The previous quarterly report, released last August, said the state economy was showing signs of stagnation and a slowing recovery from the coronavirus pandemic.
“The overall economic outlook for the state has improved compared to the previous report,” said NDSU economics professor Jeremy Jackson, director of the Center for the Study of Public Choice and Private Enterprise. “The risks of declining labor force have disappeared from the forecast, and the labor force is now projected to grow. However, there is still lingering risk of a decline in North Dakota’s gross state product.”
Total wages and salaries have been growing about 2% per quarter, and that trend is forecast to continue and possibly pick up in the third quarter of this year, Jackson’s report said. The labor force has declined slightly, losing about three-fourths of a percent over the past year, but that trend is forecast to reverse. North Dakota’s unemployment rate is forecast to continue its downward trend, possibly hitting pre-pandemic levels in late 2022. Total tax collections are predicted to pick up this year.
The North Dakota Forecast Model uses historical data and trends to predict future economic outcomes for the state. The report notes that North Dakota’s economy is heavily tied to oil, and its economic path can be influenced by changes in the price of crude.
The model for the fourth quarter report used data from the St. Louis Federal Reserve on Dec. 6. Click here to read the full NDSU report.
The NDSU report closely mirrors with the findings of a monthly regional bankers survey conducted by Creighton University. The Rural Mainstreet economic index finds the economy in rural parts of ten Plains and Western states remain strong, but bankers have growing concerns about inflation.
“Solid grain prices, the Federal Reserves record-low short-term interest rates, and growing agricultural exports have underpinned the Rural Mainstreet Economy,” said Creighton University economist Ernie Goss, who oversees the project that surveys bankers in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, and Wyoming.
The overall regional economic index fell in January to 61.1 from December’s 66.7. Any score below 50 suggests a shrinking economy.
The survey found North Dakota’s overall index rose above growth neutral from 59.4 from November’s regional low of 49.6. Since the beginning of the COVID-19 pandemic, North Dakota nondurable goods manufacturing experienced much stronger growth than durable goods producers in the state. Average hourly wages advanced by 8.7 percent during the same period, according to non-seasonally adjusted data from the U.S. Bureau of Labor Statistics.