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I find it interesting and frustrating when I hear news reporters talking or writing about employment. I suppose in fairness to them I have to admit it is difficult to talk about something as complicated as any sector of economics when the best most journalists have studied is one or two semesters of introductory economics. That is why most professional journals only hire writers who have studied, actually majored in the field they are writing about. That is an economic journal hires those who have studied economics and science journals are written by journalist with some kind of science major.

After all, I would have a difficult time writing about nuclear physics. Of course I wouldn’t try either, and sometimes such as when the government releases the monthly employment report that is “news” and people do want to know if unemployment increased or decreased over the past month.

So, I better be careful and not make any errors when discussing this report.

And here is the type of thing I am talking about. As we began to get deeper and deeper into this most recent economic contraction which society likes to call the Great Recession the increase in unemployment begin to slow down. Many begin to write that we were moving into a recovery. It took those who knew how unemployment counting works to point out that after people have been out of work long enough that they no longer could collect unemployment benefits many simply quit looking for work. Guess what? Those people are no longer officially unemployed. They are simply out there lost in the great statistical world. So, while the announced unemployment rate might have been reported as 9.8 percent the real rate when those no longer counted are included might have been greater than 12 percent, and those more than 2 percent additional were even more hungry than the 9.8 percent.

Beyond the personal problems of those who are not even receiving minimal help, we have to realize that makes the economic activity for the entire economy even worse than what is reported.

How much would take too much room to write about here. Just realize that because this recession has lasted longer than most it really meant that the problems were even greater and deeper than it has been in most recessions.

Of the four states I report on it is certainly Minnesota where this was the most important because it is by far the most industrial state of the four and has the largest percentage and numbers of people who moved into that nether land.

Another situation I would like to expand on is to discuss both the unemployment rate and the numbers of people employed. That is because most assume that if they hear that unemployment dropped a percent they think they can figure that out by comparing the difference in the two employment figures.

In fact, because of what I wrote about above and also because the employed figure changes can be influenced by both immigration and emigration. The history of North Dakota, especially over the past 20 years or so is a very good example of this.

North Dakota never has had a very high rate of unemployment over the past 40 to 50 years. It is not that as farming became more and more mechanized and there were not only fewer farmers but also fewer jobs in all those small towns around the state, and yet the state always had a relatively low unemployment rate. How come?

It is because unless there were severe losses of job opportunities around the nation that North Dakotans were told to move to where the jobs were, or at least should be. That was in other states. Especially Minnesota or Colorado, but even California, or Georgia, or Washington, or where ever the industrial growth was happening.

Now in the more recent past as the economy around the nation has changed the opposite has occurred. That is, North Dakota’s unemployment rate has improved, but really the percentage is not very much. For instance, we brag about it being the lowest in the nation at 2.4 percent in May of this year, but in May 2000 it was 2.6 percent. Of course in May 2010 it had increased to 3.3 percent before we really started to grow from the oil boom.

But this is what counts, from May 2000 to May 2014 the number of employed people in North Dakota had increased by nearly 20 percent. That is huge. That could come about only by people moving into the state.

Minnesota, which brags about having the lowest unemployment rate of any major MSA in Minneapolis/St. Paul barely increased the number of jobs over that same 14 year period by 5 percent.

South Dakota and Montana were both twice the percentage growth of Minnesota, but still barely over one-half of North Dakota. The United States was in the category of only about 40 percent of the growth compared of North Dakota.

All that being said, North Dakota still has the fewest number of employed people, and by quite a bit even compared to South Dakota.

So, which is the best state? Depends on your interpretation. Not so crowded in North Dakota. But not all the opportunities all around the state like Minnesota, or even South Dakota.

 

First, I have made three postings today. There is this report on North Dakota’s General Fund Revenues and Transfers. Below that is the Airline Boardings Report, and finally the most recent Employment/Unemployment report.

Concerning this report, second verse same as the first… Well, at least one thing that can be said about the projections purchased by the state is that they are consistent. That is, the same to be off by the same amount in each category every month.

At least that is the case with the amount they are off for the biennium to date. For a month to month comparison you would find some fairly with swings. For instance, with the individual income tax category they were short by about nine percent. That was blamed on people making the final adjustments on their 2013 income taxes. While that may be a valid reason it means that for the individual income taxes in North Dakota they were off by over 35 percent, and that is too much.

Incidentally, they were off by nearly that exact amount in the same time as the corporate income taxes. Also, in the insurance premium tax.

The worst category was the financial institutions tax. The projections
were off by 100 percent according to the OMB report. That hardly seems possible if any real economic effort was attempted.

Well, ignoring that waste of money, we can be happy that the report continues to very positive concerning North Dakota’s revenue. Even after the legislature’s attempt to cut taxes the state has collected nearly 20 percent more money to date than last biennium. We really are getting to a point where we need to consider some serious tax refunding to this state’s citizens.

 

An interesting month in North Dakota when it comes to airline boardings. Five airports, Dickinson, Williston and Fargo, reported increases. So did Minot and Grand Forks, although just barely.

Dickinson’s although relatively small compared to the biggest five is getting there, and the increase as a percentage was huge, nearly 200 percent. Now what could that be? Oh, yes, oil. It is a good thing that the oil boom is over or there would have been several airplane collisions at the Dickinson airport. Again, the oil industry has entered a new maturing phase. First, they are only drilling holes which have nearly a 100 percent success rate, as fast as the fracking crews and the final set up crews can get to them. To have several hundred non producing wells sitting there waiting for completion makes no sense.

The Dickinson boarding data needs to be read with the North Dakota Department of Mineral Resource report, which is posted on this site when that department releases their data. See the date on that post. That is usually the time of month you can expect the report.

Williston, although only increasing just over 25 percent is also attributable to the oil business, and 25 percent is enough of an increase to make even JFK exuberant. Less than 10 years ago both airports (Dickinson and Williston) had about the same traffic. Williston of course is the more (the state’s most) important oil city. Minot’s slight increase probably can also be attributable to oil.

Grand Forks slight increase is what you would hope for in the part of the state that is slowing down. In fact, my bet if you did a real study the increase came about because of the university especially the Colleges of Engineering and Aero Space, and the unmanned aerial vehicle personnel located both at UND and at the air base.

The interesting data, the one I would look at in more depth if I was serious about knowing my competition is Fargo. The increase is nearly 14 percent. There is nothing here like oil, or government, or any thing that I am aware of other than just a continuing reflection of how fast Fargo is growing. How come? How come it is growing, and especially why is it growing at the speed it is continually, not in fit and starts?

As I have said before, Fargo and Sioux Falls are the Twin Cities furthest out and “newest” suburbs. It is a chicken and egg situation, but they have airplanes coming in from more places and that makes them grow, but they grow because those air planes come from more places.
While they are still small towns by America’s standards they are true urban areas and are regarded as places for corporations to consider for establishing at least part of their businesses. This is the first time that has happened in either state.

 

Second verse same as the verse. A little…. You remember the song, and I don’t mean to be repetitive in my comments, but I just have to say this. Although it is not a great amount the legislative forecast at the end of April is off by even more than it was last month.

In total the amount received at the end of April is nearly 9% more than forecast. Last month that figure was 7.1%. The error is nearly 30% more than last month.

You might also remember that OMB said that a lot of the problem would be solved when income tax payers, especially the corporate, sent their final tax reports in and corrected for over payments they had made. Last month the corporate income tax collections were about 42% larger than the projections. This month that figure is about 39%. That is not much. The difference for the individual income taxes is less than 2%.

In sum, individual tax collections are nearly 36% larger than projected collections, and corporate nearly 39% larger. That is a lot.

The only account that is even close is sales tax collections. That is a peculiar account to be close given North Dakota’s still booming economy, and then to miss the income taxes by so much.

Remember, both income taxes were changed and state sales taxes remained the same. Seems to me Economy.com didn’t know how to adjust for changes to the income tax, both corporate and individual.

Finally, I will note again, and hope those in charge of preparing and voting on the next bienniums budget, keep in mind these continuing errors. If not, when the economy, even the growth in the economy, slows down we will find the North Dakota budget in deficit. With the total receipts being only about 9% greater than the projections income would be about $5 million dollars short if the two income tax accounts had been correct just to this point in the biennium, or $12 million at the end of the biennium if the North Dakota economy stays like this. We easily could handle that, but if it continues through the time that will amount to a significant amount-something unnecessary.

 

Well, last month I reversed myself from the month before for Grand Forks. To put it simply, if I was going to make a statement for this month I would hope none of you would go back and look at what I said then and then I would reverse myself again.

Or as the economist say, I wish I had that third hand. Since I don’t let me see if I can add some value to these May data. Basically, it is this, the economy in Grand Forks is in flux. Oh, I know, they talk about this sector and that sector, but in the end it comes to this: yes, there is some growth because of the oil patch. In fact, there may be a few engineering, architectural, and construction firms still benefiting from the oil economy, but the go-go days are over. Today, it is just some good steady work for some good steady companies.

So, too in the retail area-for the major ones anyway. For the 80 percent of the Canadians who are still coming here they head to the big boxes and their favorite haunts as far as motels and restaurants and lounges, especially now that UND hockey is over for a few months.

For the rest, well maybe the UAVs will start to bring some big money across the economy, but as of now it is simply the motels and restaurants where those specialist stay when they come to Grand Forks. It is not a big contributor to the Grand Forks economy yet.

UND is still a good steady base, but not growing. So, to is our real base-agriculture and even that has changed. The potato industry is not nearly the size that it was from the 1950s through the 1990s. Sugar beets are big, but also not growing. Corn is the new crop but it doesn’t take the kind of personnel those earlier crops did. Farming has changed, so too is Grand Forks.

As for those other cities, again we need to remember that much of the difference in totals can be because of the amount of the city sales tax. Some are one per cent, some are two. I am not listing that here, but unless there has been a change in the amount of a cities tax from last year the percentage change among the towns tell us something.