Post midterm: Can GOP reign without Trump

American voters woke on Tuesday to see which party would govern Congress, only to learn that the final results were unsettled, with vote counting to continue for days or weeks. One thing is uncertain: the much ballyhooed Red revival failed to materialize, and while the Democrats breathed a sigh of relief, for better returns than they thought, Republicans were furious as few of former President Trump’s favored candidates had significant gains.

While some wags have called this the thin pink line, others have noted that the country may have decided they wanted a balance of opinion for the ruling party, yet while we wait for the final tally, to see if the GOP can win the House, and/or the Senate, it’s also possible that the House could remain in the hands of the Democrats and retain Nancy Pelosi as Speaker of the House.

One issue seems to have defined voters to give the Dems the home field advantage and that is abortion, and women’s reproductive rights, that a majority of Americans favor abortion with some restrictions, at 60 percent according to Pew Research. And, while there were some Democrats, Bernie Sanders included, who felt that it might have not been enough, in the end it did prove to be enough.

Voters in Republican leaning Kentucky overturned an anti abortion amendment, one of the most restrictive in the country; and in MIchigan Gov. Gretchen Whitmer, ruling over a now Democratic controlled state legislature, won, in part as a champion of abortion rights, noted The Washington Post, and lastly in North Carolina where restrictions are now banned, in what was thought to be a veto proof majority.

Another surprise is that the ferocity of the MAGA crowd, and its doom and gloom scenario of militant teachers, marching lockstep with transgender and LGBT people, coupled with soft on crime Democrats, did not produce the desired push for that alleged Red wave.

The best case scenario, for the GOP, if they win a narrow victory in the House, is that the Biden administration might be able to have more legislative wins, while the more radical GOP, especially people like Marjorie Taylor Green might bear down on their Speaker of the House who will bear the brunt of their anger and force, currently favored to be Kevin McCarthy, and while he has worked the phones, is not an automatic choice, needing 215 votes from House lawmaker votes.

Some are saying that the sharp elbowed Jim Jordan might be the better choice, but in a contest of wills, it's all over but the fighting.

While Trump has been seen by many supporters as the head of the Republican party with his outsized influence, some observers are beginning to wonder if he has lost the Midas touch as both his candidates and his lie about winning the 2020 election seem to be fading, at least for now, as the deciding factor, but as we see, that does not mean it isn’t winning, for some.

While Trump says that he might run again, Scott Jennings, a Republican strategist told The Hill on Wednesday, “How can you look at these results tonight and conclude Trump has any chance of winning a national election in 2024?”

Nipping at his heels as a 2024 candidate is the victorious Florida Gov. Ron De Santis whose sweep over contender Charlie Christ, is already legend, and while predicted, there are some GOP supporters who see him as a more viable presidential candidate for 2024, one that carries less baggage than Trump with his cringe inducing moments, grinning in concert with Russian Federation President Vladimir Putin, his anti Asian labels of Covid as the Asian Flu, and his casting away of former supporters such as Jeff Sessions, or his litany of alleged violations of his financial empire, that seems to have been built on sand.

On the technical side it seems that mail in voting has reached a zenith and while extending the counts also seems to suggest that fraud is elusive, and with that, the absence of potential violence at the polls, gave a measure of safety to the electorate, and as President Biden noted, “without much interference at all. . .”

There were some election deniers who “tried to to undermine this election before polls even closes, seizing on problems with vote counting machines in Arizona and a likely delay in Pennsylvania to spin viral theories of vote manipulation” led by Trump who claimed that the election, was being stolen yet again from the Republicans, noted Rosalind S. Helderman of The New York Times.

While this was true, it has not been without support, as we heard over lunch, when two old duffers loudly proclaimed that the “Democrats stole the election from Trump,” before stomping out of the diner.

The durability of this lie has taken hold in the newly elected Congress, and among them are members of the House, Senate, governors, secretaries of state and attorney generals, nearly a thirds, so far, according to The New York Times analysis, but there has also been a significant number of election deniers that were not elected.

This seems to be a force majeure, in the GOP playbook, despite the fact that there has been no credible evidence that the 2020 election was fraudulent, but perhaps this statement of durability, says it all from Russell Fry, a Congressman from South Carolina, who said that it was “clear that it was rigged.”

One aspect of this election is that the absence of old fashioned retail politics with door to door visits seems in the abeyance and when it was done, it worked well, when it was not, candidates lost.

An emerging trend is ranked voting to support a closer support of a candidate and to avoid rancor on the part of some voters and while it was previously seen in the New York City mayoral race, it is now spreading to other state elections and Nevada is using it in the midterms

Simply put it asks voters to rank order their choice of candidates and avoids a run off, because it is an inherent part of the process, and allows for less rancor and as an advocate has said, it gives more room for voter principles.

With rancor being on the front line in this politically divided country, depending on Nevada, and in the past, Alaska, spreading further to midterms might be a positive direction.

This might have helped Tom Ryan advance over JD Vance in the ever so tight Ohio race, where Vance came in as a darkhorse and emerged a victor in a game changer from an Ivy League educated brahmin to a flannel clad good ole boy, writ large.

One gain for Democrats is the number of Black officials across the state and federal slate: Wes Moore as governor of Maryland, joined by the first Black attorney general, Anthony Brown, and Summer Lee as the first Black Congresswoman for Pennsylvania.

For the LGBT community wins are also historic wins for the Dems: Beca Blunt to Congress from Vermont, Erick Russell as treasurer for Connecticut, who is not only gay, but Black, a first in the United States.

Erick Russell

All of this, of course, is background to the larger story of who will control Congress, and as of this writing, with Georgia as a runoff, Arizona and Nevada remain as the races to watch for in the Senate, and for the House: New York, Maryland, California, Colorado, Oregon, Nevada,and Alaska. With leads on both sides of the aisle in some districts.

Let the nail biting continue.

October employment in US keeps pressure on inflation

Friday’s report from the US Labor Dept for October showed, still, the resilience of the American job market with 261,000 jobs gained, despite the predictions of economists of a number closer to 200,000 based on the September report that had a gain of just below 315,000, and these consistently high numbers have caused the Federal Reserve Bank to issue another increase, this time, once again, of 3.75 percentage points to fight inflation.

The hgh job numbers coupled with high wages, have allowed many Americans to increase demands for both goods and services, even with those wages buying power reduced by inflation.

Wage growth has been a factor since late summer and its growth has kept pressure on Inflation, as The Wall Street Journal reported In August:

“Wage gains help consumers spend money in the face of higher prices for restaurant meals, groceries and lodging. But many companies are having to pay more for labor at the same time that other business expenses are rising, including for transportation and logistics, said Omair Sharif, head of forecasting firm Inflation Insights LLC.”

Those prices are passed on to consumers, he added.

As most Americans have seen, at the gas pump, and at the supermarket, “wages haven’t kept pace with inflation. Private sector wages and salaries declined 3.1% in the second quarter from a year earlier, when accounting for inflation,” added the Journal.

With the current inflation, the highest in 40 years, showing no signs of abatement, the central bank has its hands full to meet its Congressional mandate of maximizing employment and stabilizing prices, the latter being the most difficult. 

“What I see in this is the imprint of beginning weakness,” said Diane Swonk, the chief economist at KPMG. “But it’s not enough to derail the Fed.”

While many have blamed President Biden for failure to act, the responsibility lies fully in the hands of the Reserve, under the direction of Jerome Powell, and its measures, interest rate hikes, are the key to lowering the temperature of inflation, and this report does show that there has been some effect, just not enough, and as we have noted before, the efforts at calibration has risks: too much, and there is the chance of a deep recession, with attendant job loss (mostly on the lower end) sending shockwaves across the economy, but letting inflation become the norm, then we have the problem of the 70s and 80s, where inflation became the norm, until Paul Volcker stepped in to intervene.

The unemployment rate of 3.7 percent, what we refer to as the marquee rate, is normally balanced with the household survey, but that is being temporarily suspended due to a format change.

Equally worrisome is the labor force participation rate which at 62.2 has barely moved, with many people, on the sidelines, and some, especially older workers fearful of the still present Covid virus, and those who have sought training, and education for another field; and, this has become especially true for service workers in restaurants, and hotels, to relieve themselves of long hours standing on their feet. 

In total 4.1 million have quit their jobs.

 

Still others, mostly women, who don’t have adequate child care (an area that the US lacks) have left the workforce to care for them.

One often unnoticed facet of the jobs  market deficit has been a shortfall in immigration, and this shortage “has become an economic problem for America,” according to The Economist, they noted that it is “harder for companies to find workers and threatens to do more damage to the economy, But whereas unauthorised border crossing are a perennial controversy, the drop in overall immigration has barely registered in Congress.”

Looking at fiscal year 2020/2021, we have the addition of only 247,000 people, continuing a pre pandemic trend but that was exacerbated in 2017, by the Trump administration restrictions “from several predominantly Muslim countries.”

This has been especially seen in restaurants and accommodation sectors, “which draws a quarter of its employees from the foreign born population, [and] could not fill about 15% of job openings last year.”

In short,  before then,“New immigrants accounted for nearly 70% of the growth in the American labour force in the 2010s.”

On a somewhat brighter note, for Black Americans, the unemployment rate has been 5.3, from 5.8 percent unemployment,reflecting some possible changes, although mostly unattributable to a specific reason.

The outlook despite inflationary fears is solid and “All in all, the job market is still hot,” said Daniel Zhao, an economist at the career site Glassdoor, to The New York Times, and “There’s still some cushion before we actually hit the ground.”

For Biden, the report, coming just before the midterm elections, offers some good news, but it’s a mixed bag as he faces a barrage of criticism from the right, who seeing the inflationary numbers, say it is  all his fault. Nevertheless he said in a statement from the White House on Friday, “While comments by Republican leadership sure seem to indicate they are rooting for a recession, the U.S. economy continues to grow and add jobs even as gas prices continue to come down.”

While the Fed may make smaller interest rate increases, say some, at its December meeting, Powell had to backtrack hopes, by noting that any actions in that area would depend on the data, and indeed most Reserve observers have noted, much like his predecessor, Janet Yellen, he is data dependent.

Also part of the mixed bag is the effect on consumers and while the slight dip in employment shows some effect as we have noted, but mortgage rates took a slight dip before Friday’s numbers were released, down from the prior week of 7.16, yet as  Bankers Association, reported that the 30 year rate had fallen to 7.06 percent on the average, “mortgage rates have still shot up to more than 7 percent, up from 4.2 percent in March and from their pandemic low point of 2.7 percent”, according to The Hill.

Since mortgage rates on a 30 year fixed “don’t move in tandem with the Fed’s benchmark rate, but instead track the yield on 10 year treasury bonds” with multiple factors interplaying, it bears watching for investors and buyers.

For the rental market there is some easing according to the Zumper National Report, with one bedroom apartments decreasing to 0.8 percent to a dollar figure of $1,491.00, and two bedrooms lowered by 0.7 percent, or $1,832, across most urban markets; and while, this smaller decrease in rentals offers some hope, most realtors don’t see this as a trend, but something to be watched.

And, watched, it will be.

The November report, once released, will have a great deal of attention by the market, as well as the government, and commercial interests, as it might be a bellwether for the end of the 4th quarter of 2022,  as well as a harbinger for January of 2023.