Event Recap - Report on Politics with Kyle Kondik, April 20, 2021

Kyle Kondik, the managing editor of Sabato’s Crystal Ball, which is published weekly by the University of Virginia Center for Politics, discussed political trends and consequences with the Cleveland Club on April 20. The author – as well as co-author with the Center’s Larry Sabato – of several books on politics and voting trends, Kondik discoursed on Ohio and national voting affairs.

Raised in Independence and a graduate of Ohio University as well as its Scripps School of Journalism, Kondik offered all manner of statistics on recent elections and some speculation on future ones.

Reflecting on Ohio politically – which he said could also stand in general for the Upper Midwest – he noted a “Democratic collapse outside large cities.” He observed that Ohio’s three largest counties – Cuyahoga (Cleveland), Franklin (Columbus) and Hamilton (Cincinnati) -- make up about 30% of the state’s vote, the other 85 counties composing 70%. Biden did 66,000 votes better than Obama’s 2012 total in the three big counties in 2020, he noted, but more than 700,000 worse in the other counties. “Democrats used to count on such cities as Warren and Youngstown, but not anymore,” Kondik said.

“There are lots of voter shifts going on,” Kondik said, “but the one most notable to me concerns the four-year college degree. Voters without a four-year degree used to be Democratic but have been trending Republican while those with a four-year degree used to be Republican but are trending Democratic. And in a state like Ohio there are more voters without a four-year degree than those with one.” To make Ohio competitive again for Democrats, he said, Democrats have to do better in the big city suburbs and claw back among the whiter, rural counties. These trends echo in Iowa, Michigan, Pennsylvania and Wisconsin, but Michigan, Minnesota and Pennsylvania are affected more than Ohio by their mega-cities and higher percentages of four-year college degrees. Besides higher education, Kondik noted a cultural divide: cultural liberalism vs cultural conservatism, with persons who used to vote Democratic loosening their loyalties -- perhaps associated with unionism – to the party on account of cultural issues. He also noted “negative partisanship,” the tendency to vote against a party or candidate rather than for one.

Other points Kondik offered or made in response to questions:

About Ohio

  • State offices are likely to remain Republican in 2022. Rob Portman’s U. S. Senate seat likely will remain Republican though Ohio historically elects a moderate Republican to the Senate rather than one more to the fringes of the party.

  • Democrats could peg their hopes on 1) Republican votes declining without Trump on the ticket (because some Trump voters are loyal to the man rather than the party’s positions), and 2) growth being larger in the three major cities than in rural areas.

  • Kondik lamented the diminishing resources of local newspapers including ones in Cleveland, Columbus and Cincinnati. He noted that people are relying less on mainstream media and that trust in government and media is low.

About the nation

  • Political polling has not been as reliable as in the past, some states such as Florida and Nevada being considerably difficult to poll accurately.

  • Redistricting on account of the 2020 census will likely help Republicans. Neither house of the U. S. Congress is guaranteed to flip, but of the two the House is the more likely to go Republican.

  • Redistricting will likely reduce Ohio’s House seats to 15 [proven correct on April 26] (population in the state is growing but slower than in some other parts of the country) and the district likely to disappear is the one Cong. Tim Ryan now holds. Kondik foresees a 12-3 or 11-4 Republican-Democrat mix for U. S. House representation.

  • Owing to demographic changes, Georgia will become increasingly Democratic.

For more on Sabato’s Crystal Ball newsletter and the University of Virginia Center for Politics, see: https://centerforpolitics.org/crystalball/.

Event Recap - Report on Federal Reserve Bank Of Cleveland Event, February 17, 2021

Federal Reserve of Cleveland Group Vice President in the Research Department Guhan Venkatu reported to the Cleveland Club on February 17, discussing the regional and national economy and answering questions from participants. Mr. Venkatu’s views were not necessarily those of the Cleveland Fed.

Presenting slides, Mr. Venkatu said:

  • Recent U. S. economic statistics have been historic. The 30+% drop in GDP early last year was the steepest since modern recording began in 1942 and likely the steepest since the 1890s. But the rate of the initial rebound was also historic so that by the end of 2020, GDP was only 2.5% less than in the 4th quarter of 2019, when the recession officially began.

  • Not counting the $1.9 trillion aid package currently contemplated by Congress, the federal government has spent four times the amount it spent to save the financial system during the collapse of 2008-‘09. This federal spending has increased the debt-to-GDP ratio from roughly 110% in the first quarter of 2020 to roughly 130% through the third quarter of 2020. The federal largess has helped to keep family disposable income at roughly pre-pandemic levels. Consequently, national spending on goods has been strong, although on services – which includes movie theaters, hospitality and restaurants – has been weak.

  • Sectors sensitive to interest rates -- which have been low -- have done well, for example auto and homes sales.

  • A study by the Cleveland Fed nationally has shown that over the last year net migration into core cities has dropped slightly, though the reasons remain murky.

  • Cleveland area employment has mimicked that of the nation; all gains made up since the Great Recession have been lost. Most affected have been low-skilled workers.

  • Small business survival has been slightly better in Ohio than nationally.

  • State and local governments’ bottom lines have been stressed, which may lead to lower investment and consequent deterioration of education and human capital.

  • Statistics studied for evaluating the fair value of the stock market are mixed.

  • The Federal Funds Rate is likely to stay as low as today into 2023.

  • The pace of economic recovery will depend on the rate of recovery from covid-19.

Answering questions from participants, Mr. Venkatu said:

  • A carbon tax is looming less likely on account of the inroads made by renewable energy production and prospects of an increasing electric-car fleet.

  • Anxiety over the level of U. S. debt-to-GDP is ameliorated by the purpose of the spending, which lately has been to retain the economy’s infrastructure, the health of which will be used to pay off the debt. Mr. Venkatu likened current government spending to the spending for winning World War Two.

  • Cleveland’s strengths are “Eds and Meds,” meaning educational and medical resources, human capital and infrastructure. Mr. Venkatu pointed out that the United States in the 1930s and 1940s understood the economy was shifting and that the one-room schoolhouse would have to be replaced with a greater educational infrastructure. He thought the present adoption of digital technology is similar to the conversion from an agricultural to an industrial society then. The digital economy may benefit non-coastal areas such as the Midwest on account of being able “to do the work” anywhere. He also said there was at least anecdotal evidence of persons interested in moving from high-cost coast cities to cities offering good weather and a more congenial life-style.

  • Mr. Venkatu responded to a question about cryptocurrencies by saying that currencies need wide-spread confidence, not yet enjoyed by cryptocurrencies when compared to the trust in such tax-supported currencies as the dollar, the euro and the yen. But he conceded that cryptocurrencies were making inroads and that even central banks were becoming increasingly interested.

Mr. Venkatu pointed out that persons can receive free Federal Reserve Bank of Cleveland newsletters by going signing up here. Persons can learn more about the Cleveland Fed’s research at www.clevelandfed.org or its regional analysis here.

The Cleveland Fed is always seeking economic insights from those in senior leadership positions at their organizations, who can comment, with a fair amount of detail, on their firm’s and industry’s current conditions. If you know someone who may be interested in joining one of the Business Advisory Councils, please share this form.

Mr. Venkatu also encouraged persons visiting Cleveland to tour the Federal Reserve Bank and its Money Museum (when permitted by pandemic-related rules).

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