Report shows GDP growth in North Dakota metro areas
GRAND FORKS--Federal economic data released Tuesday, Sept. 20, shows North Dakota's metro areas can grow despite a slump in oil prices, a University of North Dakota economist said.
GRAND FORKS-Federal economic data released Tuesday, Sept. 20, shows North Dakota's metro areas can grow despite a slump in oil prices, a University of North Dakota economist said.
The data, released by the U.S. Department of Commerce's Bureau of Economic Analysis, showed the Grand Forks metropolitan statistical area's gross domestic product grew by 3 percent between 2014 and 2015, when adjusted for inflation. That outpaced national metro areas' growth of 2.5 percent as well as Fargo's 1.3 percent. Bismarck tallied 5.7 percent GDP growth last year.
The BEA defines a metro area's GDP as "the measure of the market value of all final goods and services produced within a metropolitan area in a particular period of time."
David Flynn, the director of the Bureau of Business and Economic Research at UND, said the report reflected well on North Dakota's economy despite recent news about state budget cuts and slumping commodity prices.
"I understand and I get that when you hear about your state slashing budgets and these kinds of things, that the automatic assumption is there's huge problems in the state. Well, not so much," he said. "There were headwinds, we all saw it laid out in ugly, ugly fashion as we talked about budgets at the state level and how things had to change, but that doesn't mean that the economy overall was as bad as that situation."
August's special session of the North Dakota Legislature followed Gov. Jack Dalrymple's orders for state agencies to cut their budgets. State leaders have cited low oil and farm commodity prices for the budget woes.
The West Texas Intermediate oil price at Cushing, Okla., was $103.59 a barrel in July 2014. That price benchmark dropped to roughly $30 in February, and reached almost $45 in August, according to the U.S. Energy Information Administration.
Production sat at nearly 1.03 million barrels of oil per day in July, according to the North Dakota Department of Mineral Resources. There were 32 active drilling rigs on Tuesday, down from 67 a year ago and 196 in 2014, according to department data.
Those figures help explain a 33 percent drop in taxable sales and purchases in the first quarter of 2016, compared with the same time period last year, according to a report from the North Dakota Tax Commissioner's office.
But Flynn cited growth in construction and banking sectors outlined in the BEA report as positive signs.
"Those things can create other opportunities for growth going forward," he said.