Midterms, Inflation, & Sunshine

Week in Review: Nov. 7-11

I got to say, those economists who think we might be able to avoid recession had a good week (so did the guy in the White House). For those of us who think otherwise, there’s always next week!

Monday

End of Daylight Savings Time

I know, this was technically on Sunday, but there were no meaningful data releases on Monday and I can’t resist taking shots at this truly awful policy. Seriously. Changing our clocks increases the chance of stroke by 8% during the two days following a daylight savings time transition, increases fatal car accidents by 6%, and increases workplace injuries. That’s just the tiniest fraction of the research about it. It’s 4pm, and it’s dark.

To be clear, the optimal choice would be making DST permanent, which the Senate tried to do with the ill-fated Sunshine Protection Act last year, but staying in standard time would also be fine. We are so divided politically, we can’t even protect sunshine. And that’s my segue to . . .

Tuesday

Midterms

We do policy, not politics, but I have two big takeaways from Election Day: candidate quality matters, and we might not be as polarized as we think. Why do I think that? Because we saw huge spreads on ballots between candidates of the same party.

Let’s start with Georgia, where Brian Kemp(R) won by 8 points but Hershel Walker(R) now heads to a runoff and would have lost by a point if it didn’t require >50% of the vote to win. That’s a 9-point spread. In New Hampshire, Don Bolduc(R) lost a senate election to Maggie Hassan(D) by 9 points, but Chris Sununu(R) won the gubernatorial election by 16 points over Tom Sherman(D)—a 25 point spread between the two races. Ohio also saw a huge split, with J.D. Vance(R) winning a house senate seat by about 7 points while republican Mike DeWine(R) won the gubernatorial election by more than 25 points.

We saw similar spreads between same-party candidates in several other states, and that suggests that a fair number of voters are still willing to vote cross-party or simply abstain from voting for some candidates in their preferred party. What’s more, independents continue to shift back and forth between parties in their voting to demonstrate their lack of loyalty to anyone.

What should you take from this? The median voter theory isn’t dead in America just yet, and primary voters would do well to remember that when choosing between moderates and those who tilt toward the extremes.

NFIB Small business Optimism Index

This measure of small business sentiment declined in October and is now below its 49-year average for a 10th consecutive month. Inflation and labor shortages continue to weigh on small business owners, and that should surprise absolutely no one.

Wednesday