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Estimating Oil Industry Revenue

19 days ago

The importance of the oil industry to the North Dakota economy is well known. We looked at production and prices in the past. I thought a look at estimated revenue was in order. This is simply the product of average monthly price and the monthly production. Clearly it is an approximation, but it is likely a good overall approximation for industry revenue in North Dakota right now. If a picture is worth a thousand words, let’s start talking:

Revenue levels dropped back to levels from around 2010. Considering the expansion of that sector over the last ten years, this can rightly feel like a lost decade of growth. The fact that employment is down too does not instill tremendous confidence for an immediate turnaround. The good news? There is a bit of a recovery. In fact from May to

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North Dakota Economy Reset

27 days ago

A new school year is starting at UND and it seems an appropriate time to engage in a reset of what we know about the state economy. The fact is these situations are subject to change very quickly and for reasons well beyond the control of economic actors in the ND economy. With commodities comprising a significant share of ND economic activity it is a global price that really impacts profitability. What can we say that is going on at this point?

Labor Markets

Labor constraints in North Dakota are not a new phenomenon. What is new is the situation with unemployment we have seen so far. At this point in the year we already have a record for unemployment claims.

Not only is it the record, it is the record by a mile. This is a drastic adjustment for both workers and for

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Defining Economic Resilience

August 6, 2020

Even before the COVID-19 pandemic there was frequent discussion of “economic resilience.” In particular I saw constant efforts to define the term. Now I am not trying to quibble around the edges here but I am not sure “economic” is needed as a modifier for the term resilience really but we will move on to other issues.

At its heart we are talking about an issue of capacity or ability. To do what? Recover from an adverse event. The frequency of adverse events, or at least the apparent frequency of them, increased in recent years (though that is a separate post at another time). We need to be careful talking about adverse economic circumstances in large part because activities in the economy are inherently risky. That is, not all negative outcomes rise to the level of adversity

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ND labor markets still in flux

July 30, 2020

We are not out of the woods yet in North Dakota when it comes to labor market adjustments. Businesses and entire industries are still making changes to circumstances and situations so it should not be a surprise that it is happening with labor as well. This is a complicated dynamic with feedback between businesses and their customers that will present some problems.

What is happening in the state is pretty apparent. The fact is that after seeing initial claims decline from their immediate virus peaks we settled at a higher level of initial claims.

These higher levels are important to consider in terms of policy and approach to recovery. In the state, since the start of the year, there are a grand total of 101,344 claims filed. To put that in perspective the previous high I

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North Dakota Labor Update

July 23, 2020

Back after a hiatus to depressurize after 9 years as department chair. I switched roles slightly so I am now a research director with the new NCoBPA Institute for Policy & Business Analytics. I am looking forward to it, but I needed some time to step back after the long stint as chair.

The labor situation in the country is a source of constant attention, as it should be. We cannot afford to be wrong right now. The situation is dire for many households, and it is dire for the overall economy. Those that do not think so are likely auditioning to be an economic puppet for the White House. That’s puppet, not muppet. Muppet would be an upgrade in terms of coherent policy ideas.

Before we delve into the policy ideas too much, let’s get a lay of the land as it stands right how. We

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“The Letter of the Day” – US Economic Forecast Edition

June 18, 2020

There are many people out there right now talking about the path forward for the economy and the letter it will represent. The amazing thing is that I would trust a forecast from the cast of Sesame Street more than these characters. Will it be a “V’ shaped recovery? Will it be a “U”? While I cannot dismiss a “V” shape completely the blind adherence to it is more political cheerleading that is not followed up by any real coherent policy. Let’s talk keyboard characters and how they might be related to economic events.

“L”

I am pretty certain we are not heading into an “L” shaped path where there is a decline and then the economy flatlines. The haphazard policies implemented while certainly less than optimal and will be enough to prevent this from actually coming to fruition.

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Grand Forks Sales Tax and COVID-19

June 11, 2020

We have not truly hit the point yet when the data will truly show the impacts of COVID-19 on the Grand Forks economy. That is, what we see is just the beginning. With lots of concern turned toward the ways the economy will show these issues and will change going forward it pays to pause and take a look before we get too deep into the weeds.

To that end I created a smoothed out graph of sales tax collections by removing the seasonal component. It makes it a bit easier to see the overall direction of the series without all the different ups and downs.

There is a clear upward movement overall with some possible cyclical fluctuation in the data too. The city reported the value for May as roughly 10% below May of 2019. These collections are typically from two months prior so

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Legislative Acts v. Executive Orders

June 4, 2020

As part of a different research project I was thinking about executive orders versus Congressional action. There are some political scientists I know who might now accuse me of not listening to them and that is fine, because I probably was not. I was under the impression that for the last several presidencies executive orders occurred with higher frequency than before. I found that was not the case.

Going back to the 104th Congress you can see that executive orders are remarkably steady (I classified these by signing date of the order, not publication date). What we do see though is enacted laws from Congress declined significantly. So I am going to kind of claim victory from defeat. Executive orders are more frequent relative to the enacted laws than before, and I think that

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ND Wages and Unemployment Benefits

May 29, 2020

There are lots of stories around unemployment benefits and the good or bad aspects of the policy enacted through the CARES act, specifically an additional $600 in benefits per week. Why that dollar value in particular? There was an intent to make it more of a locally based number, but that quickly became an intractable problem that would delay, arguably needlessly, necessary aid. As a result the legislation used more of a national average number. The upside is it should help maintain some level of demand with more funds in the hand of people. The downside is that it might disincentivize a return to work, though this would be region and job specific and involves some short run versus long run issues.

This is a bigger issue being tackled nationally. Jamie Dimon of J.P. Morgan

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Different Looks at Initial Claims in ND

May 21, 2020

While there are no shortages of economic issues to tackle these days the circumstances surrounding unemployment get a great share of the attention. I am not going to argue with that given the difficulty I have envisioning an economy doing “alright” with 20 million unemployed. Since the claims numbers sky rocketed people ask me less frequently (yes, that is less frequently, not stopped asking) if we are in a recession. It is also the case that the fiscal policy arguments right now in Washington are more of a fight over how or whether to assist unemployed people and get an economic recovery started.

The labor constraint in North Dakota is a real phenomenon and at times represented a huge loss of potential output and income for the state. The sub-optimal level of employment did

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Initial Unemployment Claims – Week 9

May 14, 2020

Writing this update as I am on the radio so being very quick with it, but I was able to get the new week’s numbers for initial claims processed.

The big takeaways are the high level, but slightly lower level of claims, in accommodation and food service sectors. In addition, the mining percentage of claims is up a bit again, just shy of 11% of claims since the start of COVID-19 issues in North Dakota. The second highest category continues to be health care and social assistance. On health care think elective procedures and the like, not necessarily essential workers like nurses.

I will prep a better look across the time span in the next few days to try to break this out for industries.
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Updated Initial Claims Data-Week 8

May 14, 2020

North Dakota continues to see higher than typical initial claims data and they will be updated on Thursday. Here is the change in overall percentage of claims by sector from week 7 to week 8 (these are the weeks of observations since the first reported case of coronavirus in North Dakota).

The two takeaways from this graph for me are the decline in the percentage attributable to the accommodation and food service sector and the increase in the mining sector share. These are small changes to be sure, but as the process matures in the state so does the response of the different industries.

One of the significant problems remains the economic impacts of the virus impacts beyond the state. Those impacts challenge the supply chain nationally, which puts all states, including

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ND Outlook – Some Tax Data

May 7, 2020

There is so much left unclear right now that the outlook seems to change significantly on a daily basis depending on how we work in the latest information into the models. What is clear is that we probably have not seen the end of the use of the term “unprecedented” when applied to the economic circumstances of the nation or the state. There are some reasons to believe we have a better situation in place than many other states, but I think most people realize this can change very quickly.

Critical factors in these scenarios are the pace of recovery, not just locally but nationally. There are two major disruptions to consider, and they are correlated. We have an enormous demand shock right now impacting sectors in asymmetric fashions. That is creating a massive supply chain

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Class Unemployment Rate Forecast

May 7, 2020

I had my class predict the unemployment rate. They were free to guess, read a survey of news articles, listen to the television, or run a model. We pretty much had all of the above approaches followed. So the big reveal.

The class average forecast for the unemployment rate was 19.2%. These students have been pretty impressive these last months. I will not say I know all they are dealing with, but what I do know says they have some serious resolve. They got their work done, kept challenging me with questions, and kept pushing the class forward. It lets you know that no matter how long “recovery” takes, and regardless of what the “new normal” is, we can get through it.
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Back to Posting

May 7, 2020

David

Economist and economic historian with an interest in population analysis and demographic methods. Especially interested in natural disasters and disruptions to economic activity and changes in population dynamics, as well as fiscal and monetary policy with forecasting implications. Husband, father, Cubs fan.
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The Survivors’ Luxury

April 23, 2020

I see no problem with a debate about when we can reopen major parts of the economy right now. I think the debate needs to deal more in the realities of the situation we face regarding infections than an arbitrary calculation of the costs of economic closures and the cost of lives.

The fact is the scale of this threat is really outside the experience of most of us, including those in positions of policy authority. So I would not suggest there is a balancing act going on right now between loosening restrictions on distancing, and thereby re-opening parts of the economy, and the risks of further loss of life as a result of increased exposure. I do not think we should pretend that we could even somehow find a balance between the two sides of this discussion because in many ways it

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Whatever is reported for ND unemployment rate, the real number is worse.

April 16, 2020

The March unemployment rate will be released Friday, and unlike previous releases this report is likely to be outdated as soon as it is printed. According to the Bureau of Labor Statistics, February had 9,035 unemployed and a labor force of 404,494 in North Dakota. That was an unemployment rate of 2.2%. The report only covers events from a single week, the one that includes the 12th of the month which is again why it is horribly outdated. North Dakota did not report a case of COVID-19 until March 11 and so the bulk of business changes occurred after the survey date.

Add to this that the labor situation in North Dakota has always been difficult, mostly due to a labor constrained economy. This typically meant more jobs than people to fill them. With distancing guidance in effect

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Updated Occupational Distribution Data, 9 April 2020

April 9, 2020

David

Economist and economic historian with an interest in population analysis and demographic methods. Especially interested in natural disasters and disruptions to economic activity and changes in population dynamics, as well as fiscal and monetary policy with forecasting implications. Husband, father, Cubs fan.
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Occupational Distribution of Initial Claims in ND

April 9, 2020

Along with the geographic distribution of initial unemployment claims one of the other interesting aspects to examine is the distribution of the claims within the different occupational categories in North Dakota. One of the reasons this would be important from a policy perspective is that it provides some information about the degree of output lost that may not be recovered. To put it bluntly not all losses are permanent losses. The sales lost by a restaurant are unlikely to be recovered, at least in the way a manufacturer might put on extra shifts to make up for lost production time. In the same way a retail store may see a different timing pattern to purchases but over a longer period of time notice little to no change in the overall sales they make. As a result of these

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Initial Unemployment Claims in ND

April 9, 2020

I fully recognize that by the time this is posted and read there will be an updated data point for us to consider but that is the nature of the time constraints these days.

There are serious concerns about the state of the economy in North Dakota, and with good reason. Seasonal flooding, retail fallout from social distancing, and oil price collapse are the major issues at play right now. Any one of these could be a major problem on their own, and to deal with them all at one time is a particularly difficult combination to address. One of the ways we can cut through this is to try to limit the focus.

To start we should recognize the relatively recent nature of the problems. If we go with the first confirmed case of COVID-19 in North Dakota on March 11 that gives us less than

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Morning brief: Oil Jawboning, Cellphone data for social distancing

April 3, 2020

A family member’s word-a-day calendar yesterday was “jawboning” and that was apparently what the President was doing related to oil markets and Russia and Saudi Arabia (New York Times link). I will not say that is not a surprise, nor that it is unwarranted. What remains to be seen is if it works. In the past some Presidents could get away with such an announcement and force the desired outcome, but that does not seem to be the world we live in right now.

I am a bit skeptical of some of the data coming out about cell phone use and social distancing (see this story). In particular when you look at the situation with states like North Dakota I do not think there is adequate consideration of changes in behavior, nor the underlying population density at the start. In addition,

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Morning Brief: Radio today, Unemployment Claims

April 2, 2020

I will be on the radio this morning. I think unemployment will be a topic of conversation. US claims continued their rise from 3.3 million last week to 6.6 million this week. You can read articles in (Marketwatch link and the New York Times link).

In North Dakota the Governor announced claims so far this year already exceeded last year’s total. The number from two weeks ago was 5,976 and the number released today (which is for the week ended March 28, 2020)is 12,591. Pretty large numbers that are sourced from several causes and likely to continue in the same pattern.

My quick take: I think Congress will be taking more action sooner rather than later with the speed of layoffs. The changing nature of production makes it easier to layoff workers now than in the past because, I

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Retail Pull Factors and Shutdown

April 2, 2020

Where social distancing and other factors will have a significant economic impact? The easy answer is: everywhere. That, however, is not very helpful for an answer. For any kind of policy discussion and response you need a better answer, or at least the start of one. It is also important when North Dakota has so many factors at play: flooding, oil price issues, and social distancing. So I looked at the retail pull factors in 2019 as a sign of regions most susceptible to decline.

This is the average for the entire year (Q1-Q3 only available now). Not too much of a surprise that the Bakken region is high in this regard. What this means to me is that they are more set up for a large fall. The pull factor is identifying counties with per capita retail sales above the state average.

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What does a shutdown look like?

March 26, 2020

Maybe it is a good thing but I find many people struggling to understand what an economy under such tight restrictions looks like. The issue is both in the physical world and the data. Well the first one happened already with plenty of news footage showing closed shops, empty streets in metro areas with populations in the millions (cue the tumbleweed), and so on. We have yet to see this manifest itself in the data though. That ends tomorrow.

I am fortunate, if that is an appropriate word here (wait for it), that I studied the economics of natural disasters. Disasters occur in time and space and impact all aspects of life, including and especially the economy. In some cases it leads to radical declines in economic activity. This is clearly something most have difficulty

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Is $2 Trillion Enough?

March 25, 2020

I have yet to see the actual text of the legislation but I am looking at the news reports of what is included and I have doubts this will be enough. It is good though to see, finally, a fiscal response from the federal government.

Cash payments will be a backstop for many but the small business sector seems at significant risk. The small business loans are being termed more “grants” thank loans and that is good, but the time it takes to get them will be a key issue and I remain unconvinced it will find the smallest of the businesses.

The billions set aside for hospitals seems like it might be inadequate given the pace of spread in metro areas. That may need a specific and prompt revisit even if other aspects do not.

At roughly 10% of the US economy the answer is this is

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On Point of View (KVLY-TV, Fargo)

March 19, 2020

David

Economist and economic historian with an interest in population analysis and demographic methods. Especially interested in natural disasters and disruptions to economic activity and changes in population dynamics, as well as fiscal and monetary policy with forecasting implications. Husband, father, Cubs fan.
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Oil and the North Dakota Sales Tax Outlook

March 19, 2020

The continued decline in oil prices raises the prospect of further budget issues in North Dakota. This is distinct from the COVID-19 related issues that may be hitting the state too. Recall the great declines in the 2015-17 biennium compared to the 2013-15 biennium.

There is a bit of nuance to this situation. There was an enormous price decline for WTI from $105.79 in June of 2014 to an eventual low of 30.32 in February of 2016. More recently we witnessed a price decline from $63.27 on January 6, 2020 to $21.86 today. The price drop is drastic and important for budget reasons related to oil taxes. There is however another issue.

Another portion of the issue comes from the labor force employed in and around the oil economy. These workers buy significant amounts of goods and

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Age Distribution and Epidemic Risk in North Dakota

March 16, 2020

Governor Doug Burgum gave a great discussion of the state of the problems in North Dakota right now during his March 15 press conference. The key point is the potential rate of transmission and the possible overwhelming of health care services. The fact is older Americans are more at risk (at least right now) from the disease. So the question many ask is, “Why close schools?”

I think I can explain it in just a few maps. This first map shows county population over age 65 in a given county as a share of the total state population.

The concentrations are not surprising and are not the main point to highlight. Look at the county population under age 18 as a share of total state population in this second state map.

You are correct. Except for the scale the maps seem pretty

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Live Blogging Radio Show ~ 12 March 2020

March 12, 2020

David

Economist and economic historian with an interest in population analysis and demographic methods. Especially interested in natural disasters and disruptions to economic activity and changes in population dynamics, as well as fiscal and monetary policy with forecasting implications. Husband, father, Cubs fan.
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Will be on the radio today

March 12, 2020

David

Economist and economic historian with an interest in population analysis and demographic methods. Especially interested in natural disasters and disruptions to economic activity and changes in population dynamics, as well as fiscal and monetary policy with forecasting implications. Husband, father, Cubs fan.
View all posts by David

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