflation.