Is Trump Responsible for the Economic Boom? A Question That Could Sway Minnesota in the Midterms

Is Trump Responsible for the Economic Boom? A Question That Could Sway Minnesota in the Midterms

Why you should care

For many Americans, the economy and jobs matter more than anything else. That’s good for Trump. 

It may dismay relatives in his native Belgium, not to mention his wife’s family in Mexico, but Laurent Deconinck counts himself an enthusiast of the policies of Donald Trump. The benefits, he says, walking across his factory floor in a northern suburb of Minneapolis–St. Paul, are all around him.

Trump’s tariffs on imports of steel and aluminum may be pushing up metals costs, but Deconinck is passing that on to customers — clearly itemized in his invoices. Meanwhile, investment write-offs encouraged by the Republicans’ tax cuts have freed up cash for spending on new kit to make metal components, he says, gesturing at a $300,000 machine he bought as a result. And last year the prospect of a trade war with Beijing prompted a customer who sells knee braces for hobbled pets to ditch a Chinese supplier and shift the work to Deconinck’s Minnesota factory.

“A lot of people don’t want to be associated with Trump because they don’t support the bad language and nastiness of what he is saying, but they do like the action,” Deconinck says, raising his voice over the din of the production floor of his company, Machining Technology. Trump is “trying something new.”

Americans go to the polls on Nov. 6 in midterm elections that have the potential to make or break the Trump presidency. Facing the threat of losing one or even both houses of Congress, which could open up a torrent of investigations into the Trump White House, Republicans are counting on a booming economy to give them an edge with voters in places like Minneapolis.

Donald Trump, whether you like him or don’t like him, is the No. 1 issue in this election.

Margaret Anderson Kelliher, former Democratic speaker of the Minnesota House

Unemployment in the metropolis is 2.6 percent, lower than in any other U.S. urban area with a population of at least 1 million people, and a far cry from the 8 percent joblessness rate blighting the region during the financial crisis.

Yet as Trump prepared to hold a rally in Minnesota on Thursday to galvanize his party, Republicans in the state were looking at the elections with anxiety.

Two incumbent Republican congressmen in the Minneapolis–St. Paul suburbs are under threat. Republican gubernatorial candidate Jeff Johnson, who has enthusiastically embraced Trump, trailed in a recent opinion poll behind Tim Walz of the Democratic-Farmer-Labor Party — the Democrats’ Minnesota affiliate. And Democrats are looking to make inroads into the Republicans’ lead in the state Legislature.

Simply put, the president’s message of economic resurgence may be resonating with business owners such as Deconinck, but it’s being drowned out in many parts of the state by the polarizing influence of Trump as well as highly charged issues including health care and the nomination of Brett Kavanaugh to the Supreme Court.

According to Real Clear Politics, the Democrats are 7.4 percent ahead of the Republicans in the polls for the November congressional election.

Recent polling from the Pew Research Center showed that, while interest in the midterms was strong among both parties, 67 percent of Democratic voters across the U.S. were more enthusiastic than usual about voting, outweighing the 59 percent of Republicans. This is adding to the Democrats’ hopes of winning at least one of the two chambers of Congress.

“Let’s just say there are a lot of Democrats who would walk over a lot of hot coals to vote right now,” says R.T. Rybak, the former Democratic mayor of Minneapolis.

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For many Republican candidates, the economy, surging stock markets and December’s tax cuts are the cornerstone of their bid to retain power in Washington and state capitals. Congressman Jason Lewis, for instance, who faces a tight battle for suburban voters against Angie Craig, a former health care technology executive, has been hammering home the bounty he says was unlocked by the tax-cutting package.

At a June rally in Duluth, near Minnesota’s Iron Range mining region, Trump told supporters that wages were rising for the first time in 20 years and that no one had ever seen the kind of growth he was presiding over. Leaving aside the inaccuracies in his statements, the president had plenty of reason to tout the U.S. expansion. Annualized growth across the country was at its quickest pace in four years in the second quarter, clocking in at 4 percent, and the Federal Reserve forecasts that joblessness is set to plunge to a near-record low of 3.5 percent next year.

While some manufacturers are being hurt by the president’s tariffs, Fed Chairman Jay Powell said no damage is yet visible in the aggregate data. Indeed, manufacturing, a key sector for Minnesota, has added more than 7,400 jobs in the past year, and head counts in construction are up by more than 6,800. Job vacancies, up 16 percent year-over-year, have hit records.

Less qualified workers are beginning to feel more benefits. Hourly wages for jobs aimed at candidates with a high school education are being advertised at a median rate of $14 an hour, up 15 percent over the past two years, according to state government figures.

There are pockets of serious deprivation in the Minneapolis–St. Paul region, but businesses say the biggest constraint on their growth is a lack of candidates to fill vacant positions. Data from the state’s department of employment and economic development show there are two open posts available for every unemployed person in the metro area, leading to a frantic scramble for workers.

Jim Johnson, who runs two branches of recruitment agency Express Employment Professionals, says clients are easing back on criminal record checks and drug tests, as well as loosening requirements that candidates upgrade their wardrobes before starting a new post, because they are worried that creating barriers could deter applicants.

Lucas Nathan, a 22-year-old welder who recently moved from North Carolina, says he got his first job in the area on the basis of a single phone interview. In September he secured a new job in less than a week, having been offered positions by three of the four companies that interviewed him. Two of them tried to outbid the employer he opted for.

“I was very surprised by how easy it was,” he says. “Welders are needed everywhere. The economy is going up — a lot of people are building businesses.”

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Yet Nathan, who says he will probably vote Republican in November, does not appear to link the economic surge with the policies pushed through since Trump’s election. Strikingly, the Pew polling from late September showed the Republicans and Democrats level pegging nationally in terms of voters’ views of the best party to run the economy.

While Republicans point to December’s tax reductions as they take credit for an economic rebound that began eight years ago under Barack Obama, some also privately acknowledge the success Democrats have had in branding the tax package as a giveaway to the rich and to big companies.

Rhonda Sivarajah, the chair of the Board of Commissioners in Anoka County, which stretches north of Minneapolis, worries the strong economic backdrop could induce complacency among Republican voters at the midterms. “If they feel ‘my life is great, the economy is doing great,’ they don’t have that same energy level. They take it for granted,” she says.

One senior Minnesota Republican says a recent private poll showed that the economy and jobs have slipped down the list of voters’ concerns, with health care emerging as the top priority.

The Republican says that, in well-off suburban areas, there could be a surge in support for the Democrats because of women’s anger at Trump’s behavior and concerns that Republican policies could hurt coverage for individuals with pre-existing medical conditions.

That sentiment may have an impact on Republicans in congressional races in districts around the twin cities of Minneapolis and St. Paul. Vin Weber, a former Republican congressman from Minnesota turned lobbyist, says Republicans running in suburban areas are finding it difficult to separate themselves from the president in an effort to attract independent voters, while continuing to appeal to Trump’s highly motivated base.

Erik Paulsen, a Republican congressman since 2009 whose district lies in the prosperous, western parts of the metropolitan area, is at serious risk of losing his seat, according to recent polls. While he has campaigned on the strong economy, strategists say the race in his district is being dominated by other issues, including the president’s personality.

This by no means makes it certain that Democrats will triumph. The party may well manage to hold on to Minnesota’s two Senate seats, but its prospects of winning overall control of the chamber are far more distant.

While the Democrats are angling for gains in urban and suburban areas, Trump’s support remains firm in rural regions of Minnesota. The first congressional district, in the south of the state, and the 8th District encompassing the Iron Range mining area both elected Democratic candidates in 2016. Yet they both face strong Republican challengers.

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The Kavanaugh hearing, in which the Supreme Court nominee responded to allegations he sexually assaulted a fellow teenager in the 1980s with an angry denial, has injected a further, unpredictable element into the elections. Patrick Garofalo, a Republican representative in the state Legislature, argues that Trump is, like Kavanaugh, a polarizing figure for the electorate. But to date, he says, the Republicans have ended up having the best of both worlds.

Trump has attracted new members to the Republican coalition in Minnesota, yet at the same time those in the party who do not like the president have not taken it out on local candidates, Garofalo says. “A strong economy benefits incumbents: When the economy is doing well, voters are less likely to want to throw someone out of office,” he adds.

Yet Trump will be the wild-card factor in polls across the country. His personal approval ratings have remained depressed in the face of a barrage of good news on the economy, including surging consumer optimism.

“Donald Trump, whether you like him or don’t like him, is the No. 1 issue in this election,” says Margaret Anderson Kelliher, a former Democratic speaker of the Minnesota House. “His behavior is a particular motivating factor for people who are outraged by it.”

The upbeat mood of Deconinck and fellow business owners is not necessarily echoed on their own shop floors.

Terry Hill gives Trump no credit for the booming economy. The Machining Technology employee sat out the 2016 election because of indifference to both candidates, but Hill is preparing to vote in the midterms and against Trump’s presidency.

“As a country we need to get him removed from office as soon as possible,” he says. “I need to vote Democrat in order to take control of the Senate and/or the House and facilitate that happening. That is all it is about.”

Competitiveness threat of longer dispute worries North Star state

Donald Trump has been emphatic: The tariffs are having no impact on the U.S. economy. The president’s verdict has received some confirmation from the Federal Reserve, whose chairman, Jay Powell, has discerned no signs of ill effects in the aggregate data — or at least not yet.

But Powell has also highlighted a “chorus of concerns” from businesses over possible supply chain disruptions, adding that a prolonged spell of trade tensions could start to hurt families and workers. Already a range of major U.S. companies have warned of possible increases to consumer prices given the tariffs that have been levied on Chinese products.

Walmart, Target and Ford rank among the companies that have talked of customers feeling the effects.

Minnesota is among the 10 states that are most exposed to a prolonged trade war with China, according to Oxford Economics — in part because of its reliance on exports of manufactured products to the country. It also ranks alongside Iowa and Illinois as a major producer of soybeans. While Minnesota narrowly backed Hillary Clinton in 2016, eight of the other most-exposed states voted for Trump, Oxford Economics says, with farm states hit hardest.

Rod Gramse, general manager at MRG Tool and Die, a Minnesota manufacturer, says he is broadly managing to pass extra costs of commodities resulting from higher tariffs on to customers, but he worries about the longer-term impact of the levies. “If the tariffs stay there long term, are we going to be competitive on a world market?” he says.

Given the difficulties in finding qualified labor in his region, it may also be difficult to cash in on work that returns to the U.S., Gramse adds. “I can’t supply that demand coming back here because we don’t have enough people to do the work.”

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By Sam Fleming

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