Both political parties face pressure to increase market intervention following the 2026 midterms, according to a new scenario framework from FGS Global. The advisory firm, which released the analysis to Axios, argues that economic frustration will drive a shift in congressional behavior, ending the period where Congress ceded significant power to the executive branch in a Trump-dominated Washington.
The report, titled "Alternative Futures: Beyond November," serves as a sequel to previous FGS work that informed "Behind the Curtain" columns by Jim VandeHei and the author. FGS positions the document as a tool for business leaders to navigate the strategic battles ahead, focusing on how power will be exercised and how both parties will evolve. The firm states that the midterms will mark the start, not the end, of a 27-month period of unusually high strategic uncertainty.
Michael Feldman, an FGS partner and co-chairman for North America, outlined the distinct directions of intervention for each party. For Republicans, he said, intervention may involve tariffs, industrial policy, and domestic manufacturing incentives aimed at strengthening U.S. production capacity, economic security, and competitiveness. For Democrats, he noted that intervention could include affordability policies, labor protections, and antitrust enforcement designed to reduce costs, curb concentrated corporate power, and address inequality.
Feldman emphasized that while public attention focuses on congressional control, the more critical question for business is the trajectory of policy following the elections. He described the midterms as the beginning of a period of significant political and policy uncertainty rather than its conclusion.
The FGS analysis identifies three structural shifts that will shape the post-midterm operating environment for businesses of all sizes. First, voter dissatisfaction is expected to push both parties away from established policy orthodoxies toward more populist and interventionist approaches. Second, technological disruption is becoming a political variable rather than a sector-specific issue, with AI and related technologies reshaping the political agenda as profoundly as traditional partisan conflict. Third, generational turnover will weaken established political assumptions; the next generation of leaders may inherit existing parties without inheriting their relationships or governing styles.
The report concludes that divided government does not necessarily translate to lower legislative risk. Instead, FGS writes that policy and political conflict may move in less predictable ways under such conditions.