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Political Plays on Regional Checkerboard

Economic disparities across the country offer candidates some rewards - and potential risks

REGION-BY-REGION snapshots of the economy suggest that New England, the Middle Atlantic states, and pockets in the South - the nation's slowest growing areas - offer the most fertile ground for presidential campaigns planted in part on the discontent of US workers.

States in these same regions are among those next up on the primary schedule, and GOP candidates on campaign swings there are hammering on economic issues. In states especially hurt by imports, layoffs, and defense cutbacks, such as Massachusetts and New York, this week's primaries may be a barometer of the strength of the working-class voting bloc during the 1996 election cycle.

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''It's the slow-growing regions where a message attuned to discontent plays the best,'' says David Hensley, regional analyst for Salomon Brothers in New York.

Voters usually cast ballots according to the trend in their disposable income, with inflation and unemployment also proving influential. In troubled regions, as well as across the nation, slow growth in real disposable income points to possible inroads for grievance candidates like Pat Buchanan and trouble for candidates tied to beltway policymaking, political and economic analysts say.

The economy most colors the electoral map in New England, the slowest growing region. Middle Atlantic states are also sluggish, as are parts of the South, the industrial Midwest, and California. The Mountain states and the Southeast are the most robust, analysts say.

New England

In New England, the number of jobs is expanding, but only at a rate of 0.8 percent compared with 1.7 percent nationally. Housing prices plummeted in the early 1990s and appear to have bottomed out, although they remain well above the national average.

Layoffs in 1995 buffeted banking and other manufacturing in Connecticut and Rhode Island, which also hold primaries today. Defense-industry cutbacks in recent years have been especially deep. Connecticut lost 1,400 nonfarm payroll jobs last year; Rhode Island, 1,000 jobs.

Defense cuts in Connecticut will preclude or wipe out 12,870 private-sector jobs in New London County and 7,000 in the rest of the state in the next decade, a University of Connecticut study found.

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Personal income from 1994 to '95 grew at an annual rate of just 2.3 percent in Connecticut and 1.9 percent in Rhode Island, far behind the 3.6 percent national pace.

Massachusetts in recent years has generated the most new jobs in the region and offers promise for growth in high tech. Still, financial-industry consolidation, which last year swept away thousands of jobs, continues to undermine employment, analysts say.

Mid Atlantic malaise

Both New England and the Middle Atlantic states (including New York) suffer from a double whammy: beleaguered industries and structural weakness. Wage rates, energy costs, housing prices, and taxes exceed those in other regions, discouraging investment.

Although employment in business-service jobs rose in '95, New York is far from recovering from severe downsizing in communications, finance, and manufacturing. During '94 and '95, personal income in New York grew at a limp annual rate of 1.9 percent.

Southern trouble

Across much of the South, Republican candidates have encountered islands of discontent amid sweeping economic vitality.

Textile and apparel companies in Alabama, Kentucky, Mississippi, and Tennessee have slashed employment by more than 10 percent during both of the past two years. About 22,000 jobs have been lost as employers install new labor-saving technology and battle cheap imports from Mexico, China, and other low-cost producers, according to the WEFA Group, a consultancy based in Eddystone, Pa. Mississippi and Tennessee hold primaries March 12.

Golden State aglow

California features the most checkered economic tapestry, as well as the biggest jackpot among Republican primaries (165 winner-take-all delegates). Since late 1993, the state has clambered back from a deep recession. It is now creating jobs at a 2.8 percent annual rate compared with the nation's 1.7 percent pace.

The aircraft industry, the traditional mainstay of California manufacturing, is beginning to emerge from a five-year bust that saw total employment collapse by half to 80,000 jobs. The higher-paying motion-picture industry has helped take up the slack, expanding in total employment from about 80,000 in 1986 to 145,000 today.

Trade is also booming. During the 12 months prior to September 1995, exports of manufactured goods surged 18.7 percent.

Still, the recession was so severe that the pep has yet to give many Californians bounce. The construction industry has not revived and consumer confidence is still low; many residents have seen the value of their homes shrink 30 percent since 1990.

''In Los Angeles people still are looking a little backwards at the recession,'' Mr. Hensley says. ''It will take a little while for them to feel that good times are here.''

If current economic trends persist in some of these vital electoral regions, President Clinton could have a tough row to hoe to win reelection.

''Based on the economy from one region to another, it's by no means clear sailing for the administration,'' says Ross DeVol, an economist with WEFA.

The economy, which slowed to an annual growth rate of 0.9 percent in the fourth quarter of 1995, is widely viewed as the strongest influence on voter choice. Since 1932, four incumbent presidents have been turned out of office during downturns.

In general, when growth in real disposable income dips below 3 percent in the third quarter of a presidential election year, the incumbent must scramble in an uphill campaign. This year, WEFA says the third quarter figure will be 2 percent.

Another measure, the ''feel-good'' index, also suggests that hard times lie ahead for Clinton. Calculated by First Chicago-NBD Corporation, ''Feel-Good Consumption'' is total consumption minus spending for necessities like household utilities, medical costs, legal services, and auto repair.

Since 1976, each time the Feel-Good Consumption index has lingered below 3.6 percent during the year before a presidential election, voters have snubbed the incumbent. The rate is now 1.7 percent.

''Most consumer budgets are not improving much,'' says Erin Fossett, an economist at First Chicago-NBD Corp. ''So,'' she says, ''people don't feel very good.''

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