When voting for a presidential candidate, what are the crucial factors that you consider? It may be tax policies, higher minimum wage, pro-renewable energy, and so on... In the end, it all comes down to the financial wellbeing of the voter. For example, a worker in the oil industry may agree with Joe Biden's political agenda, but he would still vote for Donald Trump because of the financial impact he will have to suffer if Joe Biden becomes the president who publicly announced that he stop funds for the oil industry.
Having said that, in the election of 2016 Trump was able to win the election by planning out policies that will financially benefit more people. His main target was white people, who make up more than 73% of the US population. In other categories, however, Trump lost to Clinton allowing her to win the popular vote. Nonetheless, Donald Trump was able to win the presidency by taking strategic advantage of electoral college votes.
In the case of the 2020 election, his sole ground of white voters(both non-college educated and college educated) shifted significantly towards Democrats. While 32% of white non-college voters supported Democrats in the 2016 election, in 2020 36% of white non-college voters supported the democratic party. Such swing among white non-college voters who makes up more than 44% of the whole voting population was a huge defeat for Trump's presidential campaign. It is noteworthy to mention only voters with $100k+ inclined towards Republicans while people making under $100k shifted towards Democrats.
So, the question is, what has caused Trump to lose his ground of white voters? And the answer to that is the Trump administration's dependence in the oil industry. Of course, a major factor to consider is how Trump handled the pandemic, but I would like to only focus on the oil industry since it consists more than 10% of GDP growth in the US(in the year 2018 according to the National Bureau of Economic Research).
The graph above shows two major troughs in 2008 and 2020. The year 2008 was when Lehman Brothers Holding collapsed and caused a financial crisis, which can be interpreted as a trough in the business cycle. After such economic depression, the US enjoyed a large expansion period only going through minor hindrances. The Year 2017, when the Trump administration took over the presidency, was yet another expansion period suitable for his slogan of "Make America Great Again". To continue such expansion trend, Trump administration sought to invest large portion of its funds into shale industry.
Shale oil extraction is profitable if the oil price is above $40, and since the oil price rarely goes below $40 it seemed very logical to invest in such field: More oil meant More money! US oil companies would be able to make a profit yielding to large economic growth, and for other US companies, spending domestic oil rather than imported oil played another huge role in GDP growth. Note the significant drop in year 2014, this accounts for the point where shale oil became profitable.
Thus Trump administration took the opportunity of investing great funds towards the oil industry and as a result, the United States was the number 1 oil-producing country. Note that starting from 2017, there is a dramatic increase in oil production.
However, expansion period can't be forever, the economy will have to go through a recession period; It is just a question of when? and how? Although this time, it was a pandemic that will impact the entire humanity, unlike any past circumstances. Most countries failed to successfully contain the virus, and as a result of that economy crashed, literally. People didn't go out as much, which caused reduced employment, which caused less money to spend, which caused reduced employment, and so on, the money cycle that had supported the social system had failed. Such a vicious cycle yielded less production of goods which ultimately causes a steep decline in oil price.
The dramatic drop of oil price which makes up more than 10% of the US GDP with the combination of dampened consumer spending is responsible for the significant downfall of 2020 US GDP. Trump administration's plan of using shale oil to "make America great again" seemed reasonable, but encountered very unexpected circumstance which resulted in crashing the economic status of America. Of course, the main reason for his defeat in the election of 2020 is due to failure to contain the virus, but also Trump invested in the declining industry without taking insurance of splitting funds taking too risky leverage. As a result, former Trump supporters, especially in the rust belt states, suffered financially which led them to vote Biden over Trump. The previous statement obvious has logical leap, however, such failure in fund allocation definitely played a major role in his defeat.
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