It probably comes as no surprise that politics can influence how we feel about the economy. But the size of that influence can be pretty remarkable.
According to August data from the University of Michigan, Republicans expected prices to rise 2.4% over the next 12 months, while Democrats expected inflation of 4.7%. Same economy. Same inflation data. Very different expectations.
Psychologists have a term for this: motivated reasoning — our tendency to interpret information in a way that supports what we already believe or want to believe. And when it comes to investing, that bias can matter. If we're convinced the economy is doing great — or terribly — because of who's in office, it can affect the decisions we make with our money.
With the 2026 midterm elections getting closer, we're likely to hear a lot more about what the economy and markets are supposedly telling us. It's worth remembering that our political views can sometimes influence how we interpret that information.
Markets don't vote, and a long-term investment strategy shouldn't need to either.
Source: University of Michigan, FundStratDirect, August 2026