Connect with us

Economy

Biden-voting counties equal 70% of America’s economy. What does this mean for the nation’s political-economic divide? – Brookings Institution

Published

 on


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

YearCandidateCounties wonTotal votesAggregate share of US GDP
2016Hillary Clinton47265,853,62564%
Donald Trump2,58462,985,10636%
2020Joe Biden47775,602,45870%
Donald Trump2,49771,216,70929%

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

1

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.

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

UK borrowing to hit peacetime high as economy faces COVID-19 emergency – The Guardian

Published

 on


By William Schomberg and David Milliken

LONDON (Reuters) – Britain will borrow almost 400 billion pounds this year to pay for the massive coronavirus hit to its economy, finance minister Rishi Sunak said on Wednesday, as he took his first steps to offset the country’s highest budget deficit outside wartime.

The world’s sixth-biggest economy is now set to shrink by 11.3% in 2020 – the most since “The Great Frost” of 1709 – before recovering by less than half of that in 2021, Sunak told parliament as he announced a one-year spending plan.

“Our health emergency is not yet over. And our economic emergency has only just begun,” he said, promising more money for health, infrastructure, defence and to fight unemployment.

Britain’s budget watchdog estimated borrowing would be 394 billion pounds ($526 billion) in the 2020/21 financial year that began in April, slightly more than it predicted in August.

At 19% of gross domestic product, the deficit will be almost double its level after the global financial crisis which took nearly a decade of unpopular spending squeezes to work down.

Sunak announced cuts to foreign aid spending and a freeze on pay for many public sector workers.

But with many public services still stretched, Sunak is expected to look more at tax rises to make up the shortfall.

“We have a responsibility, once the economy recovers, to return to a sustainable fiscal position,” he said on Wednesday.

Britain was hammered harder by the coronavirus pandemic than most other rich economies as it underwent a long lockdown.

Nearly 56,000 Britons have died from COVID-19, the highest death toll in Europe.

Even with recent positive news about vaccines, the Office for Budget Responsibility (OBR) said the economy was only likely to regain its pre-crisis size at the end of 2022 – or later if Britain fails to get a post-Brexit trade deal with the European Union before a transition arrangement expires on Dec. 31.

Sunak made no reference to Brexit in his speech.

YET MORE SPENDING

Since the pandemic struck Britain a few weeks after he took over as finance minister, the former Goldman Sachs analyst has rushed out emergency spending – much of it on pay subsidies to fend off a surge in unemployment – and tax cuts.

The shift away from the traditional economic orthodoxy of the Conservative Party has alarmed some lawmakers.

Sunak said the cost of his measures to fight the coronavirus was now 280 billion pounds for this year, up from a previous estimate of about 200 billion pounds.

Even so, long-term economic damage of roughly 3% of GDP was likely as a result of COVID-19, the OBR said.

Unemployment was likely to peak at 7.5%, from 4.8% now.

With that damage in mind, Sunak sought to stress how spending would rise in the short term as Britain grapples with the fallout from the pandemic.

Over this year and next, day-to-day spending will rise by 3.8% in inflation-adjusted terms, the fastest growth rate in 15 years.

To meet Prime Minister Boris Johnson’s promise of “levelling up” growth around the country, 100 billion pounds will be spent next year on longer-term investments, 27 billion pounds more than last year.

A new national infrastructure bank will be based in the north of England, where many voters broke with tradition and backed Johnson in last year’s election.

Johnson later told Conservative lawmakers at a meeting of the 1922 Committee that he was confident the British economy could bounce back quickly, and that his government would deliver for the people who elected him, a lawmaker attending the meeting said.

The OBR said it would take 1% of GDP of spending cuts or tax hikes to bring the government’s day-to-day spending into line with its revenues. Debt was likely to rise further, to over 109% of GDP in 2023/24, up from about 101% now.

Paul Johnson, head of the Institute for Fiscal Studies think-tank, said the headline numbers were “completely staggering” but hid a squeeze on spending in three or four years’ time which would be challenging to deliver.

Sunak signalled some early cost-saving moves, including the freeze on pay for public sector workers, except for doctors, nurses, other health staff and the lowest-paid public sector workers.

And Britain will save 3 billion pounds a year by cutting overseas aid spending to 0.5% of GDP, a level that remains higher than almost all other rich countries.

The Archbishop of Canterbury Justin Welby said the cut was “shameful and wrong”, former Prime Minister David Cameron said the government had broken a promise to the poorest countries of the world, and the government’s minister for sustainable development resigned.

(Writing by William Schomberg; Editing by Catherine Evans and Jan Harvey)

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

UK borrowing to hit peacetime high as economy faces COVID-19 emergency – The Guardian

Published

 on


By William Schomberg and David Milliken

LONDON (Reuters) – Britain will borrow almost 400 billion pounds this year to pay for the massive coronavirus hit to its economy, finance minister Rishi Sunak said on Wednesday, as he took his first steps to offset the country’s highest budget deficit outside wartime.

The world’s sixth-biggest economy is now set to shrink by 11.3% in 2020 – the most since “The Great Frost” of 1709 – before recovering by less than half of that in 2021, Sunak told parliament as he announced a one-year spending plan.

“Our health emergency is not yet over. And our economic emergency has only just begun,” he said, promising more money for health, infrastructure, defence and to fight unemployment.

Britain’s budget watchdog estimated borrowing would be 394 billion pounds ($526 billion) in the 2020/21 financial year that began in April, slightly more than it predicted in August.

At 19% of gross domestic product, the deficit will be almost double its level after the global financial crisis which took nearly a decade of unpopular spending squeezes to work down.

Sunak announced cuts to foreign aid spending and a freeze on pay for many public sector workers.

But with many public services still stretched, Sunak is expected to look more at tax rises to make up the shortfall.

“We have a responsibility, once the economy recovers, to return to a sustainable fiscal position,” he said on Wednesday.

Britain was hammered harder by the coronavirus pandemic than most other rich economies as it underwent a long lockdown.

Nearly 56,000 Britons have died from COVID-19, the highest death toll in Europe.

Even with recent positive news about vaccines, the Office for Budget Responsibility (OBR) said the economy was only likely to regain its pre-crisis size at the end of 2022 – or later if Britain fails to get a post-Brexit trade deal with the European Union before a transition arrangement expires on Dec. 31.

Sunak made no reference to Brexit in his speech.

YET MORE SPENDING

Since the pandemic struck Britain a few weeks after he took over as finance minister, the former Goldman Sachs analyst has rushed out emergency spending – much of it on pay subsidies to fend off a surge in unemployment – and tax cuts.

The shift away from the traditional economic orthodoxy of the Conservative Party has alarmed some lawmakers.

Sunak said the cost of his measures to fight the coronavirus was now 280 billion pounds for this year, up from a previous estimate of about 200 billion pounds.

Even so, long-term economic damage of roughly 3% of GDP was likely as a result of COVID-19, the OBR said.

Unemployment was likely to peak at 7.5%, from 4.8% now.

With that damage in mind, Sunak sought to stress how spending would rise in the short term as Britain grapples with the fallout from the pandemic.

Over this year and next, day-to-day spending will rise by 3.8% in inflation-adjusted terms, the fastest growth rate in 15 years.

To meet Prime Minister Boris Johnson’s promise of “levelling up” growth around the country, 100 billion pounds will be spent next year on longer-term investments, 27 billion pounds more than last year.

A new national infrastructure bank will be based in the north of England, where many voters broke with tradition and backed Johnson in last year’s election.

Johnson later told Conservative lawmakers at a meeting of the 1922 Committee that he was confident the British economy could bounce back quickly, and that his government would deliver for the people who elected him, a lawmaker attending the meeting said.

The OBR said it would take 1% of GDP of spending cuts or tax hikes to bring the government’s day-to-day spending into line with its revenues. Debt was likely to rise further, to over 109% of GDP in 2023/24, up from about 101% now.

Paul Johnson, head of the Institute for Fiscal Studies think-tank, said the headline numbers were “completely staggering” but hid a squeeze on spending in three or four years’ time which would be challenging to deliver.

Sunak signalled some early cost-saving moves, including the freeze on pay for public sector workers, except for doctors, nurses, other health staff and the lowest-paid public sector workers.

And Britain will save 3 billion pounds a year by cutting overseas aid spending to 0.5% of GDP, a level that remains higher than almost all other rich countries.

The Archbishop of Canterbury Justin Welby said the cut was “shameful and wrong”, former Prime Minister David Cameron said the government had broken a promise to the poorest countries of the world, and the government’s minister for sustainable development resigned.

(Writing by William Schomberg; Editing by Catherine Evans and Jan Harvey)

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

UK borrowing to hit peacetime high as economy faces COVID-19 emergency – TheChronicleHerald.ca

Published

 on


By William Schomberg and David Milliken

LONDON (Reuters) – Britain will borrow almost 400 billion pounds this year to pay for the massive coronavirus hit to its economy, finance minister Rishi Sunak said on Wednesday, as he took his first steps to offset the country’s highest budget deficit outside wartime.

The world’s sixth-biggest economy is now set to shrink by 11.3% in 2020 – the most since “The Great Frost” of 1709 – before recovering by less than half of that in 2021, Sunak told parliament as he announced a one-year spending plan.

“Our health emergency is not yet over. And our economic emergency has only just begun,” he said, promising more money for health, infrastructure, defence and to fight unemployment.

Britain’s budget watchdog estimated borrowing would be 394 billion pounds ($526 billion) in the 2020/21 financial year that began in April, slightly more than it predicted in August.

At 19% of gross domestic product, the deficit will be almost double its level after the global financial crisis which took nearly a decade of unpopular spending squeezes to work down.

Sunak announced cuts to foreign aid spending and a freeze on pay for many public sector workers.

But with many public services still stretched, Sunak is expected to look more at tax rises to make up the shortfall.

“We have a responsibility, once the economy recovers, to return to a sustainable fiscal position,” he said on Wednesday.

Britain was hammered harder by the coronavirus pandemic than most other rich economies as it underwent a long lockdown.

Nearly 56,000 Britons have died from COVID-19, the highest death toll in Europe.

Even with recent positive news about vaccines, the Office for Budget Responsibility (OBR) said the economy was only likely to regain its pre-crisis size at the end of 2022 – or later if Britain fails to get a post-Brexit trade deal with the European Union before a transition arrangement expires on Dec. 31.

Sunak made no reference to Brexit in his speech.

YET MORE SPENDING

Since the pandemic struck Britain a few weeks after he took over as finance minister, the former Goldman Sachs analyst has rushed out emergency spending – much of it on pay subsidies to fend off a surge in unemployment – and tax cuts.

The shift away from the traditional economic orthodoxy of the Conservative Party has alarmed some lawmakers.

Sunak said the cost of his measures to fight the coronavirus was now 280 billion pounds for this year, up from a previous estimate of about 200 billion pounds.

Even so, long-term economic damage of roughly 3% of GDP was likely as a result of COVID-19, the OBR said.

Unemployment was likely to peak at 7.5%, from 4.8% now.

With that damage in mind, Sunak sought to stress how spending would rise in the short term as Britain grapples with the fallout from the pandemic.

Over this year and next, day-to-day spending will rise by 3.8% in inflation-adjusted terms, the fastest growth rate in 15 years.

To meet Prime Minister Boris Johnson’s promise of “levelling up” growth around the country, 100 billion pounds will be spent next year on longer-term investments, 27 billion pounds more than last year.

A new national infrastructure bank will be based in the north of England, where many voters broke with tradition and backed Johnson in last year’s election.

Johnson later told Conservative lawmakers at a meeting of the 1922 Committee that he was confident the British economy could bounce back quickly, and that his government would deliver for the people who elected him, a lawmaker attending the meeting said.

The OBR said it would take 1% of GDP of spending cuts or tax hikes to bring the government’s day-to-day spending into line with its revenues. Debt was likely to rise further, to over 109% of GDP in 2023/24, up from about 101% now.

Paul Johnson, head of the Institute for Fiscal Studies think-tank, said the headline numbers were “completely staggering” but hid a squeeze on spending in three or four years’ time which would be challenging to deliver.

Sunak signalled some early cost-saving moves, including the freeze on pay for public sector workers, except for doctors, nurses, other health staff and the lowest-paid public sector workers.

And Britain will save 3 billion pounds a year by cutting overseas aid spending to 0.5% of GDP, a level that remains higher than almost all other rich countries.

The Archbishop of Canterbury Justin Welby said the cut was “shameful and wrong”, former Prime Minister David Cameron said the government had broken a promise to the poorest countries of the world, and the government’s minister for sustainable development resigned.

(Writing by William Schomberg; Editing by Catherine Evans and Jan Harvey)

Let’s block ads! (Why?)



Source link

Continue Reading

Trending