ECON Blue states vs red states - the economic difference is striking

[Dozdoats]

Bayou Renaissance Man: Blue states vs red states - the economic difference is striking

Blue states vs red states - the economic difference is striking

Brandon Smith, whom we've met in these pages several times, points out the real impact of politics on the people in an economic comparison of blue versus red states.

Blue state economies are dying because they are oppressive and this stifles trade and business.
. . .
According to the U.S. Postal Service, New York City alone saw over 300,000 residents pick up everything and leave from March to October. This is an unprecedented spike, an exodus the likes of which New York has not seen in a long time.

On the other side of the country, California is witnessing its own exodus, and it started well before the pandemic struck. In 2019, California saw over 653,000 residents escape the state’s suffocating bureaucracy and high taxes. In 2020, the state has hit its lowest population growth rate in history, even after accounting for babies born. More than 200,000 people left the state than moved in in the past year, and before anyone claims that these people are “liberals” invading red states, even the California media admits they are mostly conservatives seeking to escape the socialist sinkhole.
. . .
But what does this mean for leftist states in economic terms? First, a huge loss of tax revenue, and this is dangerous for blue states in particular. California was projecting a $5.6 billion surplus in January of last year, only to face a $54 billion deficit by August. The state’s net tax revenue fell by 42% from March to May year-over-year, far outpacing losses in the rest of the country. Democratic Gov. Gavin Newsom begged Congress for $14 billion in federal aid, claiming that the government has a “moral and ethical obligation to help the states”.
And this seems to be exactly how states like California are surviving, by stealing tax dollars from people in other states that have been more responsible in caring for their economies.
. . .
What leftist cheerleaders often refuse to mention is the deep and insidious debt problems and deficits blue states suffer from. Looking at a list of the most indebted states in the U.S. in terms of total assets and liabilities, you will find that the vast majority of them are Democrat controlled.

Furthermore, blue states tend to have the highest levels of unfunded pension liabilities. In other words, their public pension obligations are only partially funded and are suffering a net loss ... Red states top the list in terms of the best funded pensions and the lowest debt per capita.
These debts are caused by irresponsible spending policies and endless socialist welfare measures, and as with most socialist systems, they always end up spending more money than they can bring in. They also end up wasting money more than they effectively spend money. This translates to much higher taxes, as blue states refuse to admit policy errors and fix their mistakes. Instead, they punish the citizenry with increased taxation. A list of the highest personal income taxes across the country is dominated by blue states.

Blue states like Illinois also stack the list of highest property taxes.
. . .
This dynamic has led to red states outperforming blue states across the board in terms of economic recovery. Job recovery in red states far outpaces blue states, along with recovery in GDP. As a result, a call has been rising for a “Blue State Bailout”, and with Biden ostensibly entering the White House they may very well get what they are asking for.
The problem is, the amount of bailout money that would satiate the hunger of blue states would have to be in the multi-trillions. As more and more people and businesses leave these places for more free states, it’s inevitable that tax revenues will dry up. And, as leftists raise taxes to cover the deficit even more people will relocate. It is a vicious cycle that will lead to complete dependency on federal dollars for blue states to survive.
. . .
It is also important to consider at a fundamental level the types of people that make up the populations of red states versus blue states. Blue states have built a culture of dependency and the majority of leftists have no useful skill sets that would allow them to adapt to an economic crisis. Meanwhile, red state culture encourages independence, self-reliance and productivity.

The most likely reaction among blue states or the federal government under Biden will be to try to “redistribute” the wealth and stability from red states to blue states.
. . .
There could also be an attempt to stop people from moving away from blue states entirely. We have already seen a beta test for this in California, where legislators are attempting to pass a bill which would legally require former residents to continue paying taxes to the state for years after they leave.

Of course, this would lead to severe resistance from conservatives, but that is a discussion for another time. The bottom line is this: the economic and pandemic policies of blue states have failed miserably. Their only option is to see the error of their ways, become fiscally responsible and remove totalitarian lockdown measures, or, attempt to leech success from the red states like parasites. Which one do you think they will choose?

There's more at the link.

It's a very serious concern that tax-and-spend progressive liberals now control the US government. I guarantee you that they're going to try to do as Brandon Smith predicts. (Nancy Pelosi tried, but failed, to do exactly that with her so-called "stimulus" packages last year.) Since the Democratic Party now controls Congress, the Senate and the Presidency, there's a very good chance they'll succeed. That might be the final nail in the coffin of the already debt-laden US economy, overloading it with a burden so great that it collapses under the strain.

I'm preparing a series of articles about inflation and the threat ahead. It's growing worse by the day, and I believe we may be facing a very serious economic headwind as a result. If we are, decades of tax-and-spend politics (which occurred, let's be honest, on both sides of the political aisle) will be at the root of it.

Peter


Posted by Peter at 1/19/2021 09:04:00 AM

 

[20Gauge]

Bayou Renaissance Man: Blue states vs red states - the economic difference is striking

Blue states vs red states - the economic difference is striking

Brandon Smith, whom we've met in these pages several times, points out the real impact of politics on the people in an economic comparison of blue versus red states.














There's more at the link.

It's a very serious concern that tax-and-spend progressive liberals now control the US government. I guarantee you that they're going to try to do as Brandon Smith predicts. (Nancy Pelosi tried, but failed, to do exactly that with her so-called "stimulus" packages last year.) Since the Democratic Party now controls Congress, the Senate and the Presidency, there's a very good chance they'll succeed. That might be the final nail in the coffin of the already debt-laden US economy, overloading it with a burden so great that it collapses under the strain.

I'm preparing a series of articles about inflation and the threat ahead. It's growing worse by the day, and I believe we may be facing a very serious economic headwind as a result. If we are, decades of tax-and-spend politics (which occurred, let's be honest, on both sides of the political aisle) will be at the root of it.

Peter


Posted by Peter at 1/19/2021 09:04:00 AM

As it is a money thing, it should require 60 votes to pass. Then again a simple EO would solve that problem.

 

[Meadowlark]

Western Canada has a similar situation. Most of the wealth generation comes from western Canada and ends up supporting the moral liberal east canada. There is a lot of resentment over that, along with periodic grumblings of secession.

 

[WTSR]

You really want to kick it off, have the Oil Producing states require Gold for Oil from consumer states. This will set the proper tone and tempo!

 

[subnet]

The new admin will bail them all out, the blue states that is

 

[All4liberty]

I hate to say it, but what if they are causing destruction and collapse in these areas causing people to leave so property can be bought dirt cheap in the next year?

 

[20Gauge]

Western Canada has a similar situation. Most of the wealth generation comes from western Canada and ends up supporting the moral liberal east canada. There is a lot of resentment over that, along with periodic grumblings of secession.

That is the end result most often. That an genocide / war.

 

[WTSR]

I hate to say it, but what if they are causing destruction and collapse in these areas causing people to leave so property can be bought dirt cheap in the next year?

And he said "Be Fruitful and Multiply to Red States" and the lord says that was good...

Commie is going to do what commie does.

 

[Dozdoats]

Nothing to See Here, Folks. I Mean, Literally, NOTHING. - The Great Recession Blog

Nothing to See Here, Folks. I Mean, Literally, NOTHING.

Every couple of months, I bring us up to date on how the economy has changed, and the last couple of month have taken us predictably back into economic decline, following a summer burst of subnormal passableness that never got us out of the crater we fell into last spring.

Retail sales circled the drain like a dead bug for the third month in a row after having fully recovered from their initial COVIDcrash. Of course, sales in brick-and-mortar stores remained below their pre-covid levels all year. The odd factor in December’s plunge, however, was that online sales were down almost 6%, month on month.

Zero Hedge

New vehicle sales put the brakes on, re-establishing a steepening descent that set in on November 2017:

Zero Hedge

Consumer spending fell 0.4% in November, its first drop since the April when the Coronacrisis was about at its worst. That’s not surprising since personal incomes dropped an average of 1.1% in November, the third drop in four months as a result of various government relief programs being allowed to expire.

US industrial production still looks like we’re tunneling our way up out of deep coal shaft. It now matches up to what would have been a declining trend line for production that began in 2018, due in good part to the Trump Trade Wars.

Zero Hedge

And where did those trade wars leave us? With a Chinese trade deficit that is now the worst it has ever been! The conclusion of the trade war is that it brought a big improvement … for one nation:

Zero Hedge

For the full year, the Chinese trade surplus with the U.S. was $317 billion, 7% higher than in 2019: not exactly what Trump had in mind when he started his fight with Beijing.
Zero Hedge

The best part is that, in the final analysis, analysis shows that Chinese companies offset almost none of the US tariffs by reducing the price of their products, which means Americans paid for almost all of the tariffs (just as they did with Mexico). The repeated claim that China was paying this tax was just one more Trump lie among thousands of big lies. I noted that likelihood along the way, and now we know it turned out as I said. But, hey, “trade wars are easy … so easy, just you wait and see …” and wait and wait and wait.
Still waiting.

Maybe, if we had been smart, and fought only one trade war — the most important one with China — we could have gotten other nations to team up with us and force China’s hand since they also had issues with China. However, when you take on World Trade War I in all theaters of the globe at once, you’ve got no allies in the fight.

But, at least, our farmers went broke faster than any time since the Dust Bowl of the Great Depression. So, MAGA!

Fortunately for tired consumers, the Fed still couldn’t get its preferred inflation gauge back up to its 2% target, in spite of months of talk about allowing inflation to run hot. US producer price inflation has stalled correspondingly, which will tend to suppress consumer inflation in months ahead.

Bankruptcies of major US companies scaled old heights in December to finally hit their 2011 levels with 16 major companies filing in December. The fourth quarter in total became the worst quarter for major bankruptcies since 2009, the pit of the Great Recession. The annual total of 243 major bankruptcies (over $50 million in size) is also the highest since 2009. The pain won’t end until the beatings are discontinued, which will be well into 2021 at the earliest.

Unemployment is now climbing a wall again as a result of all these business downturns over the fourth quarter (to the extent that it the quarter been reported so far). Job losses jumped for their first handhold on the wall in the second week of December, rising to 885,000 newly unemployed compared to the previous week’s 862,000 new applicants. Those numbers dropped off a little in the second half of December but then scaled their way up to 965,000 in the first week of January. (Prior to COVID the normal number of new unemployment claims each week was about 225,000.)

Zero Hedge

As a result, continuing unemployment claims have also begun to rise:

Zero Hedge

And, as a result of the failure of employment to recover in 2020, 12-million renters owe more than $5,000 in back rent. 20% of all US families are in arrears on rent.

“The tidal wave is coming. It’s going to be really horrible for people,” Charlie Harak, a senior attorney at the National Consumer Law Center, told the Post. “The number of people who are now 90 days behind and the dollars they are behind are growing quite significantly.”
NewsMax

Let’s finish with the good news. There has been some reprieve for the oil industry because …

A great global restock is at hand, filling ships, trucks and trains, and also firing oil demand.
NewsMax

I mistakenly said in my last post that bankruptcies had not been as bad as I predicted in the oil industry. I’ve been so caught up in the political insanity of the past two months, that I was unaware of recent milestones reached. Once I researched it, I realized oil bankruptcies became worse than ever in the fall, but the oil industry is getting a bit of temporary reprieve at the moment from a recent slight recovery in shipping. These bankruptcies just haven’t been in the news because the news, too, has been totally absorbed with the political chaos of the last two-and-half months.

The reprieve isn’t likely to hold because, even if demand remains via online purchasing, so many bottlenecks have formed in container shipping due to COVID and trade wars that the system keeps jamming up. However, even the trade wars aren’t holding up well. Trade surpluses on the China, as said, are way back up with exports from China to the US up 21%, but not just because of the Phase One deal.

Shipping rates are back to rising, and the Port of Los Angeles, jammed in the fall with empty containers, is flowing again. The container jam happened because container ships were coming into the US at full load with major shipper Hapag-Lloyd saying they were “deploying every available ship,” while exports remained way down.

Orders for new big trucks are way back up, and so are oil prices. Interstate miles in trucking are up more than 9% year on year. BNSF reports a strong increase in intermodal rail transport. (Some yards are up 20% in volume YoY.)

Whether you see a decline in home sales as good new or bad news depends on whether your looking to buy a home or sell one. Home buyers have become strained because of a COVID migration that has accelerated prices higher. For those feeling priced out of the market, that appears to be slowing down, though that may just be the normal winter slack

New-home sales in November dropped by 11% from the previous month, even though sales in the previous month were also revised down. That looks like more than normal winter slack, but in weird times, who know what normal is? Economists had only expected a 0.3% drop for November. New-home sales, however, remained up more than 20% above the year before.
Single-family home construction rose its highest since the housing-market summit in 2007, trying to fill the earlier explosive demand of 2020 for new homes. In spite of November’s slump in demand, median new-home prices rose another 2% in November because it typically takes several months of falling demand before prices start to follow.

Of course, none of the above has been keeping the stock market from rushing to peak insanity:

Zero Hedge

Imagine when that Jenga tower falls! But, hey, Jumpin” Joe is here, and for the moment the market has been happy. That infatuation may wear off before the honeymoon even begins; but, hey, the stock market gurus all told you late last spring that we’d be returning to normal by the spring of 2021 to justify the high prices being hit in the late spring of 2020. I seem to recall saying, “Not at all likely.” Now the stock market gurus can shift to telling you that, because the stock market presciently prices in the future, today’s high prices are really fine because we’ll be back to normal by fall.

To top it off, at half-a-trillion dollars, the US budget deficit for the first fiscal quarter just came in 61% higher than the already scorching previous year … and it’s about to rise even faster as Joe manages to pass all the stimulus under the new Demo-run congress that Trump wished he could.

Imagine when that tower of debt falls!