economy jobs NFP Trump

Goldman Wants To Know What Trump Voters Are So Damn Upset About

Obviously, large swaths of the American electorate (and this apparently applies to European voters as well) are vulnerable to manipulation.

This is a subject I’ve spent quite a bit of time on this year. One of the saddest things about the rise of Donald Trump is that he’s managed to galvanize public opinion around a narrative that is manifestly false. “China is stealing our jobs.” “Illegal immigrants are raping us, both figuratively and literally.” “I would have won the popular vote, but the same illegal immigrants who rape and pillage and are responsible for opiate abuse turned out en masse to vote for Hillary Clinton.” “I can bring back American manufacturing.” “We’re getting killed on trade and by extension globalization is bad.” “Muslims are out to get us.” And on, and on.

It’s all bullsh*t. Sorry, but it is.

But leaving the social issues aside, one thing that really grates on my nerves is this idea that the new administration is going to usher in an American manufacturing renaissance. That’s so patently ridiculous that it’s hard to imagine how anyone takes it seriously, but unfortunately a lot of people do and again, that’s the tragedy here. Trump is preying on the very downtrodden people he claims to be helping. He’s giving them false hope.

The idea of resurrecting US manufacturing is akin to saying you’re going to bring back the flip phone. Or that you’re going to make BlackBerry great again.

But that doesn’t mean there’s no hope for the US economy. It just means that the world has changed. And that specialization and offshoring represent the natural progression of business in a world where capital flows freely across borders. That’s a good thing. Why do you think you can outfit your entire bathroom and kitchen with one $200 trip to Target? Americans need to embrace change, just like they threw out the flip phone in favor of a Droid or an iPhone. Skill set antiquated? Well, you’ll have to develop some new skills to compete. Sorry. Don’t like multiculturalism? Too bad. Try getting a college education – trust me, the government will fund it for you and if student loan delinquencies are any indication, you’ll never have to pay back the loan.

I hear a lot of memes about how the US economic recovery is all an illusion and how the headline jobs print always obscures this or that underlying indicator which, if only we were paying attention, proves that everything is going to sh*t. You’ll see that story perpetuated on almost any alt-Right website you care to visit. 

While I’m certainly sympathetic to the idea that we shouldn’t trust “official” numbers, and while I’m acutely aware of the arguments here (indeed at one time or another I myself have been guilty of cherry picking labor force participation rates, real wage growth, and [fill in the blank with any other data point you care to conjure that undercuts the rosy narrative], there’s nevertheless a rather amusing discrepancy between the idea of an economy at full employment and a story that paints America as a desolate wasteland where the word “opportunity” ceased to have any meaning decades ago (and that’s essentially the picture Trump painted in his inauguration speech). 

Well as it turns out, Goldman is interested in this discrepancy as well. Below, find the bank’s latest (note: some of what the bank says supports my overall viewpoint, but other parts of the analysis do indeed support the Trump narrative, so no,  I did not cherry pick the excerpts).

Via Goldman

While we view the labor market as having reached roughly full employment, we are often asked how this can be true given the general mood of economic discontent that appeared to play such an important role in the 2016 presidential election.

We see two possible answers. First, cyclical recovery is not inconsistent with the secular trends of income stagnation and dimmer economic prospects facing much of the population. Second, the recovery has been a bit uneven, and weak job growth in non-metropolitan areas, especially when linked to trade, likely contributed to both economic malaise and the election results.

Even so, middle income stagnation is far from new, and it is hard not to see cyclical recovery as the distinguishing feature of the labor market in recent years. One lesson is that that economics certainly cannot explain everything about election outcomes, and the level of economic discontent is not always perfectly proportionate to the state of the labor market.


[One] possible explanation is that the recovery might have been uneven, so that aggregate statistics mask lingering weakness in some pockets of the economy. The most obvious examples of those hit hardest by the recession, the housing bubble states and construction industry workers, now have roughly normal unemployment rates. But what about the rural-urban split, a division that is seldom highlighted in US economic data releases but has become increasingly striking in electoral results?

Exhibit 2 compares metropolitan and nonmetropolitan areas along a range of labor market outcomes. While the unemployment rate remains somewhat higher and the participation rate remains lower in nonmetropolitan counties, the patterns since just before the recession mirror those for metropolitan counties. Likewise, while per capita income is lower, it has grown at a similar rate recently.

The key dimension along which nonmetropolitan areas have done worse during the recovery is employment growth, shown in the top-left chart. While this could partially reflect slower natural population growth, the sharp decline in net migration to nonmetropolitan areas since the recession suggests that weaker population growth was probably fueled by a lack of job opportunities, not just normal urbanization.



8 comments on “Goldman Wants To Know What Trump Voters Are So Damn Upset About

  1. Maybe middle america is fed up with being taken advantage of by the financial class. Today on CNBC, I learned that the American Bank Assoc is suing because the dividend paid to banks owning stock in the Federal Reserve was reduced last year from a fixed 6% to the lower of the 10yr ust rate or 6% and the difference was to be used for infrastructure spending. They claim the reduction is an “unlawful taking” . Wait till the public learns that the banks borrow at 0% and make 6% while savers earn squat. Watch what happens to bank stocks if Trump tweets about this!

  2. America being able to manufacture stuff is like a person being able to feed itself. “Heisenberg” you are a globalist… and the pendulum is swinging towards localism.

    • History Man

      Yeah, America being able to manufacture stuff is like a person being able to feed itself. But most people stopped being able to “feed itself” more than a century ago. The manufacturing nostalgia that is so popular right now is exactly like farming nostalgia at the end of the 19th century. America doesn’t need millions of workers to start manufacturing stuff that the Chinese can make more cheaply any more than it needs millions of city folks to go back on the farm and grow stuff.

  3. You see, fly- over-America (where I’m from), hears about immigrants getting benefits even though they’ve never paid into the system. Quite frankly, that’s asinine. While I understand the long term goal of population growth and aging economies etc., taking from the WORKING CLASS, meaning a $500 bill for anything is a lot of cash, and literally giving anyone who isn’t a citizen free money/health care while we pay for it infuriates us.

    A lot.

    If we made it easier to become citizens, that’s fine. But otherwise, not one single dime should EVER be spent on a citizen over a non-citizen. Ever.

  4. John Snyder

    And yet we are letting the orange Julius spend an unspecified amount to reduce the non citizen contribution to our GDP and our non opiate labor force.
    They may take some form of societal compensation but their contribution to our economy will not be replaced as easily as it is vacated, nor as cost effectively.

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