Economic Pacesetters and the 2014 Elections

by John Hood

In 2010, Republicans didn’t just take over the U.S. House and make substantial gains in the U.S. Senate. At the state and local level, the GOP had its most successful electoral cycle in decades, with a net gain of six governorships, hundreds of seats in state legislative chambers, and thousands of victories in local races. For the first time in living memory, most state governments were run by Republicans. Even the Democratic surge generated by the 2012 Obama reelection campaign didn’t change things much. Most state legislatures are now Republican-controlled. GOP governors and legislatures combined control 24 state governments, while Democratic governors and legislatures control only 13.

The minority party is hoping to change that in 2014. Given President Obama’s unpopularity and the likelihood that the midterm electorate will lean rightward, however, it may prove difficult to translate these Democratic hopes into substantial gains. Some Republican-held legislative seats are clearly in play and at least three incumbent GOP governors — in Florida, Pennsylvania, and Maine — are currently fighting for their political survival. But in many other places, Republicans who might otherwise face strong challenges are likely to benefit from the fact that their state’s economies — often bolstered by fiscally conservative, pro-growth policies — are clearly outperforming the national average.

Consider, for example, the state GDP figures just updated by the U.S. Bureau of Economic Analysis. Of the top ten states in economic growth from 2010 to 2013, seven have Republican governors. Of the bottom ten states in economic growth from 2010 to 2013, seven have Democratic governors. Looking at the most recent year only, 2013, seven of the ten fastest-growing states have both GOP governors and conservative legislatures (Nebraska’s unicameral legislature is nonpartisan but right-leaning). On the other hand, there are some Republican-led states where the recent GDP growth has lagged behind the national average. Pennsylvania, Maine, and Florida are among them, which helps to explain the current polling in those states. So are New Jersey and Louisiana, a fact that has its own political implications.

To be fair, GDP growth isn’t the only way to measure relative economic performance. If you look at changes in unemployment rates, Florida, Maine, and Louisiana look quite a bit better (Pennsylvania and New Jersey don’t). Overall, of the top ten states in labor-market improvements since 2010 — I’m using a broader measure that takes discouraged and other marginally attached workers into account — eight have Republican governors.

Obviously there are many factors that determine the relative performance of state economies. National and market factors lay outside the control of state policymakers, although the best empirical evidence suggests that state fiscal and regulatory policies do have significant effects. Still, as a political matter at least, Republicans are probably going do fare pretty well at the state level in 2014 — protecting most of their past gains, and perhaps making a few more — because their electorates feel less dissatisfied with the direction of their state economies than the average American voter does.