FARGO - North Dakota's economy is still struggling with the effects of the COVID-19 pandemic, but a North Dakota State University professor says the economic forecast - while not glowing - is considerably more positive than in recent months.
Still, it will likely be a while before wages, employment, production of goods and services, and tax collections return to pre-pandemic levels, Jeremy Jackson, a professor of agribusiness and applied economics told attendees at NDSU’s State of the Economy conference.
“We’re not painting a very rosy picture,” but it is more optimistic than previous economic modeling, Jackson told attendees Wednesday, Nov. 18.
The daylong conference also included presentations on state policy issues and the oil and agricultural markets.
Jackson, who directs the Center for the Study of Public Choice and Private Enterprise, ran through a roller coaster of economic indicators at the national, state and local levels that point to a U.S. economy that was badly wounded when the virus took hold, starting with small declines in February, then plummeting in March and April.
North Dakota’s gross state product, a measure of the total output of goods and services, “was hurt significantly” in the first two quarters of 2020, Jackson said.
While third quarter state data is not yet available, even if the gross state product shows a rebound similar to the nation’s gross domestic product (which dropped 9% in the second quarter, then bounced back up 7.5% in the third quarter), he expects “next to no economic growth” in gross state product in the near term and it may be mid-2022 before it recovers to pre-pandemic levels.
An early November analysis of trends suggests that where there is improvement, it is slow, such as with North Dakota’s steady decline in unemployment.
At the same time, though, the size of North Dakota’s labor force is declining as people leave, retire, or just give up on looking for work, Jackson said. “The labor force is significantly lower (than) pre-pandemic.”
Total wages and salaries are trending to “a steady decline” for this year. And total tax collections are expected to see a “quite substantial” decline through about the second quarter of 2021, he said.
NDSU’s latest Economic Outlook Quarterly Report also lays out the prospects for the state’s metro areas.
“Metro areas are also facing difficulties ahead,” Jackson said, as state and national responses to the pandemic remain fluid.
Fargo may have the most upbeat prospects in the report. Wages are expected to trend upward in the fourth quarter (though not without some fluctuations). The Fargo metro area’s labor force is expected to decline by 3.35% in the quarter, then hold steady until the second quarter of 2021, when it begins increasing again. Unemployment is projected to return to a near normal rate by the second quarter of 2021. Housing prices are expected to increase in the fourth quarter of this year, then dip back to normal levels in 2021.
Bismarck and the Grand Forks area are facing mixed economic outlooks, the report said.
Wages in the Bismarck metro are projected to fluctuate in the fourth quarter of this year, then level off slightly below current levels. The labor force is also expected to decline going into 2021, though there’s a lot of uncertainty regarding the labor market there, the report said. Bismarck’s housing index (a measure of prices, affordability, mortgage defaults and other factors) is also expected to decline in the coming year.
Wages in the Grand Forks metro area are projected to show dramatic fluctuations in the first quarter of 2021, but remain level into the third quarter of 2021. The labor force is also expected to decline dramatically as 2020 closes out, then rise in 2021. Housing prices are expected to remain relatively stable.