When we hear reports on how the national economy is struggling, we know that in many ways it impacts every American. However, when these reports discuss specific topics, like unemployment, we understand some Americans are severely impacted by unemployment, yet places like the Dakotas are effectively not impacted by unemployment at all. Really, the national economic data is an aggregate of all states, but it will not necessarily paint a picture for each region.
The preliminary estimate for the national unemployment rate in November is 6.6%, according to the Bureau of Labor and Statistics. However, locally, unemployment is much lower. Bismarck, ND sits at 2.3%, Fargo reports 2.6%, Sioux Falls is 2.9% and Rapid City reports 3.6%. Regionally speaking, our unemployment is impressively low. If we look to some of our larger urban neighbors, we see Minneapolis reports 4.0% unemployment, Denver sits at 5.8% and Omaha reports 3.6%. All in all, our nearest urban centers aren’t fairing too bad either.
With the Dakotas posting notably low unemployment, we would naturally wonder what is driving the economy in our area. The Bureau of Economic Analysis in 2012 reports South Dakota’s economic output is $42.5 billion and North Dakota’s economic output is 8% greater at $46.0 billion. We know the oil boom in North Dakota is a major driver of the economy. Natural resource exploitation comprises $8.1 billion of North Dakota’s economy, or roughly 17.5% of the total North Dakota economic output! By contrast, natural resource exploitation in South Dakota totals $4.5 billion, which is 10.6% of total South Dakota economic output.
Diving further into the economic profiles of the Dakotas, we know South Dakota has intentionally created a particularly favorable climate for the financial services industry. Core financial services in South Dakota produced $6.7 billion in output, which equals 15.9% of South Dakota’s economy. By comparison, North Dakota’s financial services output was $2.9 billion, which equals 6.3% of the North Dakota economy.
Lastly, we can’t help but think about how much agriculture is a major contributor to the economy. In North Dakota, ag output totals $3.6 billion or 7.9% of the economy, and in South Dakota, ag output totals $4.4 billion or 10.3% of the economy. While these figures seem surprisingly small, we need to keep in mind the ag economy serves as a lynch pin to several other aspects of our regional economy. Without agriculture, there likely would be less demand for financial services, retail, and wholesale activity that supports farm operations.
When comparing these statistics to national averages, we can see just how different a regional economy can be. National unemployment is 6.6%, but North Dakota unemployment is 2.6% and South Dakota unemployment is 3.6%. Development of natural resources is 2.9% of the national economy, but 10.6% of the South Dakota economy and 17.5% for North Dakota. Financial services are 8.0% of the national economy, but 15.9% for South Dakota and 6.3% for North Dakota. Agriculture represents only 1.1% of our national economy, but 10.3% for South Dakota and 7.9% for North Dakota.
It is interesting to see that unemployment in the Dakota’s is roughly half the national average, and our regional economy relies upon natural resources by nearly 4 to 6 times as much as the national economy. Our economy is also roughly 8 to 10 times more reliant on agriculture! And as for South Dakota, the economy records roughly twice the amount of financial services activity compared to the average national economic output. Without further analysis, it is easy to conclude that ag, natural resources, and financial services are likely related to our overall prosperity in the Dakotas.