Redistricting & the Economy: Keys to the ‘22 Election

by Max Cook, MBA President and CEO

Max Cook, MBA President & CEOI’m sure many of you are scratching your heads wondering why I’m focusing my attention on the 2022 midterm elections in this column. Believe it or not, the phones are ringing off the hook with requests for campaign contributions, for both state and federal races. What makes this especially interesting is that the redistricting process is about to unfold once the 2020 census data is released. Throw in the fact that our economy is in the early stages of recovery from a year of COVID shutdown, and you have the makings for an interesting lead-up to the November 2022 midterm elections.

Let’s look at the congressional redistricting process first. Nationwide, Republicans will dictate much of the process by controlling the mapping in 22 states with 186 U.S. House districts while Democrats will be able to draw the map in nine states with 76 districts. Independent commissions will draw maps in 12 states with 126 districts. Just seven states with 47 districts have split control. With twice as many districts to remap, the Republicans would seem to have the advantage. Maps drawn by independent commissions also can be overturned by state legislatures in many cases, so the Republican grip appears to only get tighter. Republicans have control in places like Texas, Georgia, Florida and North Carolina, and they need to flip only five seats to recapture the House, something they could possibly attain through favorable maps in those states alone.

In Missouri, Republicans control the redistricting process. In some quarters, there is speculation the GOP may pick up a seat. How does that happen? It’s easier than ever for Democratic areas to be divided up and scattered among more rural Republican-leaning areas. 

When you look at the process nationwide, it is easy to see how the GOP could pick up three to four seats in the U.S. House simply through the redistricting process. Add to that the fact that since the end of the Civil War, the party holding the White House has lost House seats in 36 of the 39 midterm elections, and you have your answer.

Let’s look at the economy and the impact it will have on the midterms.

The one thing that almost everyone is focused on is the growing federal debt. Just in the one year running from first quarter 2020 to first quarter 2021, the U.S. national debt load has gone from $23.2 trillion to $28.1 trillion. These numbers don’t include all the stimulus money that has been injected into the economy, nor does it include any of the more than $3 trillion being proposed for infrastructure and other programs. 

The issue with the debt really centers around the debt as a percentage of our gross domestic product. For the longest time, most economists have said that anything more than 100% of GDP is unsustainable. Well, we hit 100% sometime mid-year 2012 and have reached 127.3% as of first quarter 2021. Need I say more?

In addition, supply chain issues are creating shortages and price inflation on almost everything we buy and consume. Federal Reserve Chairman Jerome Powell stated recently that he believes this is temporary and as our economy opens more and more people get back to work, supplies will increase and prices will stabilize or even come down. That may be true, but will it occur fast enough to influence the voters in 2022?

I think the biggest question here surrounds the labor force. Everyone is looking to hire, but applicants aren’t to be found. We need to get back to work manufacturing, importing, exporting, transporting, warehousing and selling goods and services that we all need and use every day. With an unemployment rate hovering around 6%, you would think there would be ample numbers of people available to ramp back up. Interestingly though, our labor participation rate is 1.7% lower than it was in February 2020, now sitting at 61.6%. Between 1948 and 2021, the range has been a high of 67.3% to a low of 58.1%. Unfortunately, we currently sit in the lower one-third of that range. To entice people back to work, employers are increasing wages, putting more pressure on prices.

There is much more with respect to the economy, but the important thing regarding the midterm elections is that people will vote their pocketbooks! If inflation and scarcity persist, voters will likely rebel, and that will work to the advantage of the Republicans.

It will be interesting to see if my crystal ball is accurate. My guess is that it is because history tends to repeat itself, and we’ve seen this scenario before. Hang on … it’s going to be an interesting year! 

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published in The Missouri Banker
July/August 2022