Political gridlock is portrayed as an intentional strategy. By creating a temporary economic downturn via a shutdown, the administration creates fiscal and monetary space to inject massive stimulus leading into midterm elections, timing the recovery for political gain.

A political party might intentionally trigger a government shutdown not to win policy concessions, but to create a public narrative of a dysfunctional opposition. The true victory isn't legislative but reputational, aiming to sway voters in upcoming elections by making the ruling party look incompetent.

Morgan Stanley's analysts suggest the Trump administration intentionally enacted initially growth-negative policies, a strategy akin to a new CEO deliberately reporting poor results to lower expectations and clear the way for future positive growth.

The 2026 US economic forecast is not a simple slowdown but a tale of two halves. A weaker first half is expected due to lingering effects of tariffs and policy. A recovery is projected for the second half as spending remains resilient and the economy adjusts.

M&A activity is not constant; it ebbs and flows with the political climate. Administrations perceived as "anti-M&A" can significantly slow deals. Founders looking for a strategic acquisition should consider the current political cycle as a key factor in their exit timing.

A government can artificially inflate its jobs numbers and GDP by going on a hiring spree for bureaucratic roles. This growth is illusory, or "phantom," as it's funded by printing money and doesn't contribute to the productive economy. It creates positive short-term metrics but fosters long-term inefficiency.

The current expectation for legislative stalemate could be completely upended by a significant economic downturn. A recession would make fiscal stimulus more politically appealing to both parties, consistent with historical patterns, creating an environment for policy action that otherwise seems unlikely given the political landscape.

Morgan Stanley posits the U.S. economy experienced a 'rolling recession' where different sectors declined sequentially. This downturn's 'finishing move' was a contraction in government jobs, which paradoxically signaled the end of the broader recession and the beginning of a recovery cycle.

The traditional relationship where economic performance dictated political outcomes has flipped. Now, political priorities like tariff policies, reshoring, and populist movements are the primary drivers of economic trends, creating a more unpredictable environment for investors.