A caller to the radio show last week questioned why the North Dakota economic experience seemed is such stark contrast to the Minnesota situation. (She asked this while almost getting hit by a school bus breaking traffic laws.) There are a couple of reasons for this, one pretty easy to explain on the radio, and the other is visual and so is not as easy to explain. I should point out the two stories are not in opposition to each other. That is, they can be part of the same larger narrative.
I’ve talked about this on the radio for the last few weeks already, and talked to national media about this too. I thought I would just briefly mention here some of the items people should be looking at with these budget revisions. Here is a link to the announced revisions to the document.
The future is always uncertain, but it seems that labor markets in the core Bakken counties could be having their Mark Twain moment: “The report of my death was an exaggeration.” My central argument here is not that the markets are not correcting, and I am not suggesting declines in employment will not happen, though the extent of that decide is obviously debatable. At some level, you might expect people to welcome the pause in the employment growth occurring now. It could reduce pressures in the other related areas such as housing. Regardless of any decline, the data show that employment is still more than twice the level from just 5 years ago (see figure below).
The old saying goes that a picture is worth a thousand words. Clearly the idea is that one good image could relay information better than a lengthy description. There are two issues with that: 1) it needs to be the right graph, and 2) the graph may need at least some explanation. I think this is true of the North Dakota oil story right now. Those who watch these things will not find anything new or exciting in the following graph.
After the boom comes the bust, or so we are told. One of the more interesting questions for North Dakota is the extent of the pain, if any, felt during the bust, and how it ends up distributed across the state. To help answer this question we need to continue analysis of the circumstances of growth in North Dakota during this century. Call it a Nearby Economic History. A better understanding of the process of economic growth in the state is 1) important in its own right (knowledge for its own sake is seldom bad), and 2) potentially useful information as the state discusses policies going forward.