If the behavior of consumer purchases of autos wasn't so striking I'd be happy with just explaining this as diverging behavior by households and firms. That is, ignoring 2024q4 autos, you could say firms pulled demand forward in response to tariff talk and households were waiting to see.

lol i’ve been posting Bairoch everywhere too.

Historical evidence suggests that the differential growth rates at the state level are being driven by sectoral shifts in nonmanufacturing.  The historical evidence also suggests that these sectoral shifts are part of what is driving faster wage growth for unskilled workers.

For personal capital income, migration matters during the period of heaviest labor market shuffling 1940-1943)  but after that the direct effects of the political economy of war spending are driving the behavior of capital income. (8/x)

I decompose these “negative multipliers” into the portion explained by the direct fiscal shock of the war and the portion explained by across state migration.  Statistically speaking about half of the slower growth in nonmanufacturing income is being driven by migration. (7/x)

Personal capital income (from interest, dividends rent) and state level corporate profits also both grow more slowly in response to war spending. (6/x)

The attached figure shows how WWII affected the US economy at the state level.  The war was a positive, short run, shock to manufacturing income growth.  However, in the long run, the war was a negative, permanent, shock to nonmanufacturing income growth at the state level. (5/x)

When interpreting relative, open economy multipliers they have multiple moving parts that must be considered. As Figure 1 shows, growth rates were very rapid during this period. Per capita income in states with in-migration grew 115% from 1940-1947 but states with out-migration grew 166%. (4/x)

The basic point of the paper is made by Figure 1.  This shows the relationship between WWII contract spending and the change in income from 1940-1947.  States that received less war spending were more likely to experience outmigration and faster growth in incomes. (3/x)

As @jwmason.bsky.social and I have argued elsewhere, WWII is a great example of how a full employment economy is the best anti-poverty program. The labor market shuffling of the war broke the hysteresis of the Great Depression and put the economy on its generational full employment trajectory. (2/x)