"If Hillary gets elected president and the Senate stays Republican, that changes the whole dynamic of her presidency. If the Senate goes Democratic, that also has a huge effect on where the country goes," He said in an interview with CNBC's "Power Lunch."
To take control of the Senate if Clinton wins, Democrats need a net gain of four seats for a total of 50. In that case, Clinton's running mate Tim Kaine would cast the tie-breaking vote. If Trump is the victor, the Democrats need a net gain of five seats.
There are 34 Senate seats up for re-election this year, with 10 currently held by Democrats and 24 held by Republicans.
The stock market appears to be betting on a Clinton win with continued gridlock in Washington, D.C., which would mean a moderation of her policies.
Gregg, who is also the former governor of New Hampshire, is expecting a "gridlock-type situation." Therefore, the market will probably react positively, he added.
Gregg has said he will not vote for either Trump or Clinton.
Meanwhile, a handful of key swing states could determine the outcome of the presidential election.
Jared Bernstein, former economic advisor to Vice President Joe Biden, believes the best early indicators will be the outcomes in North Carolina, Florida, Pennsylvania and Ohio.
If Clinton wins two or three of those states, it will be a "very, very tough path for Donald Trump" and vice versa, "it'll be a long night," he told "Power Lunch."
He believes one of the key things is whether voters believe Hillary Clinton's narrative on the economy — that there are many positive economic indicators, but there are parts of the country the recovery hasn't reached — or Donald Trump's belief that the economy is a disaster.
Gregg thinks it comes down to American's confidence in the future.
"There's a real concern amongst the American people today about the direction of the country. The vast majority of Americans don't think we're headed in the right direction," he said. "That's why Donald Trump's doing well, and it's one of the factors that is going to play out, I think, very significantly in this vote."
— CNBC's John Schoen and Stefanie Kratter contributed to this report.