What swung the election to Trump?
The way some people are talking, it's resembling a game of Clue.
- Was it Vladimir Putin in the Kremlin with the propaganda? The CIA seems to suggest such.
- Was it Roger Ailes (formerly) at Fox News with an agenda? Outgoing president Obama says so.
- Or was it Dr. Evil in a secret underground lair with a diabolical cat?
You get the idea.
The problem is that there are simpler explanations that don't require a conspiracy. In fact, if you go back in history, it comes down to what Bill Clinton and Ronald Reagan both knew -- it's all about the economy. Clinton's pitch was simple: "It's the economy, stupid." Likewise Reagan's was an obvious question: "Are you better off now than your were four years ago?
The evidence shows that yet again, it was the economy that made the difference, at least for the voters who counted in the election. That is to say, those voters who live in key swing states such as Wisconsin, Michigan and Pennsylvania.
Jobs, or Lack Thereof
A new analysis from the Economic Cycle Research Institute, that was provided exclusively to TheStreet shows how. The report looked at which ethnic groups had seen job gains over the period since Obama was first elected.
"Of the five-million-plus net jobs added since that high-water mark nine years ago, some 56% went to Hispanics," the report states. Blacks and Asians also saw gains, 29% and 25% of the five million plus total jobs created, respectively.
Whites did not. They actually lost jobs. "Whites, who made up over 81% of the labor force in 2007 accounted for negative 9% of the net job gains," the report continues.
That's worth restating another way. The group that represents by far the largest demographic in the U.S. lost jobs over the Obama years, according to the ECRI analysis.
Lakshman Achuthan, who cofounded ECRI, says "the lopsided jobs gains have been evident to ECRI for almost five years."
You have to believe that the voters were also aware of this fact. When you, or your friends, or your family, are feeling economic pain, no amount of government flimflam about growth or employment gains will change things.
(Achuthan points out that there is some double counting: White hispanics show up in both the white and hispanic numbers and black hispanics are counted as black and hispanic.)
There's another datapoint that wreaks of economic pain.
Another detail worth considering is that just before the election, premiums for the required Affordable Care Act health insurance were set to jump an average of 25% for 2017 for those policies purchased on the Obamacare exchanges.
For some people, these premium payments without a government subsidy are now rivaling car payments. More simply, these mandated costs are growing to become the second-largest household expense after housing. For example a gold-rated plan in New York will cost me approximately $600 a month in 2017, a hefty increase from this year.
The letters detailing the increases were sent out in the run up to the election. It was like a direct mail marketing campaign that advertised forthcoming inflation.
The health insurance cost jump also comes on the back of rent increases. Housing costs in urban areas were rising at an annual rate of 5.9% in August, according to data from the St. Louis Federal Reserve.
In short, no matter what the government may say about inflation being subdued, the two biggest expenses for many voters are rising rapidly.
The New Misery Index
When you combine rising inflation for key expenses and job losses, you get to see some sort of Misery Index. That is to say, the economic misery of voters in the all-important swing states rose. Historically, when the traditional Misery Index (percentage inflation + percentage unemployment rate) rises, the incumbent party gets the boot.
Now doesn't that sound like a better explanation than Dr. Evil?
Constable is an independent contributor and owns none of the securities listed in this story.