Trump’s Economy Is Looking Better for Trump’s Voters

(Bloomberg Opinion) -- After booming in 2017 and 2018, employment growth in manufacturing all but stopped this year. And the numbers were even worse in the swing states crucial to President Donald Trump’s re-election hopes: Michigan, Pennsylvania and Wisconsin.

As it turns out, however, reports of the death of manufacturing jobs in the Rust Belt were slightly exaggerated. New data paint a rosier picture.

That’s not to say employment in these states is robust. The Bureau of Labor Statistics’ most timely and widely cited report is its monthly establishment survey. Led by huge job losses in Michigan, that survey indicates that growth in manufacturing employment in the three most closely contested states of the 2016 election is still negative. That’s a damning indictment of Trump’s campaign promise to bring jobs back to the Rust Belt by negotiating more favorable trade deals; instead, his trade war has dented economic growth overall and manufacturing in particular.

Trump won those three state by a combined total of about 80,000 votes. The establishment survey shows that those same three states have lost roughly 44,000 manufacturing jobs in 2019. At the current rate of decline, manufacturing job losses would easily exceed the president’s margin of victory.

More important, the rate of job loss in all three states equals or exceeds that of the regional recession of 2016. The reasons for Hillary Clinton’s surprise loss in 2016 are hotly debated, but a strong contender is the sharp slowdown — and, in Wisconsin and Pennsylvania, the outright decline — in manufacturing employment just before the election.

A substantial body of research shows that voters’ opinions on the economy, combined with their approval of the incumbent president, is a strong predictor of which party will win the popular vote. The Electoral College complicates the analysis somewhat. But narrowing the focus to manufacturing jobs in Michigan, Pennsylvania and Wisconsin has produced results that should alarm Trump.

The bright spot for the president comes from a separate report published by the BLS. The quarterly census of employment and wages, based on a direct count of unemployment insurance records, gives a far more accurate picture of job growth but comes with a significant lag. The most recent data, released last week, is from June 2019.

In contrast to the monthly survey, the quarterly census shows that manufacturing held on longer, and at least in June was still recording decent levels of growth. The trajectory is still negative — but when it comes to predicting voter behavior, what counts is the absolute growth rate, and that looks substantially better in the quarterly census.

The exception is Michigan, the state the president won by the smallest margin in 2016. The jobs data there is actually worse in the quarterly survey than in the monthly one, and worse this year than last. So Trump may find it hard to win in Michigan again.

Things look much better for him, however, in Pennsylvania and Wisconsin.

In Pennsylvania, the quarterly survey shows that manufacturing job growth was better in June than at any point in 2015 or 2016. It could still turn negative by Election Day, but the margin for error is larger than the monthly survey would indicate.

In Wisconsin, the picture looks even better, with employment growth overall equal to what it was at the end of 2018. The trajectory is still down but that may be due in part to an unexplained surge in employment at the beginning of 2019.

No matter the cause, there is no doubt that this more accurate quarterly data complicates the narrative in at least two of the most crucial states in 2016 — and for 2020. Trump’s trade war is still a clear headwind for manufacturing growth nationwide, and appears to be devastating Michigan. But in Wisconsin and Pennsylvania, the president may still be able to claim to some measure of success in keeping manufacturing jobs growing.

To contact the editor responsible for this story: Michael Newman at mnewman43@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Karl W. Smith, a former assistant professor of economics at the University of North Carolina and founder of the blog Modeled Behavior, is vice president for federal policy at the Tax Foundation.

©2019 Bloomberg L.P.