As “Tyler Durden” puts it at ZeroHedge, “US Set For Epic Labor Market Experiment: Red States Vs Blue States“. The experiment has to do with the effect of the cessation of extended unemployment benefits on unemployment rates:

According to JPMorgan’s Daniel Silver, as of this moment some 23 – all republican – states have announced at least some form of early reduction in pandemic-related unemployment insurance benefits ahead of the September expiration at the federal level. These programs, he suggests, are likely limiting labor supply, generating a potential economic argument for ending these programs early….

So, while the left are desperately gaslighting that this is a skills or geographic mismatch, the chart above makes it clear that paying people to stay home is not good for growth (or social stability).

Which is why 23 (Republican) states have listened to their business owners and started to cut those benefits. In fact, as Mike Shedlock notes, that means around 3.5 million Americans will come off Pandemic emergency benefits in the next few weeks….

And since Democrats will likely not end UI benefits any time soon – or ever, if they could –  this sets up the US economy to become an epic real-time economic experiment, one where everyone can keep track of the unemployment across in Red states (most of which have ended their UI benefits), and blue states where claims will keep potential workers at home, pressuring unemployment rates….

By way of early confirmation of our thesis that government handouts are repressing the recovery by encouraging people not to work, according to an analysis published this week … job searches jumped by 5% the day each state announced its intent to pull out of the federal programs.

I have compiled some statistics from another natural experiment. They support the thesis that Republican-controlled States outperform Democrat-controlled ones economically.

Although the central government’s tentacles reach deep into every State’s economy, there is still latitude for State and local action — or lack thereof. Republican-controlled States should have somewhat freer economies than Democrat-controlled ones. (See, for example, the Tax Foundation’s 2020 Business Climate Tax Index.) Republican-controlled States should therefore be more growth-prone than Democrat-controlled ones. Regional statistics support this hypothesis:

Constructed from the regional data tool of the Bureau of Economic Analysis, starting here.

The red lines represent regions that are dominated by Republican-controlled States; the blue lines, regions dominated by Democrat-controlled States. The constituent States of each region are as follows:

Far West — Alaska, California, Hawaii, Nevada, Oregon, Washington

Southwest — Arizona, New Mexico, Oklahoma, Texas

Rocky Mountain — Colorado, Idaho, Montana, Utah, Wyoming

Southeast — Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia

New England — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont

Plains — Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota

Mideast — Delaware, DC, Maryland, New Jersey, New York, Pennsylvania

Great Lakes — Illinois, Indiana, Michigan, Ohio, Wisconsin

Despite the Far West’s slight lead over the Rocky Mountain and Southwest regions, it is obvious that, on the whole, Republican-dominated regions have enjoyed much higher rates of growth than Democrat-dominated ones.