Let’s all hope that Politico doesn’t start a new publication called “Economico.” Because its latest venture into economic policy reporting – yesterday’s examination of President Trump’s trade-centric approach to strengthening America’s automotive industry – had about as much in common with sound economic analysis as Beto O’Rourke’s current talking points have with the Gettysburg Address.
The headline nicely sums up the piece’s theme: “Trump facing failing strategy on auto jobs as he heads to Ohio.” And the news hook is the President’s trip today to Ohio, where the announced closure of a long-time General Motors factory in the northeastern town of Lordstown has understandably attracted national attention given Mr. Trump’s 2016 campaign promise to ensure its survival, and given the importance of Lordstown-type manufacturing workers to his political success.
But the article’s treatment of the Lordstown decision and the broader Trump auto industry record is based almost entirely on cherry-picked facts presented in such stark isolation as to produce a thoroughly misleading picture to readers.
First, the piece doesn’t say that, for all the disrupted lives already caused and sure to continue due to GM’s Lordstown decision, Reuters reported the day before that
“GM Chief Executive Officer Mary Barra has said the automaker expects to have 2,700 job openings by early 2020 at other thriving plants, enough to absorb nearly all of those displaced in plants in Maryland, Ohio and Michigan willing or able to uproot for work hundreds of miles away. GM said another 1,200 affected hourly workers are eligible for early retirement.
“Based on a plant-by-plant count provided by GM, if every worker displaced or soon to be displaced volunteers for or accepts a new job – and those eligible to retire do so – that would potentially leave up to 500 GM workers jobless, far fewer than the thousands decried by the UAW [United Auto Workers union] and Trump.”
No one should underestimate the economic and other difficulties of relocation – especially from an economically struggling area like northeastern Ohio, where homes on the market don’t exactly command primo relative prices. And GM’s claims should be closely monitored going forward. But the Politico article, and all the coverage of Lordstown, should have mentioned that, based on what’s been promised, most of the released employees won’t be left on the streets (figuratively speaking).
By contrast, the Politico reporters unquestionably swallowed the claims by GM as well as Ford about the Trump administration’s metals tariffs crippling the auto companies’ prospects. Had they asked the obvious question about how the higher metals prices compared with the auto-makers’ overall costs, they’d have discovered that the tariffs barely moved the needle on overall figures – and that the companies’ could easily have found (and still can find) other economizing options to offset them.
Nor did the authors ask the equally obvious questions about overall trends in Lordstown-area and Ohio automotive and manufacturing employment. A five-minute dive into Bureau of Labor Statistics (BLS) data would have found that, during President Trump’s first 23 data months in office, the state’s manufacturers have added more jobs (20,400) than during the final three years (36 months) of former President Obama’s administration (19,700). The Trump-era gains are especially impressive since they’ve come later in the business cycle, when expansions typically lose momentum. (These time periods are chosen since they’re the stretches of each administration closest to each other during the same business cycle.)
In addition, although the latest figures only go up to September, 2018, the two Ohio counties in which Lordstown and nearby Youngstown (another victim of the GM decision) – Trumbull and Mahoning, respectively), have fared relatively well during the Trump years as well.
Specifically, during the first 19 data months under Trump, Trumbull County lost 569 manufacturing jobs. (BLS doesn’t track automotive employment at the county level.) During the final 19 months of the Obama administration, manufacturing payrolls fell by 1,150. For Mahoning, the comparable numbers are: Trump, up 294, Obama, down 468. Those are hardly gangbuster results during the Trump years. But failure?
In automotive specifically, from the state-level perspective. President Trump’s impact looks more mixed – but hardly failed, either. During his first 23 data months in office, Ohio vehicle makers added only 800 jobs. But during Mr. Obama’s final 23 months in office, they shed 1,300. In parts, the “Obama effect” looks better – Ohio-based facilities increased their payrolls by 3,600 during his last 23 months, whereas they boosted employment by only 800 under the Trump administration so far.
Interesting, a similar mixed picture emerges on a nation-wide basis. During Mr. Obama’s last 23 data months in office, U.S. auto and light truck producers increased employment by 21,400, versus a 23,400 improvement during the first 23 Trump months. But the Obama numbers for auto parts are much better – a gain of 34,900 during his last 23 months versus an 11,900 rise for the first 23 Trump months.
At the same time, are the lagging overall Trump national numbers due entirely or even mainly to his allegedly failed trade policies? Or to the topping out of American light vehicle sales that began in the fall of 2015? The Politico authors never give readers a chance to decide.
In fact, the changing automotive cycle surely accounts for much and maybe all of the declining rate of auto industry investment during the Trump years so far, especially compared with the big numbers racked up during the Obama years. Most of that spending of course came much earlier in the auto and broader economic cycle, when the sector and the rest of the nation were rebounding (with decisive federal aid) from a near-death economic experience.
The Politico article also repeats the canard that “International trade makes it difficult to distinguish between what’s truly American and what’s truly foreign.” Actually, it’s not difficult at all. U.S. Transportation Department data annually presents the U.S./Canadian and foreign content figures for every auto and light truck model sold in America. As reported by a recent analysis of the figures:
“Detroit has the bulk of cars with high domestic content. GM, Ford and Fiat Chrysler Automobiles build 37 of the 57 U.S.-assembled cars with 60 percent or higher domestic content. Foreign-based automakers are responsible for dozens of imported cars with zero percent domestic content, according to the National Highway Traffic Safety Administration [NHTSA]. Detroit automakers have just two cars below 5 percent….”
Finally, the authors express puzzlement that despite “the threat of auto tariffs….the foreign automakers who would be targeted by the tariffs are bolstering bolstering manufacturing in the U.S. with investments in auto plants across the Midwest and South.” To which anyone not infected with Trump Derangement Syndrome would respond, “Exactly.”
RealityChek 