North Dakota largely escapes economic downturn

Folks across the globe felt an undeniable impact in their pocketbooks as the recession became a reality in the past year. Sluggish consumer spending contributed to an already struggling economy. When 401(k) values deteriorated, stock market values diminished and key players in the automobile industry sought federal assistance in epic proportions to bail out – even the surest of us felt a deeper need to tighten our proverbial belt and prioritize purchases.

In markets where home value appreciation had leapt, the market stabilized. Foreclosures and unemployment rates climbed elsewhere in the country, resulting in further decreases in spending, across the board.

Consumers noticed grocery prices rise, as size and quantities decreased. Gas prices soared, then settled back down. And everywhere, people began prioritizing. Pay for groceries or health care? Drive to work or utilize public transportation? Downsize the home or purchase an affordable one? Take on supplemental sources of income?

And through it all, some regions seemed harder hit than others. Somehow, North Dakota escaped the worst of it.

“North Dakotans maintained a good Midwest mentality throughout the recession,” Job Service North Dakota business services consultant Dan Schumacher said. “We continued to live as we’ve always lived: conservative. For the most part, we didn’t take big risks, we continued to plan our lives to live without overextending – which helped to contribute to a healthy economy with a stable workforce.”

According to the North Dakota Workforce Intelligence statistics, seasonally adjusted unemployment rates in North Dakota remained steady through 2007 and 2008, hovering near 3 percent. The rates broke 4 percent early in 2009, again maintaining to a seasonally adjusted rate of 4.3 percent in August 2009, several percentage points away from the national unemployment rate of 9.7 percent during the same period.

“Traditionally, North Dakotans choose to work,” Schumacher said. “Even when college-trained individuals can’t find work in their field, they trend toward taking a position in the next-best job. And they wait it out. Eventually they find employment in the field of their choice.”

In the meantime, the energy sector is booming. From employment in North Dakota key cities to job openings in rural towns, there’s a certain amount of work to be found. Perhaps not equivalent to the jobs lost to Bobcat’s impending closure, but jobs just the same. Despite a gradual reduction in staff, the loss of the plant leaves a significant number of workers seeking other employment. Fortunately, thus far, there have been opportunities for many within our state.

“Over the years, Bobcat workers were assimilated into our community due, in part, to a diversified economy,” Bismarck-Mandan Development Association president and CEO Russ Staiger said. Additionally, he said that we won’t see the full impact of the recently announced closure until December or even January, when the doors close. And we have no idea what to expect as those workers search for employment within our community or elsewhere.

Despite the disappointment to our community and the devastating news to families of Bobcat employees, we seem less pummeled with company closures. Where manufacturing slumps have devastated other regions, North Dakota tends to attract smaller businesses as well as establish strengths in a number of sectors. Strong in agriculture, technology services, health care and energy, the state is balanced.

“Our elected officials play a large part in this, since they’ve invested wisely in the economic development of our state,” Bismarck-Mandan Chamber of Commerce President Kelvin Hullet said. “All along, they’ve been cautious to spend and have found ways to save money for that rainy day.”

Financially, the state has not overcommitted to any one sector. Within the energy industry, the oil patch continues to spawn new oil-related businesses as drilling rigs materialize across the Bakken Formation. Workers are fl own in to work in seismographic crews by the dozens – and ongoing job postings with Job Service announce openings for everything from roughnecks to transportation hands.

New jobs mean more housing needs – in turn creating retail dollars for rental properties or new construction. Additionally, homes are being built and sold for their true market value.

Realistic numbers. Gradual, steady increases in property values opposed to spikes in other markets keep North Dakota home ownership within our means.

“Lenders, too, remained steady and conservative in financing,” Bismarck-Mandan Board of Realtors executive director Nancy Deichert said. “Locally, average home sales prices rose 5 percent over the last period – which is a desirable, normal appreciation rate.”

The median-priced home in the Midwest for July 2009 was $157,200, opposed to the median-priced home in the nation at $178,400, according to the National Association of Realtors. Significant is the percentage of decrease. The Midwest median dropped 5.9 percent over the same period in 2008; however, the national median dropped 15.1 percent.

Although the average days on market stretched some, home values have dropped some, stabilized – and are climbing steadily again.

North Dakota’s average farmland real estate also rose, up 1.3 percent from 2008, valued at $780 per acre. Although cropland values dropped 1.2 percent in 2009, pastureland remained unchanged, according to the USDA, National Agricultural Statistics Service, whereas cropland values in the nation dropped 3.9 percent; pasture values declined 1.8 percent. Cash rent for crop land is also up, 7.1 percent to $45.50 per acre in North Dakota, compared to the national value of $90.00 per acre, up 5.3 percent.

“We seem to have a stable economy, less the peaks and valleys, as we use good old common sense,” Hullet said. “We buy houses we can afford and are encouraged as our elected officials do their job.”

As a nation, we seem to be on the upside of the recession. The government program “Cash for Clunkers” created auto sales as both the stock market and 401(k)s gained stability. And folks are shopping. Gas prices are steady – and there are occasional recreational vehicles on the road – even this late in the season. Small businesses continue to risk opening up in our state.

“North Dakota hasn’t changed much,” Staiger said. “People around here are continuing to work hard, stay within their means and live a life they can afford.”

Story by TINA DING