U.S. Economy

Good Times Come to Trump-Leaning States

Places that favored Clinton have had rising unemployment. Some red states have reached record-low levels.

Alabama's unemployment rate fell -- as 32,000 people left the workforce.

Photographer: Luke Sharrett/Bloomberg

One of the biggest visible impacts after last November's presidential election was a surge in economic confidence among Republicans, and somewhat less of a drop among Democrats. Perhaps not surprising given how much we all view the world through partisan-tinted glasses. But it raised a larger question: In the months following the election, would the "hard" economic data confirm what these "soft" measures of sentiment and confidence were showing? Nearly a year after the election, the answer appears to be yes.

The really interesting numbers come from state employment data. The two states with the biggest drops in their unemployment rates since November are Alabama, whose unemployment rate has fallen to 3.8 percent from 6.2 percent, and Tennessee, whose rate has fallen to 3.0 percent from 5.1 percent. Trump won those states by 27.7 percent and 26.0 percent, respectively. Other Trump-leaning states like Tennessee and Idaho are now at record-low levels of unemployment.

By comparison, places with a strong Clinton lean have not seen a similar improvement. The unemployment rate in Washington, DC, has increased to 6.5 percent from 5.8 percent. Massachusetts's has increased to 3.9 percent from 3.1 percent, New York's rate is unchanged from 4.9 percent, and California's has fallen just 0.2 percentage points, to 5.1 percent from 5.3 percent.

Seven of the 10 most Trump-leaning states have seen their unemployment rates fall by more than the national average. Only three of the 10 most Clinton-leaning states can report the same, including none of the top seven. Outside of New Mexico, Trump-friendly Ohio now has the highest unemployment rate in the continental U.S. 1

The hard part is figuring out what to attribute this to. We've seen no major movement on the national policy front -- there's yet to be any movement from Congress on health care, taxes or fiscal policy. What we're left with is evidence that the psychological impact of the election has shifted labor markets at the state level. Perhaps some employers in Republican-leaning parts of the country were holding back on hiring during the Obama years in large part due to their political leanings, in the same way that perhaps some employers in Democratic-leaning parts have grown cautious in the new political environment.

The nature of the fall in the unemployment rate in Alabama and Tennessee raises particular questions. In a strong labor market driven by rising confidence, one might expect to see a combination of more hiring on the part of employers and rising labor-force participation. But what we've seen in both states is that the pace of hiring since the election has been somewhat steady, while the size of the labor force has fallen. Alabama's labor force has fallen by 32,000 people since November, and Tennessee's labor force growth rate has fallen sharply since the election. But those two states appear to be aberrations.

The next big question is whether policy makers in Washington can come up with positive-sum ideas that everyone can buy into, or if we're destined to endure an economic confidence swap every time there's a partisan change in the White House.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
  1. The states Trump flipped in the Rust Belt that have gotten so much attention -- Wisconsin, Michigan, Pennsylvania and Ohio -- don't give a conclusive message. While Wisconsin, Michigan and Pennsylvania have seen their unemployment rates fall a little faster than the national rate, Ohio's unemployment rate has actually increased, to 5.3 percent from 5.0 percent.

To contact the author of this story:
Conor Sen at csen9@bloomberg.net

To contact the editor responsible for this story:
Philip Gray at philipgray@bloomberg.net

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