(Bloomberg) -- Jobs are now growing at a faster rate in Trump country than they are in the Democratic-leaning urban and coastal areas that long had been a main driver of the U.S. economic expansion.
During the first 21 months of Donald Trump’s presidency, the 2,622 mostly rural and exurban counties he won in the 2016 election added jobs at twice the pace they did during the previous two years under the Obama administration and at a slightly higher rate than the 490 counties that supported Democrat Hillary Clinton.
Red America overtook Blue America last May in 12-month employment growth for the first time in seven years, according to a Brookings Institution analysis of county-level economic data for Bloomberg News.
Although Blue America still leads in pay and economic output, the uptick in Trump country is crucial to the president’s re-election chances in 2020. The White House and many down-ballot Republicans are counting on the economy to compensate for the churn of controversies in the administration and the president’s low approval ratings.
Trump ran for office promising restore America’s greatness for “the forgotten people” in swaths of the U.S. hit hardest by the Great Recession.
The economy has helped him hold solidly to his political base, with the latest Gallup weekly tracking poll showing a 91 percent job approval rating among self-identified Republicans. His overall support also climbed to 46 percent from 39 percent at the beginning of March following the release of Special Counsel Robert Mueller’s report and a burst of positive economic news. Trump boasted of “blowout numbers” last Friday when the jobless rate hit a 50-year low of 3.6 percent.
The key for Trump is whether the trends can be sustained through the latter part of next year. The Brookings data doesn’t capture the recent cost of the president’s trade conflicts on industries, such as agriculture and export-driven manufacturing, that Trump-supporting areas depend on. Trade tensions with China worsened with the administration’s announcement Monday that the U.S. plans to raise tariffs on Chinese goods at the end of the week as negotiations falter.
Trump’s policies also haven’t closed the economic gap between Red America and Blue America. Democratic-leaning metropolitan areas powered by advanced manufacturing, financial services, information technology and internet companies are still pulling ahead of rural and exurban regions in pay and economic output.
Trump counties, with 45 percent of the nation’s population, account for only a third of national GDP. In September 2018, workers in Red America earned only 72 cents for every dollar in the weekly paychecks of their counterparts in Blue America.
“Red places are winning a little, and might feel that, but even so they remain on the wrong side of the economic divide,” said Mark Muro, a senior fellow at Brookings’s Metropolitan Policy Program.
That’s reflected in the rhetoric of the Democrats seeking to challenge Trump next year, who mostly are focusing on Trump’s behavior in office and on income inequality rather than the health of the overall economy.
“The economy is doing well,” Vermont Senator Bernie Sanders said on ABC’s “This Week” program, adding the he doesn’t credit the president. “The truth is that half of the people in this country today, despite the good economy, are living paycheck to paycheck.”
Muro said the changes are driven largely by a spread of growth to outlying areas typical of the late stages of an economic expansion and a bounce-back in energy production and manufacturing. Both industries are more concentrated in Republican-leaning rural and exurban areas.
“These remain modest shifts that don’t alter the fundamental structure of the economy with big, dense, blue places dominating high-value, high-productivity business activity,” Muro said.
A White House spokesman, Judd Deere, said the president deserves credit for the acceleration of job growth in Red America. “The combination of the Trump tax cuts, deregulatory actions, and fair and reciprocal trade have spurred an unprecedented period of economic growth that is benefiting all American workers across the country.”
There is plenty of good news for Trump in the data. Employment growth accelerated in Republican-voting counties to a 2.6 percent annual rate under Trump from 1.3 percent during Barack Obama’s final two years in office. Counties that supported Clinton added new jobs at a 2.2 annual rate, up only slightly from 1.9 percent.
The national jobs gap is also closing between whites without a college education -- who overwhelmingly supported Trump -- and college-educated Americans of all races -- who leaned heavily toward Clinton.
The jobless rate for whites with no college education during Obama’s last full month in office, December 2016, was 5.3 percent, unchanged from two years earlier. Under Trump, the unemployment rate for this group fell to 3 percent last month. The unemployment rate for workers of all races with at least a bachelor’s degree fell to 2.3 percent from 2.7 percent during Obama’s final two years. It was 1.9 percent in April.
Trump country has benefited from a sharp rebound in energy production after hard times in the industry at the end of the Obama administration. Global oil prices crashed from $107.26 per barrel in June 2014 to $26.21 per barrel in February 2016 as OPEC tried to stifle the U.S. fracking industry by pumping up production. Oil prices have since recovered, trading at more than $62 a barrel on Monday.
Mining and oil and gas extraction lost 247,000 jobs nationally during Obama’s final years and then added back 108,000 jobs during Trump’s first two years.
Manufacturing also reversed a mini-recession in the sector at the end of the Obama years as a slowdown in emerging markets overseas, a higher dollar disadvantaging exports and the sudden drop in equipment investment among energy producers simultaneously hit companies. Manufacturers across the nation only added 63,000 jobs during the last two years under Obama but added 454,000 in Trump’s first two years.
Trucking, another industry that disproportionately draws workers from rural and exurban areas, also has recently surged, adding more than 60,000 jobs during Trump’s first two years, compared with fewer than 9,000 in Obama’s last two years.
Economic growth rates are converging between Red and Blue America. Gross domestic product growth in counties that voted for Clinton slowed to a 2 percent rate in Trump’s first two years, down from 2.5 percent in the final Obama years; growth accelerated in Trump counties to a 1.9 percent rate from 1.6 percent under Obama.
Yet that growth hasn’t translated into pay gains. After inflation, average weekly earnings in Trump country fell at a 0.3 percent annual rate, down from 0.6 percent growth in Obama’s final years. Workers in Democratic-leaning areas did better, with pay rising at a 0.1 percent rate, down from 0.9 percent annual gains during Obama’s last two years. Still, national data point to stronger wage gains under Trump beyond 2018.
Red America jobs also are more vulnerable. Many are the types of physical and routine labor that is especially susceptible to automation and outsourcing abroad. And industries such as mining, oil and gas and construction that are adding jobs in Red counties would be among the first hit in a recession.
American agriculture, already hit by five years of decline in farm income, is being squeezed by Trump’s trade conflicts and the sector’s financial pain has worsened since the end of the local data, which runs through September 2018 for jobs and wages and through December 2018 for county-level economic growth.
The Brookings analysis used county-level employment and wage data from the U.S. Bureau of Labor Statistics and county-level gross domestic product estimates from Emsi, a private economic data service.
--With assistance from Catarina Saraiva and Jeremy Lin.
To contact the reporter on this story: Mike Dorning in Washington at firstname.lastname@example.org
To contact the editors responsible for this story: Joe Sobczyk at email@example.com, John Harney
For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.