After a long, and much longer than anticipated, health hiatus it is time to talk the economy again. That means local, state, and national issues and policies will all be considered. The current trajectory of the national economy, the current debate around policy each necessitate serious consideration for how they will impact important variables in the state and the various local areas within the state. This will be the focus, along with anything else I find interesting and my current research topics.
In the past few months I participated in numerous discussions around the Fed interest rate regime and what to watch for signs of the perceived (by the Fed) effectiveness. The key right now is the labor market, but this plays out at the national level. Local area consideration is giving too little weight to the significant differences between labor markets at the national level and what happens at a state level. This is especially important in a state experiencing a binding labor constraint for better than a decade now, a portfolio of businesses in the state notably different from the national composition, and a host of other issues we need to evaluate.
So to start this long road back I think the labor force participation rate is a good place to start.
It may come as a surprise to many, but even during the height of the Bakken oil boom the labor force participation rate in North Dakota started its decline. We are only talking about around 6 percentage points over this 12 year period, but the decline is still notable. At some level this is not necessarily a surprise because the economic growth triggered a massive inflow of population seeking to personally capitalize on the opportunity.
What this does signify though is a need for further understanding of the dynamics of the state labor market. Who is getting jobs? In what industries? Where? What I find more important is to understand who was losing jobs, the industries where they lost employment, and the location. These factors could set up long run growth, or long run struggle, for local areas, which is why it is vital to have the data and the understanding of the changes.