Global economy hinges on whether AI investment can sustain growth momentum [U.S. Midterm Elections]

[Financial News] The Democratic Party’s control of Congress has made a slowdown in advanced AI investment and weaker economic growth among the immediate risks facing the global economy. The key question is whether U.S. AI investment can sustain growth momentum.
The Democratic Party’s sweep of Congress and state governments has enabled it to put the brakes on President Donald Trump’s policies that require congressional cooperation, including additional tax cuts, major fiscal spending and support for AI infrastructure, weakening his ability to advance his agenda.
The Democratic Party supports stronger oversight and investigations into AI safety; electricity and water consumption and environmental impacts resulting from data center expansion; monopolies and data privacy; and local public opinion and permitting. The risk of antitrust regulation for Big Tech companies has also come to the fore.
Concerns about tighter regulation of AI and data centers have grown particularly acute. In this connection, Brad Long, chief investment officer (CIO) at asset manager Wellsfire, said, “What the market needs to digest is not whether data centers will be built, but where they will be built, how long it will take, and how many regulatory procedures they will have to go through.” He said this “pushes capital spending and the realization of AI benefits further into the future.”
In this election, gubernatorial winners in 12 states, including Texas, called for a temporary halt (moratorium) on data center development. The Information and other IT publications reported on the 5th that 34 winners, including these officials, supported at least one regulation on data centers.

With investment in AI infrastructure driving growth in the U.S. and global economies, cuts in support and the introduction of regulations could curb investment and weigh on growth. According to the WTO, AI-related goods accounted for 47% of the increase in global merchandise trade in the first half of 2026. A direct impact on global technology supply chains is therefore inevitable. If sentiment toward AI investment weakens, global capital flowing into U.S. stock markets will slow and demand for the dollar will fall.
A slowdown in AI investment is bad news for South Korea and Taiwan, which produce semiconductors and AI equipment. After the election results came in, South Korean technology stocks, including Samsung Electronics and SK hynix, weakened. A weaker dollar, by contrast, is expected to bring a short-term improvement in exchange-rate conditions for exporters in emerging markets such as South Korea.
Experts assessed that the fallout from the “blue tsunami” would pose a policy risk that could spur a reassessment of the AI bubble, valuations and capital spending, rather than cause an immediate, large-scale shock to stock markets. The key variables for markets are expected to be debt-ceiling negotiations between the U.S. administration and Congress and the actual severity of data center regulations.
Meanwhile, as political gridlock continues under divided government, with the executive branch and Congress sharing national power, the Trump administration will find it more difficult to advance large-scale tax cuts and increased fiscal spending. A reduction in government fiscal stimulus would bring continued pressure to issue Treasury bonds and a decline in long-term interest rates, putting downward pressure on the dollar. 
With control of the Senate, which has the power to confirm Federal Reserve Board members and the chair, the Democratic Party can strengthen institutional safeguards for the Fed’s political independence. By limiting Trump’s involvement in Fed appointments, it can also strengthen congressional oversight of Chair Kevin Warsh’s monetary policy and financial regulation.
Mark Spindel of Pilotwave Holdings noted, “Institutional support from the Senate gives the Fed room to make decisions based on inflation and employment rather than political pressure.” 
Political gridlock in Washington creates an opportunity for the Democratic Party to strengthen checks on abrupt policy changes by the executive branch. Mark Hackett, Nationwide’s chief market strategist, said, “Political gridlock is a friend to markets,” explaining that the hurdle posed by Congress makes the policy environment more predictable for investors. 
Reflecting this, all three major New York stock indexes rose that day, while Treasury prices also climbed and yields fell. Some analysts say tighter AI regulation could also help curb excessive capital spending and borrowing burdens. 
Meanwhile, efforts to establish a regulatory framework for the future of cryptocurrency are also expected to become more complicated. The future of the Digital Asset Market Clarity Act of 2025 (CLARITY Act of 2025) has become even more uncertain. 
[email protected] Lee Seok-woo, international affairs correspondent Reporter