Even with a new president and political party soon in charge of the White House, the nation’s economic standoff continues. Notwithstanding President-elect Joe Biden’s solid popular vote victory, last week’s election failed to deliver the kind of transformative reorientation of the nation’s political-economic map that Democrats (and some Republicans) had hoped for. The data confirms that the election sharpened the striking geographic divide between red and blue America, instead of dispelling it.
Most notably, the stark economic rift that Brookings Metro documented after Donald Trump’s shocking 2016 victory has grown even wider. In 2016, we wrote that the 2,584 counties that Trump won generated just 36% of the country’s economic output, whereas the 472 counties Hillary Clinton carried equated to almost two-thirds of the nation’s aggregate economy.
A similar analysis for last week’s election shows these trends continuing, albeit with a different political outcome. This time, Biden’s winning base in 477 counties encompasses fully 70% of America’s economic activity, while Trump’s losing base of 2,497 counties represents just 29% of the economy. (Votes are still outstanding in 110 mostly low-output counties, and this piece will be updated as new data is reported.)
Table 1. Candidates’ counties won and share of GDP in 2016 and 2020
Year
Candidate
Counties won
Total votes
Aggregate share of US GDP
2016
Hillary Clinton
472
65,853,625
64%
Donald Trump
2,584
62,985,106
36%
2020
Joe Biden
477
75,602,458
70%
Donald Trump
2,497
71,216,709
29%
Note: 2020 figures reflect unofficial results from 96% of counties
Source: Brookings analysis of data from the Bureau of Economic Analysis, Dave Leip’s Atlas of U.S. Presidential Elections, The New York Times, and Moody’s Analytics
So, while the election’s winner may have changed, the nation’s economic geography remains rigidly divided. Biden captured virtually all of the counties with the biggest economies in the country (depicted by the largest blue tiles in the nearby graphic), including flipping the few that Clinton did not win in 2016.
By contrast, Trump won thousands of counties in small-town and rural communities with correspondingly tiny economies (depicted by the red tiles). Biden’s counties tended to be far more diverse, educated, and white-collar professional, with their aggregate nonwhite and college-educated shares of the economy running to 35% and 36%, respectively, compared to 16% and 25% in counties that voted for Trump.
In short, 2020’s map continues to reflect a striking split between the large, dense, metropolitan counties that voted Democratic and the mostly exurban, small-town, or rural counties that voted Republican. Blue and red America reflect two very different economies: one oriented to diverse, often college-educated workers in professional and digital services occupations, and the other whiter, less-educated, and more dependent on “traditional” industries.
With that said, it would be wrong to describe this as a completely static map. While the metropolitan/ nonmetropolitan dichotomy remained starkly persistent, 2020 election returns produced nontrivial movement, as Biden added modestly to the Democrats’ metropolitan base and significantly to its vote base. Most notably, Biden flipped seven of the nation’s 100 highest-output counties, strengthening the link between these core economic hubs and the Democratic Party. More specifically, Biden flipped half of the 10 most economically significant counties Trump won in 2016, including Phoenix’s Maricopa County; Dallas-Fort Worth’s Tarrant County; Jacksonville, Fla.’s Duval County; Morris County in New Jersey; and Tampa-St. Petersburg, Fla.’s Pinellas County.
Altogether, those losses shaved about 3 percentage points’ worth of GDP off the economic base of Trump counties. That reduced the share of the nation’s GDP produced by Republican-voting counties to a new low in recent times.
Why does this matter? This economic rift that persists in dividing the nation is a problem because it underscores the near-certainty of both continued clashes between the political parties and continued alienation and misunderstandings.
To start with, the 2020’s sharpened economic divide forecasts gridlock in Congress and between the White House and Senate on the most important issues of economic policy. The problem—as we have witnessed over the past decade and are likely to continue seeing—is not only that Democrats and Republicans disagree on issues of culture, identity, and power, but that they represent radically different swaths of the economy. Democrats represent voters who overwhelmingly reside in the nation’s diverse economic centers, and thus tend to prioritize housing affordability, an improved social safety net, transportation infrastructure, and racial justice. Jobs in blue America also disproportionately rely on national R&D investment, technology leadership, and services exports.
By contrast, Republicans represent an economic base situated in the nation’s struggling small towns and rural areas. Prosperity there remains out of reach for many, and the party sees no reason to consider the priorities and needs of the nation’s metropolitan centers. That is not a scenario for economic consensus or achievement.
At the same time, the results from last week’s election likely underscore fundamental problems of economic alienation and estrangement. Specifically, Trump’s anti-establishment appeal suggests that a sizable portion of the country continues to feel little connection to the nation’s core economic enterprises, and chose to channel that animosity into a candidate who promised not to build up all parts of the country, but rather to vilify groups who didn’t resemble his base.
If this pattern continues—with one party aiming to confront the challenges at top of mind for a majority of Americans, and the other continuing to stoke the hostility and indignation held by a significant minority—it will be a recipe not only for more gridlock and ineffective governance, but also for economic harm to nearly all people and places. In light of the desperate need for a broad, historic recovery from the economic damage of the COVID-19 pandemic, a continuation of the patterns we’ve seen play out over the past decade would be a particularly unsustainable situation for Americans in communities of all sizes.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
