How important was the economy to the election? According to exit polling data, it was the top issue, polling higher than Iraq, Terrorism, or Corruption.

On the day before the election, we noted that It was Still the Economy, Stupid. In an article Sunday, the NYTimes took a similar approach in Maybe You Did Vote Your Pocketbook:

"To paraphrase a Clinton-era mantra, it really might have been the
economy, stupid. More than 80 percent of voters in an exit poll,
conducted for The Associated Press and television networks by Edison
Media Research/Mitofsky International, said the economy was a very
important or extremely important issue. That percentage was the highest
for any issue, including Iraq and terrorism.

Furthermore, electoral data and government economic statistics
suggest that the economy played a role in the outcome: if your state
wasn’t among the best economic performers in the last six years, judged
by the growth of personal income, it appears that you were three times
as likely to vote to throw the bums out."

In the past, we have discussed the Middle Class Squeeze, and the increasing chasm between the top 10% of earners and everyone else.

It turns out that this schism (to a lesser degree) is also reflected geographically. This lumpy economic recovery is being felt differently in different parts of the Nation. Personal Income gains in particular can have varied dramatically from State to State. Some parts of the country have enjoyed decent wage gains, while many others have not.

What was the the political impact to this uneven growth this election cycle? The faster your
state’s personal income rose over the past 6 years, the more likely you
were to elect incumbent GOP representatives:

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click for larger chart

Vote_pocketbook

graphic courtesy of NYTimes
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Source:
Maybe You Did Vote Your Pocketbook
DANIEL ALTMAN
NYTimes, November 12, 2006
http://www.nytimes.com/2006/11/12/business/yourmoney/12view.html

Category: Economy, Employment, Politics

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

18 Responses to “The Bifurcated Economy”

  1. Michael C. says:

    PPI…yowsers…disinflation?!

    BR is gonna have a field day with this one.

  2. Rusty says:

    Looking at the chart, it seems you’ve got it backward – those states elected Republicans in 2000, and since have enjoyed more wage growth.

  3. tjofpa says:

    Jap GDP report this morning another indication of impending worldwide Liquidity Trap. All Business spending and inventory growth, not enough consumption.

    (They also rejiggered their inflation calcs back in Aug.)

  4. Rusty –

    Thats the pooint — if they enjoyed more wage growth, they re-elected the prior GOP incumbents.

    Those with below average income growth did not re-elect ruling party incumbents . . .

    (How is that backwards?)

  5. James Mitchell says:

    I think that chart looked fishy (not to mention the questionable causality) so I ran a regression analysis. (Using BEA data and a record of the 107th congress on Wikipedia). The adjusted R2 is -0.008, and the t-stat for percent Republican is 0.767 (with a P-value of 0.44). Bottom line- I don’t see much of a connection.

    (.xls data available on request)

    Minor detail: NY Times shows Massachusetts as being 0% Republican. That’s not accurate, since Joe Moakley (R) of Boston was elected but died in office on May 28, 2001. (source: Wikipedia)

  6. kharris says:

    Doesn’t migration come into play here? Nevada, Arizona and Wyoming have had a sizable influx of the rich and the right, have they not? Flight from Orange County? There may been to be a distrinction between doing better individually and piling up people who had been doing better all along, and decided to take their doing better to a more congenial location.

  7. Bob says:

    Hi Barry – Excellent stuff.
    However, I wanted to add a correction – as a resident of Taxachusetts, I can report that Joe Moakley was not a Republican – he was as Democratic as they come. The Wikipedia entry must be incorrect.

  8. wunsacon says:

    Is that graphic adjusted for inflation? My recollection is that real wage growth has been flat and hasn’t added up to the 15% (Michigan) to 50% (Nevada) spread over 6 years represented in the chart .

  9. Bob A says:

    What’s truly amazing is the number of people who can be flimflammed into believing a massive tax cut for the top 1% of taxpayers translates into a tax cut for themselves and/or makes them better off. I guess your life is better if you get to see rich people drive around in Range Rovers they bought with Republican tax breaks right?

  10. km4 says:

    Yes agree the economic ignorance in this country is astonishing.

    > I guess your life is better if you get to see rich people drive around in Range Rovers they bought with Republican tax breaks right?

    Perception and projection of the wannabee crowd, the majority of which are deluded

  11. tt says:

    This is a great chart..

    BR’s been the only person who has discussed this subject and it’s ramifications for the election , and for the country’s feeling of malaise ( where’s Carter when you need a good , depressing speech ?!?!? )……..and has nailed it

  12. Rusty says:

    Barry,

    Maybe I took your comments wrong. I was mainly operating on the idea that more GOP house members were voted out this go-round than Dem house members – thus, on the face of it, it would appear that voter dissatisfaction was higher in GOP states, which runs contrary to the reality that wages were up more in those states than others. So the 30,000 foot view is that the economy should have been a plus for those GOP losses.

  13. Paul Jones says:

    To kharris: another factor may be the raw materials sector explosion recently. Manufacturing, the basis for a strong middle class and military superiority, has taken a beating.

  14. darkroth says:

    Along the lines of the correlation/causality discussion before, consider the statement along the y-axis of the chart: “From the end of 2000 to the middle of this year, personal income generally rose faster in states that elected a high proportion of Republicans to the house in 2000″. That suggests a possible causal relationship between high proportion of Republicans elected in 2000 and the income rise after that event, i.e. 2001-mid2006, as suggested by Rusty’s first comment.

    The chart doesn’t indicate the proportion of Republicans re-elected in 2006, in which case the suggested causation statement would be as noted by Barry: “The faster your state’s personal income rose over the past 6 years, the more likely you were to elect incumbent GOP representatives.”

    Again, note that all of this could be purely incidental correlation; though I don’t think too many people hold that view.

  15. RW says:

    Rusty: While the cause(s) may be debatable the effect, wherever it came from, was stronger than you suggest; i.e., not a single Dem incumbent was voted out, not one.

    BR was not alone in discussing the growing income disparity in the US (e.g., http://tinyurl.com/yfdrvh) but it continues to surprise how little attention corporate media (AKA MSM) tended to pay to the issue, much less attempting an analysis of its potential political impact.

  16. kharris says:

    PJ,

    Yep, that’s true. There is the question of how much income raw material extraction generates locally, but anecdotal reports have employment in those industries in those states humming along.

  17. vfsv says:

    The SIA sales results clearly show bifurcation. USA IC sales are way down since 2000 (-30%) but Europe (-7%) and Japan (-0.4%) are near 2000-peak sales levels.

    For the actual numbers & more facts, see: http://www.viewfromsiliconvalley.com/id278.html

    This is a by-product of US companies preserving upper management while off-shoring mid-tier & line jobs.

    This cannot be good news for the average technology employee. As this option to mange costs is exhausted, it won’t be good news for the average technology investor either.

    To read more Silicon Valley-specific news, please visit:
    http://www.viewfromsiliconvalley.com

    Thanks!

  18. ac says:

    If you take away the Bush era expansion of government, the unemployment rate would register around 5.7% on the year so far(5.9% last year). The inability of the private sector to create enough jobs has been over and over again documented. vfsv just gave us another example. These government jobs being created are largely either part time/seasonal low pay jobs or speciality jobs that are only a segment of the population can do. A signifigent segment of the population per ratio unemployed gets left off the card.

    We see why the Republicans won’t ‘cut’ back the level of government because if they do, things get worse. They have borrowed and spent to give illusion of a 90′s redux. But it is far from the truth and quite unhealthy.