Brief Notes: The Election, The Economy

First let me offer an intriguing story about Deep Blue IL, which may say something about what’s going on far more broadly across the country as a Red Wave builds.

For several weeks there have been reports, not widely disseminated, about the governor and senate races tightening in IL. Now, these reports were based on internal polling. However, yesterday a poll came out that was run by Emerson College and WGN-TV, and it showed the same thing. The numbers won’t seem startling—the margin in the governor and senate race were at 9 and 10, respectively. However …

The governor race had been at 15 a month ago. Moreover Pritzker had slipped from 51 to 50%. The same thing is happening in the senate race. Duckworth’s 19 point lead slipped to 10, and overall she stands now at 49%. The movement is all in one direction.

It’s still an uphill struggle and I haven’t heard anyone projecting an upset in either race. Nevertheless, both Dems had been prohibitive favorites, and when any candidate who’s a favorite starts slipping below 50% with two weeks to go, you know something is wrong with the dynamics of that campaign. I’ve been getting Dem flyers in the mail during this time period which make it abundantly clear that the Dems see crime as the issue that’s behind this shift. The result is that Dems may be forced to spend far more money than expected on what they probably hoped were non-races, and may end up spending money on those races in these final weeks when they had hoped to be using that money to shore up candidates in known toss-up or close races.

IL is as Deep Blue as virtually any state. If this is happening in IL, what’s going on in the rest of the country?

Go to Don Surber for some suggestions:

Democrats write off the House

One of the problems for the Dems that Surber documents is that the Dems have been spending big money in all the wrong places, on all the wrong races—but getting not enough love in return.

Exhibit One, of course is the governor’s race in AZ, where Dems helped Trump endorsed Kari Lake to win the primary, thinking that any Trump endorsee would be dragged down by the J6 Theater in the House. Woops! The Dems then threw money at Soros backed Katie Hobbs, but Lake is wiping the floor with Hobbs. Meanwhile, the NY and MI governor races, which were supposed to be sure things, are turning out to be anything but. The same dynamic is at work in the PA senate race and across the country.

As for the House …

In the House, Real Clear Politics gives them 175 seats and Republicans 225 with 35 tossups. 30 of those tossups are now held by Democrats.

Democrats have given up on seats they once thought they could easily take from Republicans.

Politico reported, "The party isn't airing ads in six of the 14 Republican districts Joe Biden carried in 2020, as it directs money to help incumbents under threat."

This next bit wasn’t supposed to be happening in CA—but it is. For years Dems could economize on such races and spend elsewhere. Now they’re losing races they can ill afford to lose:

The story said, "Rep. Mike Garcia holds one of House Republicans’ most vulnerable districts. But Democrats have barely spent a dime on TV to take him down.

"The decision, according to those involved, was driven by a relative lack of resources: As Republicans’ biggest House super PAC floods the election with hundreds of millions of dollars, their Democratic counterparts have lagged far behind.

They also spent money on the wrong issue:

Democrats thought abortion would be the issue this year, not inflation. So they went on the offense in summer like Napoleon did in his Russian campaign.

Winter is coming.

It’s not only that, though. Republicans are learning how to handle this issue. Go on offense. They’re doing it with new confidence. For a thorough overview of how this is playing out:

Republicans Find Their Footing On Abortion

The first example is Marco Rubio:

Rubio’s decision to come out swinging won rave reviews from pro-life groups. For months, these advocates have pressed Republicans to fight fire with fire when it comes to abortion because, they argued, Americans’ positions on the issue are much more nuanced than many topline poll results have shown.

Much, much more at the link.

Now, on the economy, what seems to be good news at first glance—a rise in GDP—turns out to be not that great. Virtually the entire rise was driven by “trade”, i.e., exports. Most people will certainly not notice, while their home values plummet:

GDP Grows 2.6% In Third Quarter but the Number Masks a Shocking Weakness in the US Economy

Consumer spending is down. Housing investment is down. Government spending, particularly in the defense sector, was the driving force behind the increase. One can’t help but wonder if the weapons and mentions sent to Ukraine and to NATO partners to backfill equipment shortages created by sending older arms to Ukraine were the reason for the increase in exports.

US GDP Grows 2.6% In Q3 Driven Entirely By Trade; Price Index Comes Cooler Than Expected

• Personal Consumption: 0.97% of the bottom line number, down from 1.38% and the lowest since 2019.

• Fixed Investment subtracted -0.89% from the GDP, in line with last month's -0.92% as corporations continue to retrench ahead of the recession

• The change in private inventories shrank for the 3rd quarter, this time shrinking GDP by -0.70%

• On the positive side net exports rose by 2.77% courtesy of a 1.63% increase in exports and a decline in imports which contributed another 1.14% to the GDP print. As noted above, this alone was enough to explain the entire gain in Q3 GDP, and is a function of US support of the European war economy as the US exports record amount of commodities (oil and gas) as well as weapons to Europe.

• Finally, government consumption - which was and remains an oxymoron - added 0.42% to the bottom line GDP.

US Core Durable Goods Orders Tumble Most Since COVID Lockdown Collapse, CapEx Shrinks

The Zhou administration will flog the supposed good news, but I doubt anyone will notice.