BISMARCK – North Dakota has the potential to continue its economic rebound from the pandemic in 2022, with unemployment expected to keep falling while wages and state tax revenues climb, according to recent economic modeling.
The 2022 forecast released earlier this month by a North Dakota State University economist shows recovery trends for the state's wages and salaries, labor force, unemployment rates and tax revenues, with each metric potentially driving sustained economic growth in the year ahead.
Still, North Dakota State University economist Jeremy Jackson said that a handful of factors inject a healthy dose of precariousness into the new year for North Dakota.
Though Jackson, the director of NDSU’s Center for Public Choice and Private Enterprise, noted that almost all of the trends in his forecast look “very positive,” he said the state's economy is still on a kind of "knife’s edge" due to a trio of uncertainties: the fast-spreading omicron variant of COVID-19, the country's rising inflation and possible fluctuations in U.S. oil prices could each have a substantial impact on outcomes for the state over the next year.
"Things could go several different directions depending on what happens," Jackson said.
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The NDSU professor said that the state economy is already approaching pre-pandemic unemployment levels, a threshold he forecasts the state could achieve again by the end of 2022. But since there aren't very many people in North Dakota looking for jobs, the workforce challenges confronting many business owners could persist in the next year as the state has to compete with other parts of the country that are also short on workers.
Statewide unemployment sits at 3.2%, or about 12,800 people, according to the latest data from the U.S. Bureau of Labor Statistics .
The NDSU professor said that his forecasting draws on historical patterns and noted that North Dakota’s economy has had a tendency to move in a different direction from national trends, in part due to the state’s relationship with oil prices. The one exception to Jackson's rosy forecasts is North Dakota's Gross State Product, which his modeling suggests could move in the opposite direction from an upward national outlook in upcoming reports.
While high oil prices are pinching the pocketbooks of consumers around the country, the recently lofty levels have put North Dakota ahead of state revenue forecasts established by the Legislature earlier this year.
This November, U.S. oil prices reached a high not seen since 2014, and even though that buoyancy took a hit with the discovery of the omicron variant last month, prices are back to more than $70 a barrel ahead of Christmas.
Lynn Helms, North Dakota’s top oil and gas regulator, noted during a December industry update that recent prices put the state 50% above the Legislature’s budget forecast, while oil output has tracked a percentage ahead of state plans even with producers' recent drilling hesitancy.
Forecasts for the Fargo-area show a similar trajectory to the statewide trends in Jackson's modeling.
Current Fargo unemployment rate sits at 2.8%, down from a high of over 8% in the spring of 2020, and Jackson’s forecast predicts that those rates could return to pre-pandemic levels by the end of next year.
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Readers can reach Forum reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com .
