State Winners & Losers From Census Bureau Redistricting

Before I get into our main topic, let me briefly mention today’s government report on 1Q Gross Domestic Product. The Commerce Department reported this morning that its “advance” estimate shows the economy growing at an annual rate of 6.4% in the 1Q, about in-line with pre-report expectations. It was the second fastest growth rate since 2003. I’ll have more details in next Tuesday’s Forecasts & Trends. Now onto our topic for today.

When the Census Bureau released the findings from its 2020 population survey on Monday, its findings have been widely reported and analyzed over and over by the media. We all know the highlights by now, with some states losing a congressional district based on population change, and some states gaining a district based on population growth over the last decade. Texas will actually gain two new congressional districts based on its huge growth since 2010.

Given the non-stop coverage in the mainstream media, I didn’t think I would write about the Census Bureau population survey this week. However, there is one aspect of the Census Bureau survey which has been largely ignored by the mainstream press. That is: How do states enact the redistricting process? Put differently, who decides where and how new congressional districts are created and just as importantly, where and how are districts eliminated?

The simple answer is, different states do it different ways, as I will discuss below. I don’t think most Americans know how this works (I didn’t know some of the details myself), so that’s what we’ll discuss today.

As noted above, several states saw their population shrink over the last decade, some saw their populations increase but most stayed about the same. The results are illustrated in the chart below.

As you can see in the chart, most of the states which saw their populations shrink were in the Democratic-leaning Upper Midwest and California (which saw its population shrink for the first time in history). Those which gained one new congressional district were spread out around the country and included several Republican-leaning states, including Texas which grew the most and will gain two new districts going forward.

So, the question is, who or what process decides how these new congressional districts are created, and just as importantly, who decides how districts are eliminated – and which congressperson is forced to retire? Have you ever thought about that?

The answer is: The redistricting process varies widely from state to state. Some states have non-partisan redistricting commissions. Some let their legislatures draw the new maps but give the governor veto power. A state-by-state mish-mash of partisan and non-partisan committees defies prediction, particularly when courts enter the fray.

It isn’t even clear if traditionally Republican states’ gaining seats is an actual advantage for the party, as the district boundaries will likely depend on the more detailed population data from the Census Bureau, which won’t be released until late this summer.

With more Americans relocating than ever before – with many moving out of high tax states to lower tax states – historians and political analysts are perplexed as to how big this trend is, how long it will last and what it means for our future.

POLITICO, the popular Internet political and news journal, described this unsettling trend as follows, calling it:

“…the most politically uncomfortable and unpredictable year Congress must face each decade, when new maps drawn in redistricting force veteran incumbents into retirement, turn former friends into fierce rivals and pitch safe-seat House members into hotly contested elections.”

Specifically, it notes: New York, Pennsylvania, Ohio, Michigan, Illinois, West Virginia and California all have to shrink by one district, meaning one of their congressmen will have to resign or run for another political office.

Meanwhile, Florida, North Carolina, Colorado, Oregon and Montana all have to create one new district due to population growth. And Texas will have to create two new districts and elect new House members to represent them later this year.

With all this “gerrymandering” (changing district boundaries) going on, most political analysts believe the most likely result will be a shrinking of the Democrats’ 9-seat majority in the House of Representatives, which could go down to only 4-5 or less. This means only a handful of Democrats could block President Biden’s liberal political agenda. We’ll see about that.

Some analysts believe this potential to limit President Biden’s power could be good news for the stock markets. I think it’s way too early to reach such a conclusion. Let the redistricting process play out, along with the new elections and retirements, and then decide what we think.

In the meantime, the stock markets are doing just fine on their own, with most at record highs.

Let’s not get greedy over political speculation as to what may happen going forward.

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