"Promises Made! Promises Kept?" Links between Trump Economic Policy and County Level Unemployment Rates
In the 34 months since November of 2016 the U.S. unemployment
rate has declined -1.2% through August 2019. Across the counties that President
Trump campaigned in, the average decline has been roughly -1% (through July
2019).
In Pennsylvania, county level unemployment rates have
declined an average of -1.5%; in Texas the decline has been -1.9%; Alabama
a whopping -3.1%; and in coal loving West Virginia -1.1%.
Major Trump policies fall under the mantra "America
First". The goals of this approach entail - among other things
- domestic energy independence, the adoption of "fair-trade"
tariffs, and a reduction in the flow of illegal aliens. The policies effectiveness
or lack thereof can be partially assessed by county level variation in labor
market outcomes. President Trump has tended to focus most on the unemployment
rate in his “Thank you Tour” and “2020 Campaign” rallies, so that is what I’ve
chosen to focus on.
Effects of Energy Policy
Domestic field production of crude oil has increased 29%
from November 2016 through July of 2019. Counties reliant on oil
production have seen their unemployment rates decline an average of -1.5% versus
an average decline of -1% for non-oil producing counties. Coal production
has declined -16.5% since Trump took office. In-spite of this the average
decline in unemployment rates for counties with coal mines has been -1.8%
versus -1% for counties without coal mines. This suggests to me that while
coal miners might leave Trump in 2020, their neighbors will stand by his
side.
What about the Farmers?
Since Election Day, agricultural exports have fallen -5.2%. The
decline in the unemployment rate for counties weighted by 2017 corn production
has been a modest -0.6%, this is roughly half the decline of -1.25% experienced
by non-corn producing counties. The same calculation for wheat heavy counties
produced an even lower weighted decline of -0.47%. Farmers have clearly
not meaningfully benefited from Trump era trade policy.
Intrastate Differences
Intrastate declines are even more telling, especially in
Pennsylvania and the border regions of Texas. West Pennsylvania has seen
the bulk of the improvement for the state as a whole. If this continues, I
foresee Trump Pennsylvanians chanting, "Promises Made! Promises
Kept!", into 2020.
Texas: The Big Oil Laboratory
Texas counties closest to the boarder have seen some of the
largest unemployment rate declines in the state. The figure below shows
the counties with the largest declines in the unemployment rate. Presidio
County, a prominent boarder county, has seen its unemployment rate fall -4.7%
since Trump's election. Oil producing counties like Zavala County
have seen unemployment rates decline even further (in this case -7.6%). The
unemployment rate has declined (on average) -2.2% in oil producing counties
across the state. The average decline in non-oil producing counties has been
-1.7%.
As usual, policies entail winners and losers. While some policies like slashing regulations
and approving pipelines have had real benefits for domestic crude oil
production; the cut in regulations has not meaningfully limited the tremendous
slide in coal production. Furthermore,
Trump’s Trade War has had a real effect on agricultural America, with
unemployment rates declining much less in these regions than in the rest of the
country. Although promises have been
kept, it has not come without gain for some and pain for others. The question
is: Will some hard-line promises have to eventually be broken, in light of these
circumstances?