Red State economies vs Blue States: You already know who’s better off
WASHINGTON – As the Covid pandemic morphs into an ongoing, government-supported Covid propaganda (as in this month’s dreaded “Delta Strain” fear-mongering), the US economy is fast becoming a Tale of Two Economies. Namely, the Red State economies vs the Blue State economies. Throughout all this 2021 market turmoil, this interesting fact continues to bob to the surface for those paying close attention. This despite the MSM’s refusal to cover it.
Meanwhile, as of 2 p.m. ET Monday, US markets remain fairly flat. While the Dow Jones Industrials (DJI) remain about half a percent in the red – down nearly 200 points – and the S&P hovers right on the flatline, the tech-heavy NASDAQ, at least, remains up about 0.6%. As the Fed’s money spigot remains wide open despite the central bank’s hint it might allow interest rates to rise some time before the year 3000, bulls are trying to extend 2021’s over-extended rally. But that rally seems to be running out of steam as speculative fervor has begun to cool.
And the reason why may involve, at least in part, America’s economic bifurcation into a twisted Tale of Two Economies.
Red State economies: Progressive, in the original sense of the word
In the main, Red States have opened their state economies to relative normalcy much more quickly than those Blue State Meanies. Further, Red States have chosen to terminate distributing all that free Federal unemployment bonanza, encouraging many unemployment bonus goldbrickers to hit the payment, find a job and go back to work rather than avoid it to continue their government-paid vacations. That’s helping understaffed Red State companies to staff back up, increase productivity and, more than likely, increase profits.
Meanwhile, the Blue States have kept their lockdowns in place, continuing to give out the free Federal $$$ and continue those free vacations, which, frankly, most workers are taking advantage of, since they’re effectively making more money this way than by actually working. As a result, productivity, and even re-openings have been ruinously delayed in most of those states, thus helping retard a robust national recovery.
Red State economies sizzle, while Blue State economies largely fizzle
Our friends, the Tylers, over at ZeroHedge discuss this at length, interspersing a series of illustrative charts, the first of which appears above the headline of this market commentary. It shows in color those states that have or are about to terminate the free Federal checks and on what month and day. All of them are showing robust economic rebounds.
Needless to say, this is the 21st century, and politics continues to, er, trump everything else. Republican-led Red States, in the main, realize we’ve done pretty much all we can do, re: Covid. So their governors have determined it’s time for a Return to Normalcy. Meaning that it’s time to go back to work, start adding to those 401(k)s again, start sending the kids back to schoolhouses and / or summer camps, and, well, just have as normal a life as any red-blooded American citizen can, Cancel Culture notwithstanding.
ZH opines further, and we quote the relevant article at length. It’s helpfully headlined:
The Experiment Is Over: Labor Market Normalizing In Republican States, Remains Broken In Blue States
So let’s get into the opening material. We’ve lightly edited it to trim sentence length, which the Tylers extended in order to drop in several charts. To read the whole thing, unedited, and see those other very interesting charts, link to ZH here. Let’s get into it.
“Exactly one month ago… we observed that … 23 – all republican – states announc[ed] at least some form of early reduction in pandemic-related unemployment insurance benefits. [They did so] ahead of the September expiration at the federal level. [Their intent:] to unclog labor supply and ease the unprecedented labor shortage gripping America[.] [That shortage] has manifested in record numbers of job openings which nobody wants due to Uncle Sam’s generous weekly benefits[.]
“[We] said that ‘since Democrats will likely not end UI benefits any time soon – or ever, if they could – this sets up the US economy to become an epic real-time economic experiment[.] [An experiment] where everyone can keep track of the unemployment across in Red states (most of which have ended their UI benefits), and blue states where claims will keep potential workers at home, pressuring unemployment rates.’”
And now, let’s open the winning envelope, please…
“One month later the verdict is in, and as Morgan Stanley recaps over the weekend, “some states chose to end these benefits early – in about 10 states in the US, these benefits expired on June 19.” So what did the bank find? That not only were Republican states right all along to end benefits early[. B]ut that the primary – and biggest – reason for the unprecedented shortage in workers has been Joe Biden’s catastrophic socialist policy of having the government match or even surpass what the private sector is paying…”
(Our edits indicated by square brackets and occasional ellipses (…). All other typography, etc., via ZH.)
A real Tale of Two Economies
In short, we really are dealing with a modern-day Tale of Two Economies. Not to mention two drastically different reactions to the never ending Covid epidemic.
We can easily see this diabolical and destructive pattern with increasing clarity. It’s now a key part of a vicious, left-wing Democrat plan to crush America’s capitalist economy. That part? Encouraging American workers to permanently rely on the Federal government to supply money they need to survive. This would ultimately, rob entrepreneurs, independent startups, and inspire individual Americans to wake up to the new reality. And learn to love Big Brother Joe. (Or maybe even Big Birthing Person Kamala.)
This stuff may seem esoteric. But it hangs like a Sword of Damocles above our markets and our institutions, many of which, sadly, have chosen to go along with this vicious movement so they can reap great financial rewards for their cooperation.
The good news: Clearly, the Red States’ economic approach is working. The Blue States’ Covid Fear Forever platform is not. Only one of these plans will win. Unfortunately, at least right now, only the Blue States have an army of brown shirts to enforce theirs.
We’ll see what happens next. But no matter what gobbledygook the financial pages offer to explain current market conditions, remember this. The American economic Civil War is already underway. And we think that’s the longer-term message that today’s confused stock market and market averages are trying to tell us. Today’s watchword is “Caution.”