Essential reporting in volatile times.

Click here to stay informed and subscribe to Herald-Dispatch.

Click #isupportlocal for more information on supporting our local journalists.


Learn more about HD Media

This recession has featured extreme differences in pain levels between companies and industries based on their exposure to the pandemic. States are no different. Those reliant on travel and services are basically in depressions. Those more exposed to manufacturing are relatively better off, which may be good news for President Donald Trump’s re-election hopes. State employment data from July make these trends clear. It’s why New York City and Los Angeles have unemployment rates close to 20%. But Rust Belt states that were key to the 2016 election, such as Michigan, Ohio and Wisconsin, seem to be suffering something more like a typical recession. With the national unemployment rate at 10.2%, things aren’t going particularly well for any state or region. But Midwestern states are relatively less exposed to the industries that have gotten hurt the worst. Unemployment in Michigan, Ohio and Wisconsin is on average 2% lower than the national unemployment rate. We’ve never seen anything like this before in 45 years of state employment data, particularly during recessions. There are a couple ways to think about this. The first is that if we get a vaccine tomorrow and everyone can go back to their pre-pandemic routines quickly, then the Midwestern states that have done relatively better in this crisis may underperform their coastal peers. The post-vaccine recovery, at least initially, will likely be more robust in New York and San Francisco than Michigan. But assuming that doesn’t happen over at least the next few months, there are reasons to believe these Rust Belt states can grow even as life remains disrupted. Pandemic-related inventory shortages have led to price spikes throughout the economy, suggesting there’s room for production to increase. Wednesday’s durable goods report points to a V-shaped recovery in manufacturing. This should benefit workers in Midwestern factories and supply chains. Another perhaps surprising source of strength for the Midwest is the housing market. Construction and new home sales tend to be a more important part of the economy in the South and West, where demographics are more favorable. But this week’s new home sales report showed housing is booming in the Midwest as well. On a seasonally adjusted basis, Midwestern new home sales in July were the highest in 13 years, and more than triple their level during the worst months after the 2008 financial crisis. If the presidential race tightens over the final two months of the campaign, it might be due in part to the economies of key Midwestern states being somewhat more resilient than those of coastal, more Democratic locales. Unemployment rates of about 8% make it tough for any president running for reelection. As my colleague Brooke Sutherland has written, many manufacturers are cutting jobs even as they report relatively strong profits. But with manufacturing and housing improving, the lagged impact of fiscal relief passed by Congress this spring still being felt, and much of the labor market burden being felt by younger workers who may be less likely to vote, it’s possible the kinds of older voters without strong attachment to either party who voted for President Trump in 2016 might be economically insulated enough to stick with the president. There are still two months for voters to make up their minds, and in a year like this one perhaps late-breaking economic conditions will be more impactful than in most election years. For that reason it will be important to track economic conditions not only nationally but also in the states most likely to determine the outcome of the election. Polling averages currently give Democratic nominee Joe Biden a lead of about 9% nationally and slightly less in Midwestern battleground states, putting him in better shape than Hillary Clinton was at this point in 2016. But if the trajectory of the coronavirus improves somewhat over the next couple of months, manufacturing and housing continue their upward trajectories, and Congress passes another fiscal relief package, that may be enough to make the election more competitive than it currently looks.

This recession has featured extreme differences in pain levels between companies and industries based on their exposure to the pandemic. States are no different. Those reliant on travel and services are basically in depressions. Those more exposed to manufacturing are relatively better off, which may be good news for President Donald Trump’s re-election hopes.

State employment data from July make these trends clear. It’s why New York City and Los Angeles have unemployment rates close to 20%. But Rust Belt states that were key to the 2016 election, such as Michigan, Ohio and Wisconsin, seem to be suffering something more like a typical recession.

With the national unemployment rate at 10.2%, things aren’t going particularly well for any state or region. But Midwestern states are relatively less exposed to the industries that have gotten hurt the worst.

Unemployment in Michigan, Ohio and Wisconsin is on average 2% lower than the national unemployment rate. We’ve never seen anything like this before in 45 years of state employment data, particularly during recessions.

There are a couple ways to think about this. The first is that if we get a vaccine tomorrow and everyone can go back to their pre-pandemic routines quickly, then the Midwestern states that have done relatively better in this crisis may underperform their coastal peers. The post-vaccine recovery, at least initially, will likely be more robust in New York and San Francisco than Michigan.

But assuming that doesn’t happen over at least the next few months, there are reasons to believe these Rust Belt states can grow even as life remains disrupted. Pandemic-related inventory shortages have led to price spikes throughout the economy, suggesting there’s room for production to increase. Wednesday’s durable goods report points to a V-shaped recovery in manufacturing. This should benefit workers in Midwestern factories and supply chains.

Another perhaps surprising source of strength for the Midwest is the housing market. Construction and new home sales tend to be a more important part of the economy in the South and West, where demographics are more favorable. But this week’s new home sales report showed housing is booming in the Midwest as well. On a seasonally adjusted basis, Midwestern new home sales in July were the highest in 13 years, and more than triple their level during the worst months after the 2008 financial crisis.

If the presidential race tightens over the final two months of the campaign, it might be due in part to the economies of key Midwestern states being somewhat more resilient than those of coastal, more Democratic locales.

Unemployment rates of about 8% make it tough for any president running for reelection. As my colleague Brooke Sutherland has written, many manufacturers are cutting jobs even as they report relatively strong profits. But with manufacturing and housing improving, the lagged impact of fiscal relief passed by Congress this spring still being felt, and much of the labor market burden being felt by younger workers who may be less likely to vote, it’s possible the kinds of older voters without strong attachment to either party who voted for President Trump in 2016 might be economically insulated enough to stick with the president.

There are still two months for voters to make up their minds, and in a year like this one perhaps late-breaking economic conditions will be more impactful than in most election years. For that reason it will be important to track economic conditions not only nationally but also in the states most likely to determine the outcome of the election.

Polling averages currently give Democratic nominee Joe Biden a lead of about 9% nationally and slightly less in Midwestern battleground states, putting him in better shape than Hillary Clinton was at this point in 2016. But if the trajectory of the coronavirus improves somewhat over the next couple of months, manufacturing and housing continue their upward trajectories, and Congress passes another fiscal relief package, that may be enough to make the election more competitive than it currently looks.

Conor Sen is a Bloomberg Opinion columnist.

Conor Sen is a Bloomberg Opinion columnist.

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.