The midterms and your money: What a divided government means for the U.S. economy

This year's economic woes — the highest inflation in 40 years, a bear market and lagging wages —played into voters' choices as they headed to the polls on Tuesday. The result is likely to be a divided government, which could have an impact on everything from the stock market to the federal government's ability to respond in the event of a recession next year, experts say.

While the midterm election results are still being sorted out as of Wednesday afternoon amid several close races, the balance of power in Washington, D.C., looks likely to be split between Democrats and Republicans, with the GOP projected to gain control of the House. Control of the Senate remains a toss-up as each party has each secured 48 seats as of Wednesday morning, with four races yet to be called, CBS News projects.

A divided government, with Republicans in control of at least one chamber of Congress and a Democrat in the White House, would likely pose challenges over the next two years. Among them is the risk of drama over the debt ceiling, with Republicans signaling they plan to use their House control as a negotiation tool with President Biden to rein in government spending. And Mr. Biden may have more difficulty passing major legislation moving forward.