State Unemployment Rates: Reality Update

We look at the state unemployment rankings for a reminder that the economy has been in good shape despite the Pinocchio population growing like tribbles.

Oct 22, 2024

Pinocchio, the nose job is a good look for you. Who knew?!

With the market in the two-week countdown to an Election Day rendezvous with some sort of destiny, we look at the latest state unemployment rates and ask, “Why are so many partisan political leaders so comfortable with misinformation about the economy?”
We see a lot of red states with unemployment rates below the national levels, many well below long-term medians, and most below unemployment rates that used to be considered “full employment.”
Maybe there are some liberties being taken with the facts in the interest of partisan marketing (aka lying) and all the while waving their flags and preaching God and patriotism.

The above chart updates the state level unemployment rates for the latest set of September numbers as investors (and those who vote in part on economic “facts”) get closer to an Election Day deadline and early voting underway for many. We looked at the state and local flavor vs. national economic fact gaps in prior commentaries. The metrics included unemployment, GDP growth, or personal income trends (see State Level Economic Reality Check: Employment, GDP, Personal Income 9-28-24, State Unemployment: A Sum-of-the-Parts BS Detector 6-30-24).

No one ever accused the political realm as being immersed in an abundance of honesty, but the stock markets are consistently posting up records for a reason. Does anyone else remember a time when Trump used the stock market to define success?

We have been trying to connect the dots on the material disconnect between the numbers at the state level and how many state and local leaders portray the national economy depict the national economy as a sequel to The Road. Apart from the inflation experience of 2022-2023 and the repriced menu that has been brutal, the headline CPI of 2.4% is now below the long-term median (3.1%) for the past 4 months (see CPI Sept 2024: Warm Blooded, Not Hot 10-10-24). After a 3.0% 2Q24 GDP, we will get a fresh GDP gut check for 3Q24 (advance estimate) next week.

In other areas, the “story time” around what Trump’s first term looked like tends to go off the rails with misrepresentations, exaggerations, and outright falsehoods (often knowing and intentional). For example, the year 2018 was abysmal in the markets with the tariff backdrop creating confusion and risk aversion. Asset returns were slammed that year (see HY Pain: A 2018 Lookback to Ponder 8-3-24, Histories: Asset Return Journey from 2016 to 2023 1-21-24).

After 2018, the 2019 period saw exports and corporate capex slow down enough to convince the Fed to start easing when it had earlier been looking to “normalize.” Then came 2020 and COVID and a fresh fiscal and Fed rescue. Somehow the “better off 4 years ago” question requires an unhealthy dose of amnesia.

The ability to do “economic data comps” runs from GDP growth rates to the impact of tariffs and the backdrop of jobs (employment). Even within GDP, you can run line-by-line comps from headline GDP across PCE, fixed investments, and government spending (see Tale of the Tape in GDP: Trump vs. Biden 12-4-23). The State and Local government budgets are on the short list of most glaring misrepresentations given how so many state and local budgets have soared and state and local employment along with it (see Employment: Real Numbers vs. Fictitious Dystopian Hellscapes 3-9-24).

A couple of notable examples…

As a choice example of political fact spinning from CNBC, I was watching Gary Cohn and Jay Clayton in Q&A sessions recently discuss some of the economic and political issues on the business media circuit (more than once). Cohn was a Trump guy but an independent thinker (many say that cost him the Fed Chair). He clearly has been one of the top guys in the business, but he stated that people can look to the Trump “3% economic growth” in making their decision. That was either false by design or misleading by accident. Trump hit an annual 3.0% in only one single year and that was in the first year after the Dec 2017 tax cut flowing into 2018 (see Employment, GDP, Personal Income 9-28-24. Over 4 years, Trump averaged under 2% and over the first 3 years pre-COVID he averaged under +2.7%. How is that a 3.0% economy in the rear-view mirror?

As we noted in an earlier commentary on Cohn’s 3% number:

“Trump hit that level once in 2018 at +3.0% with +2.5% in 2017, 2.5% in 2019, and -2.2% in 2020. That is a +2.66% average across 3 years and +1.45% over 4 years. Biden had a +5.8% year in 2021 followed by +1.9% in 2022 and +2.5% in 2023. That is 3.4% over 3 years (for Biden). The impact of COVID is a debate on how much of that fed the +5.8% in 2021.”

Meanwhile, Jay Clayton was the SEC Chairman and thus ran the entity that demands truth in disclosure. When he was pressed to say that China does not pay the tariffs (in contrast to Trump saying he collected “hundreds of billions” in tariffs from China), Clayton shifted the subject to other topics such as anti-dumping and did everything but pull out some card tricks to avoid simply saying “buyer pays.”

It is a very strange time. You expect hyper-religious cult leaders on the political circuit in the House to lie since they got permission from their faith-based visions and self-image (end justifies the means, etc.) Then again, you should expect factual and truthful dialogue from elected representatives on reported numbers. These are not the rules of engagement in Washington, where dis/mis-information rules.

Back to the “greatest economy ever”…

With two weeks to go, our favorite slice of delusional disinformation has to be how Trump’s first term was the “greatest economy in history” and an “economic miracle”. When you hear it from Trump, you can at least assign the Trump asterisk, but it is echoed by leaders such as Mike Johnson (pious election denier he is) and J.D. Vance among other independent, upright thinkers. Brazen lies are now considered acceptable and score you points on Sunday.

No President in the new millennium can lay a claim anywhere near that “greatest ever” economy even just for the US even the last 40 years or so – and not even for the post-Nixon years. The 1980s and 1990s crush the numbers of Trump (and Biden, Obama, and George Bush). Even Carter had posted 3 years of GDP growth better than Trump’s best GDP year (see Presidential GDP Dance Off: Clinton vs. Trump 7-27-24, Presidential GDP Dance Off: Reagan vs. Trump 7-27-24).

The takeaway should be that bipartisan economic policy as seen under Clinton and Reagan yield better growth and more opportunities for voters of both parties. That would of course conflict with the “divide to gain power strategy.”

As everyone rages over ideological, social and broad policy differences, the book “This Time is Different” on sovereign debt is worth remembering given the soaring US debt (see US Debt % GDP: Raiders of the Lost Treasury 5-29-23). Maybe it is time to reread the conclusion that high debt to GDP usually leads to slow growth. That now seems like a proven fact in the case of the US. The problem this time is it could be way too different given the overall mix of Trump policies. We would throw in Strongmen as a companion book. That one has some historical evidence worth considering as well.

CPI Sept 2024: Warm Blooded, Not Hot 10-10-24

Payroll Sept 2024: Rushing the Gate 10-4-24

State Level Economic Reality Check: Employment, GDP, Personal Income 9-28-24

PCE Prices Aug 2024: Personal Income & Outlays 9-27-24

2Q24 GDP: Final Estimate and Revision Deltas 9-26-24

CPI Aug 2024: Steady Trend Supports Mandate Shift 9-11-24

All the Presidents’ Stocks 8-21-14

Presidential GDP Dance Off: Clinton vs. Trump 7-27-24

Presidential GDP Dance Off: Reagan vs. Trump 7-27-24

State Unemployment: A Sum-of-the-Parts BS Detector 6-30-24

Employment: Real Numbers vs. Fictitious Dystopian Hellscapes 3-9-24

Tale of the Tape in GDP: Trump vs. Biden 12-4-23