The Economy Is Outperforming in Swing States — It’s Good News for Harris

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(Bloomberg) — Six of the seven states expected to decide this year’s U.S. presidential election saw faster growth than the U.S. economy as a whole in the second quarter, adding to a recent tailwind for Vice President Kamala Harris nearly a month after voting.

Particularly noteworthy is the rebound in major industrialized countries with a “Blue Wall” legacy. Inflation-adjusted GDP growth in Michigan and Wisconsin was among the 10 fastest in the country, and Pennsylvania rebounded after contracting in the first quarter, according to Bureau of Economic Analysis data published Friday.

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Growth in Sunbelt states like Arizona, Georgia and North Carolina remained stronger than the national average. Only Nevada trailed the 3% U.S. GDP increase with a 1.8% increase.

Voters consistently see the economy as their top concern, with former Republican President Donald Trump leading his Democratic rival on the issue in opinion polls.

However, Harris has worked to close the gap on economic issues in recent polls. A Bloomberg/Morning Consult poll of likely voters in seven battleground states this week found that she was virtually tied with Trump on who voters trust most to handle the cost of everyday goods, and she also has an 11-point lead over who will handle it more. Helping the middle class.

GDP numbers do not reflect recent months, and state-level data can be volatile.

But the stronger economy in blue wall states may matter politically because Democrats viewed them as key to retaining the White House even before Harris took the ticket. The three states as a group have lagged in recovery since the pandemic, growing at only a third the rate of the rest of the United States in real per capita terms between 2019 and the end of 2023, according to a Bloomberg analysis published last month.

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Wisconsin saw the biggest turnaround in the latest GDP data, growing at an inflation-adjusted annual rate of 4.2% in the second quarter after shrinking at a 1.1% rate in the first three months of the year. Real GDP rose 4.2% in Michigan and 3.2% in Pennsylvania.

“The key state is, of course, Pennsylvania,” said Mark Zandi, chief economist at Moody’s Analytics, who is based in the state. “The larger cities of Philly and Pittsburgh are benefiting from very strong growth in health care, education, and financial services,” while the rest of the state is “living it tough.”

Although that did not translate into many new factory jobs, manufacturing as a contributor to GDP was significant, along with construction, he said.

Arizona, Georgia and North Carolina, where economies boomed during the pandemic recovery, outperformed the rest of the United States in the fourth quarter. But in Nevada, economic growth in the second quarter fell to the main accommodation and food services sector.

The economy remains by far the most important issue for voters in the Bloomberg/Mounting Consult poll, and more than two-thirds of respondents believe it is on the wrong track. Trump continues to lead Harris among likely voters when asked who they trust most to handle the economy. But the vice president was taking advantage.

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The reality for many people remains that although inflation has slowed, prices for everything from housing to groceries are still higher than they were before the pandemic.

Swing states like Georgia and North Carolina have clearly benefited from the Biden administration’s push for new investment in electric vehicle and other green energy plants, said economist Mark Vitner, founder of North Carolina-based Piedmont Crescent Capital.

However, Vitner cautioned that country-level GDP data are often subject to significant revisions. He added that strong growth numbers in a state often don’t translate into votes, even in an election year.

“People aren’t putting GDP in their gas tank. They’re not buying GDP at the grocery store. That’s where most of the anxiety is in the economy,” said Vitner, who works at an electric vehicle plant in Greensboro, Ohio. North Carolina feels more frustrated by higher gas prices than if he were working in a furniture factory.”

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