Trade Losses Could Doom Cruz’s Indiana Hopes

Hoosier State has been prime victim of failed U.S. policies

If Tuesday’s Indiana primary really is Ted Cruz’s last stand, his campaign for the Republican presidential nomination is in even worse trouble than it seemed right after Donald Trump’s Northeast sweep. For the Hoosier State — and especially its big manufacturing sector — have been prime victims of the failed American trade policies that have been a signature Trump issue throughout his revolutionary campaign.

Worse for the Texas senator, whose roots as a trade policy critic run much shallower than Trump’s, many Indianans unmistakably blame offshoring-friendly trade deals for many of their economic struggles. In fact, they produced one of this campaign year’s iconic incidents, when Carrier heating and cooling systems workers erupted in fury — and on video — when the company told them that their jobs were heading to Mexico.

Not that industry and globalization are Indiana’s only economic problems. The state’s economy shrank more than twice as fast after adjusting for inflation during the last recession as the American economy overall. And since the onset of the recovery through 2014 (the latest state-level data), its real growth has been less than half as strong.

The Indiana job creation picture is somewhat better, especially recently. The state lost 6.86 percent of all its employment during the recession years 2008 and 2009 (compared with a 5.27 percent employment loss for the nation as a whole). But since then, and through last month, payrolls have rebounded slightly faster (10.42 percent) than the national average (9.73 percent). At the same time, these numbers show it’s been a rough ride for Indiana workers in recent business cycles — and the recent nationwide growth slowdown can’t have them feeling more secure about employment prospects.

Indiana’s industry has been under-performing, too — especially lately. A national manufacturing output leader during the bubble expansion of the 2000s, Indiana has turned into a manufacturing laggard since. Its industrial sector cratered in real terms by 14.54 percent during the recession years — more than twice the national contraction. From 2010 through 2014, moreover, it’s rebounded by only 0.93 percent — only a fourth the rate of American manufacturing overall.

As with employment generally, Indiana’s manufacturing jobs performance has bested its output record — and the nation’s employment generation. From 2010-14, Indiana manufacturing jobs rose by 21.27 percent — more than four times faster than national manufacturing job growth of 4.82 percent. But during the recession, the state’s manufacturing employment nose-dived by nearly 21 percent — much faster than the national 13.71 percent toll — and sluggish manufacturing production growth since then has employment falling again. No one could blame Indiana manufacturing workers for fearing that their ride could get rocky once more, especially since these jobs still typically pay about 35 percent more per week than Indiana private sector jobs.

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Moreover, trade is unquestionably biting into the state’s manufacturing output — and threatening its employment. During that 2010-2014 recovery period, Indiana’s manufacturing trade deficit has more than quadrupled — from $2.57 billion to $11.15 billion, as import growth (50 percent) more than doubled export expansion (24.11 percent). In fact, Indiana’s manufacturing trade deficit in these years soared more than ten times faster than the national manufacturing trade shortfall.

Perhaps most worrisome for Cruz, though, Indiana’s recent trade and manufacturing experience has been considerably worse than that of Wisconsin — where a big April 5 primary win breathed new life into his White House hopes.

For example, Wisconsin manufacturing production contracted during the recession, but much less (10.08 percent after inflation) than Indiana’s. And from 2010-2014, its 6.06 percent real expansion outpaced both Indiana’s meager 0.93 percent and the overall U.S. figure of 3.74 percent.

One major reason has been trade. Whereas Indiana’s manufacturing trade has recently run deficits that have worsened much more rapidly than the nation’s, Wisconsin’s manufacturing trade remained in rough balance between 2010 and 2014. In other words, imports haven’t been eating into net demand for the state’s industrial products.

Wisconsin’s manufacturing employment has been more stable than Indiana’s as well. Although it’s rebounded only half as strongly during the recovery, it also fell only about half as much during the recession. At least as important, manufacturing jobs have kept growing in Wisconsin since the end of 2014 — by 1.41 percent.

Trade and jobs won’t be the only issues on Indiana Republican primary voters’ minds on Tuesday. Moreover, even strong trade skepticism won’t necessarily produce a Trump victory. Indeed, exit polls showed that Wisconsin GOP primary voters viewed trade as a job-killer, not a job grower, by a whopping 54-33 percent.

But Indiana Republican primary voters have more reason than Wisconsinites to back the party’s most outspoken and consistent foe of current trade policies. If those cashiered Carrier workers are remotely typical of Indiana’s mood, Cruz’s last stand will turn into Cruz’s swan song.

Alan Tonelson, who blogs on economic and security policy at RealityChek, is the author of “The Race to the Bottom” (Westview Press, 2002).

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