The situation in the national economy is getting better but is greatly uneven and imbalanced at this time. In addition, just become some recovery started does not mean there are not risks of later declines. Significant risks still exist in the economic outlook. However, in this analysis we turn the look to the state of North Dakota.
Clearly recovery started from the problems over the summer. It is also the case that there are risks in the outlook for North Dakota too. I want to look at the change in employment around the state on a monthly basis. I also want to look at this on a rolling basis. I start this at the beginning of 2019 so that the effects of the COVID-19 outbreak and the oil impacts can be seen better at scale.
Through the first part of 2019 there was an increase in employment in excess of 10,000 employees. Interestingly, that started to erode throughout the second half of 2019 to the point where the state was at almost 0 employment change at the start of 2020. After a brief increase in the first few months the COVID situation hit and the result was an almost immediate 20,000 decline in employment. Since that time the state regained its footing with an increase over the summer back to a position of about 3,000 decline from the start of 2019.
This is really good performance and is way ahead of many states. The sustainability of the changes is a key and national and international events obviously play a key role. Oil prices are a key factor (expect a post about that outlook soon), and drive significant parts of the state economy (both sectorally and geographically). In fact, it is important to look at the larger counties in the state to see whether there are similar patterns.
The counties roughly move together over the course of 2019 and even through the COVID crisis. The recovery is where there appears a divergence. Counties like Cass and Burleigh saw a decline and then a large increase, to the extent they end positive compared to the start of 2019. Of more concern, at least locally, is the Grand Forks, along with Williams, end up negative after the decline. Economic growth and employment gains are not easy to envision from a policy perspective at this time.
North Dakota was labor constrained before COVID. It seems that the COVID impacts did not change that constraint, implying the departure of many workers. The increases also indicate the likely return of labor as a binding constraint on markets, and the possible limit on production. Addressing these possible labor problems should be a continued focus for policy at the state and local levels.