Comparing ND and the US

There is obviously a great deal of interest in fiscal and economic performance in the US based on recent policy discussions and suggestions. So clearly there will be a great deal to process and digest there. For this post, let’s just consider the movement in US and ND GDP over the last decade plus.

This is percentage change in year-over-year fashion to remove any quarterly seasonality. The relatively strong performance for ND from 2006 to around 2012-13 will not be a surprise to anyone that read a post here before. The strength of mining, the lack of banking issues in ND during the Great Recession, and strong state finances insulated the state from the worst of the crisis and aftermath.

However, after the commodity cycle hit farms and oil took a dive the state underperformed the US as a whole for a time, even with the relatively low increases occurring in the US at the time. One takeaway from here is that ND does not necessarily follow the US pattern, in fact far from it. What we see here is a commodity driven economy within a larger, more diversified economy both outperforming and underperforming in about a 12 year period.

North Dakota is, in some way, doing its own thing, but that does not make the state economy immune from larger US events. In fact, the recent trade war with China and other policy is arguably hitting ND farmers and other industries somewhat more than other states and industries.

There are no clear signals from this small set of years about the integration of US and ND economic cycles. It is too small a set of observations and quite frankly the economy is evolving too rapidly to be sure there are not composition issues to consider as well. There needs to be a more granular look at this data, as well as a combination with policy variables to determine the level of integration and allow state and local policy to act in a more informed way based on national movements.

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