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What to do about the Astros? (Department of Creative Punishments)

15 hours ago

I am a huge baseball fan and so I watch with interest the constant iterations about the sign stealing scandal. Before I delve into options let’s consider the basic premise. While sign stealing is a constant part of the game, use of technology to analyze and communicate information to the dugout and then to the hitter is a new twist on an old approach. It seems this is a new level of problem, and one that was actually mentioned by the league in a memo. The trickle of player reactions likely requires some response form the commissioner or there will be significant amounts of vigilante activity that they will be forced to punish. Does the league want to punish those responders and not the admitted offenders? Or do you want the Hall of Fame voters to be the ones doing the policing of

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We need a new way to talk about labor markets in North Dakota

6 days ago

It is typical to celebrate low unemployment rates in North Dakota. While that may be something that worked in the past, the unemployment rate nationally is so low that this fails to be a point of distinction for the state. The persistent low level is also a potential issue.

The fact the rate remained low for so long should provide some concern. It is too low to attract some businesses and some labor. We need to reframe the discussion a bit. For example, are we interested in attracting employers or workers?

If we are interested in attracting workers then I suggest we talk about job openings and the number of unemployed. Shown in the graph above it should be clear that across the state there are not enough unemployed to fill all the job openings. This should go a long way to

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Latest CBO report (for radio listeners)

21 days ago

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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ND Oil v. WTI

21 days ago

A former student, who blogs at justadatageek.com, had a question about the connections between North Dakota oil prices and West Texas Intermediate crude prices. This was because of some of the distinctions between ND first purchase price and the Brent crude price.

The integration between the North Dakota price and the WTI price seems similar. As it stands the relationship looks very similar to that with Brent. Clearly though there are differences and to take a further look I plotted the difference of ND price less West Texas Intermediate crude price.

There is remarkable stability in the price difference per barrel over time. One of the remarkable features is the consistency of the negative value of the series. WTI price is almost always higher than North Dakota first

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Radio Show 23 January 2020

28 days ago

The running log of topics, questions and conversations from my appearance on KNOX – 1310 AM in Grand Forks, North Dakota. 

Fiscal Issues

A little side rant on fiscal issues like the lack of deficit control. Caller asked me what I would start with and it is defense and social security but that will never get you elected or re-elected. The further policy aim needs to be increasing taxes to generate more revenue to lessen the impacts of the spending cuts. Spending cuts and tax increases are the only feasible way forward to meaningful deficit reduction at this point. The political realities of the issue are pretty clear in the sense that tough decisions about “sacred cows” are not popular and gain little traction with voters.

Oil

Global events are clearly a bigger driver

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ND in 2020: Oil Industry

28 days ago

Anyone paying attention knows the story of the rise of oil in the ND economy. It is well documented both here and elsewhere. I think the most important question to address and possibly answer right now is about the near future. Let’s start with a brief look at the history of the oil in ND.

Oil Prices and Production History

The price and production decisions created large contributions to the state economy over the last decade plus. When looking at prices though it is important to explicitly recognize the outside impacts on North Dakota oil prices. To give a little expanded perspective I include the Brent crude prices which are more of a global benchmark.

As we can see the two series move very closely. The moments of deviation of the two are perhaps the most interesting.

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Radio Log, 16 January 2020

January 16, 2020

Keeping up with the log for the radio show on January 16, 2020. Like I said before, just a record of what was going on.

Phase 1 Trade Deal

Is the Phase 1 trade deal a guarantee for North Dakota farmers and ranchers. Not from what I read. The agreements allow for more ag product purchases from the US, but that does not guarantee that it will be products produced by ND farmers and ranchers. It is better to have the cooling-off for certain and it gives an opportunity to make gains, but that is not a guarantee. It also seems this deal was available months ago which means the producers experienced losses for little to no further guarantees of improvements.

Doom and Gloom

A caller just said that I am a doom and gloom guy. So apparently somebody has not heard that economics

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Phase 1 and North Dakota – Agriculture

January 16, 2020

There is a great deal to look into with the text of the Phase 1 agreement signed between the US and China and how it impacts the state of North Dakota. Clearly trade agreements this potentially broad present many avenues for impact, such as technology transfer and intellectual property, finance, and agriculture. I will look at the agriculture avenue first given the importance of that area to the state economy. Let’s start first with what are the obligations are. That is, actually, not much.

Most of the paragraphs discuss that the parties “intend” to hold discussions or “intend” to cooperate. “Intending” to cooperate and actually cooperating are two very different things. Much of the guiding principles of the agriculture chapter (Chapter 3) are, simply put, wishes rather than

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Radio Log, 2020 January 09

January 9, 2020

I decided to keep a log of radio topics as we go along to help with future posting. First radio show of the New Year. KNOX 1310 AM in Grand Forks!

Brexit

Brexit obviously seems more than likely to happen now. What are the consequences for the US from Brexit? Not major in terms of direct impacts. Trade relations seem likely to continue but that does come under some possible negotiation issues with the White House. The issue of the border in Ireland and the issues there also came into play in the discussion.

Minimum wage

Minimum wage, it’s level and the philosophy behind it is the next topic. A caller suggested that outsourcing of work is a big issue, inflation, and diminishing labour power are all candidates to blame.

Another caller focused on the impatience of

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On my mind in 2020

January 9, 2020

For the inaugural post of the year I thought to take a step back and look forward. There are so many issues that could be confronted by Grand Forks, North Dakota, and the US in the coming year that I think it is important to highlight a few that keep my attention right now. Let’s start locally. 

Grand Forks

There are many things Grand Forks needs to confront right now. There is a curious demographic/labor dynamic occurring right now that threatens to impact businesses on both the selling front and the producing front. One need only look at the relative lack of progress on measures like labor force to see that Grand Forks, at a time when the state as a whole was doing amazingly well, advanced at a slower pace than other communities. 

The retail landscape is also in flux. I

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North Dakota Initial Claims, December 2019 Update

December 19, 2019

North Dakota labor market dynamics are an interesting set of circumstances. One of the first states to deal with too few workers compared to open positions it also demonstrated that in meaningful ways an unemployment rate can bee too low. One of the more frequent labor data sets to examine is the weekly initial unemployment claims. As a side note, weekly data can be problematic to deal with and is not often of great use at that level of frequency. I aggregate the weekly data in to monthly observations to make implementation a bit easier and the data friendlier.

I did a forecast based on the initial claims data too, doing some tinkering around. There needs to be some adjustment to the model to account for some changes in seasonal peaks but overall it does not do too badly for a

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Quick take on BEA County release for ND

December 12, 2019

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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ND Metro Area Wages

December 12, 2019

One of the more frequent topics on the radio is about wages in the different metro areas in North Dakota. One of the first aspects to tackle is what exactly is the history of wages with the three metro areas (Bismarck, Fargo, and Grand Forks). Well I am glad you asked. Here is the picture since 2001.

Bismarck and Fargo are very close and trade lead position over time. Consistently the metro area of Grand Forks is the lowest annual pay level. The growth rate for all three metro areas over the 18 year time frame was over 3%, which is clearly excellent growth. To reframe the situation for Grand Forks I put the wage level for Grand Forks as a percentage of the three metro area average pay.

Grand Forks is consistently more than 5% below the average. This is a very big deal for

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ND Metro Area Labor Force

December 5, 2019

Economic performance requires comparison often. It is not always clear what to do in terms of comparison sets though. Let’s start with the metropolitan areas in North Dakota. Labor force is a nice comparison variable to utilize as well. First we can look in the levels.

The takeaway from here should be that there is only one metropolitan area growing in North Dakota (in terms of labor force). You could maybe make the argument about Bismarck, but it is only in comparison to the lack of change in Grand Forks. There is basically no change over this time frame (2001 to 2019) in Grand Forks. There were many different initiatives in this time, but apparently little lasting impact, and frankly it appears little short term impact. There are probably many factors to examine as

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Making County Comparisons in ND

November 21, 2019

I took another pass at the idea of making comparisons of different counties in North Dakota (my first post is here). I used some different data. In this case I used the annual growth rate in county labor force from 2000 to 2018, the annual growth rate in county non-farm income from 2000 to 2018, and lastly the annual growth in taxable sales and purchases from 2000 to 2018. This is not an all inclusive list of variables but it is more data points than before. I also use the longer time frame to allow some cyclical swings but also to smooth them out over that time.

I vary the number of groups this time as well. I specify three to six clusters to see how the composition of the groups changes too. In all seriousness the suggestion here is that it is difficult to come up with the

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Radio discussion: Tax changes

November 14, 2019

JT informed me that we will be discussing taxes and tax changes at the federal level tomorrow. Yay! So I thought by way of a bit of backdrop we would look at just a few pieces of information. Nothing new here or deep insights or pictures, just a starting point for the discussion. Start with federal tax revenues and outlays. This is not a pretty picture.

The one interesting think to point out with this graph is that you really can almost draw a straight line between the beginning and end of the financial crisis and connect the outlays line throughout. Tell me again that political party matters for spending! The revenues clearly dropped during the Great Recession and did recover after as well.

The deficit picture here is not very encouraging either. The natural,

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ND County Clusters by Income Source

November 7, 2019

One of the most frequent questions I get regarding the nature of the regional economies within North Dakota focuses on proper comparisons. The question boils down to a search for comparable peers, and while there are jokes to be made regarding nobody compares it is an excellent question.

So I start this process with a simple cluster analysis (k-means) looking only at the annual percentage change in farm and non-farm income from 2016 to 2017. The interesting constraint on this looks like it might be data. There are many suppression flags in the data set for counties based on disclosure concerns. However, all counties in the analysis include those grass categories.

There will be a need to look at levels and rates in the analysis at some point, but this seems to be a decent

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Cluster Analysis and Hockey

October 31, 2019

The sports business analytics class is going to learn cluster analysis tomorrow, specifically k-means cluster analysis. The lectures lately discussed some methods of data analysis, ways to go about adjusting the data and some basic linear fit. It seemed a logical extension to go further and look at clustering.

While we look at a few types of data for tomorrow we will look at salary and points. We will look at these in levels as well as differences from the five year average for all teams in the NHL. Our discussion of the five year time frame centered on the smoothing aspects we might be able to see from that length of data.

Tomorrow’s discussion will focus on setting up the number of clusters but for right now I am starting at four.

This graph is for the level of points

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A different age group in ND

October 24, 2019

So I often write about retired and young populations in North Dakota, but thought I would switch it up a bit this week. In particular, I am looking at the age group nearer to retirement, those aged 45 to 64. Why this grouping? Well those above 64 are at or very near retirement age and face relatively easy decisions in terms of finance constraints and other factors. Those younger have a great deal of national attention.

The younger age groups rightly receive a great deal of attention. Theirs is an interesting retirement outlook. The federal budget picture gives little confidence in the long run solvency of the federal government, and therefore any plans it backs. Let me be clear, there will be something done to shore up programs, but the nature of that is far from clear. The

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ND Taxable Sales & Purchases, Q1 2019

October 17, 2019

Taxable sales is a common and key metric reported for economic performance and it seems appropriate to look beyond the confines of Grand Forks for a time to examine the situation in the state as a whole. To start, let’s ask question to which we already know the answer: what are the big contributing counties to taxable sales and purchases in the state. The answer, as I said, is pretty well known already.

The six largest contributors are pretty obvious with Cass and Williams as the two top performers followed by Burleigh county. Of note is that Grand Forks is actually not distinct in the next tier. It actually is in between Ward and Stark counties. I suspect most people would be able to identify at least five of these counties without thinking very long just based on population

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Public Banking: Bank of North Dakota Assets

October 10, 2019

I’ve given lots of interviews related to public banking over the last week. People are looking to North Dakota to gauge the likely outcomes in California. This is flawed for many reason but perhaps the biggest is that North Dakota does not have a law like California. North Dakota created THE Bank of North Dakota, not a law allowing various municipalities to create public owned banks. That is what the California legislation allows.

There are lots of reasons to question the wisdom of public banking, This is clearly an industry with many private sector participants already, so where is the market failure? I suspect public opinion right now pushes towards acceptance of public banking based on the circumstances of the Financial Crisis of 2008-9. Why?

The banking industry received

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Caller observation: Minimum Wage

October 3, 2019

There is a frequent caller to the radio station, and in anticipation of his call tomorrow I thought I would put up a chart of the minimum wage. This caller focuses on various aspects of the minimum wage, but a key feature is the declining value of the minimum wage. I provide both the real and nominal minimum wages in the following graph.

So even with the increases in the minimum wage over time, inflation eroded the value of the minus wage as you would expect. The value of the minimum wage has been on a long decline since the 1970s and 1980s which is the caller’s significant point. In terms of a nearby value there is a steady decline since 2010.

Now on the radio we have a broader discussion about what the minimum wage really represents and that is a fine discussion to have

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Quoted in Vox article

October 3, 2019

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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Labor Force Growth and Streaks

October 2, 2019

I was looking at labor force data again and thinking about the consecutive months of increase in North Dakota. I went back to 2001 for the data and found that North Dakota enjoyed a streak of 53 consecutive months labor force increase from August of 2009 to December of 2013. Now this is just a simple increase, not a percentage change or any type of scaling, so an increase of one represents an increase, though it may seem trivial. During the oil boom the increase was typically larger, with an average increase of 777.5 workers per month, but even if a few months were low numbers it was still an impressive streak.

On the face of it that number may not seem like a great deal. However, the relative concentration of those workers would be significant and in many cases in areas that

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ND July Unemployment Rate

September 26, 2019

Those that read this blog regularly or listen to my appearances on the Jarrod Thomas Show know that I do not find unemployment to be a very informative metric for North Dakota. A primary reason for this is that North Dakota is clearly a labor constrained state. Countless pieces of data over many years makes this abundantly clear. The supposed lack of labor market adjustment to this persistent outcome is a whole different story for another day.

The latest data for unemployment continue to make the case that this number is not a helpful policy tool. Take the last two months of observations.

These maps look almost identical. There are only minor differences really. If we wanted to gather some meaning out of these representations we could look at the monthly change in the

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North Dakota Median Age, 2010-2018

September 19, 2019

I received several questions from media and others this week that boil down to a question of age in the state. The age profile of the state is important in terms of many aspects. First, the trajectory was bad from about 1997 on with significant departures of young and significant remaining by the older. This impacted everything from business succession planning to bank deposit management.

With oil there was a change in the trajectory. The inflows were younger and the outflows were older. There were various reasons for the change but suffice it to say it was about everyone taking advantage of their opportunities.

State Changes

The state got younger, significantly younger. From 2010 to 2018 median age in the United States went from 37.2 years to 38.2 years. Median age in

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The Week Ahead ~ 16 September 2019

September 16, 2019

There are several US data series worth paying attention to this week for the data inclined person in North Dakota. At the U.S. level we will get private housing starts for August. Housing is an interesting US and North Dakota issue so national trends certainly bear watching.

There will be oil market volatility to scrutinize. The situation in the Middle East is heating up, obviously, and that matters for North Dakota and the US is ways different than 20 years ago. Higher prices will encourage increased production in places like the Bakken and the Permian Basin but labor constraints make it less than a foregone conclusion that we will see increased production from those formations.

I think another area of interest in this regard will be exchange rates. The US dollar is in a

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Capital gains and inflation are complicated

September 12, 2019

So I look at the New York Times this morning and the article saying President Trump will not be indexing capital gains for inflation via fiat. Obviously the significant discussion within the article relates to the political consequences as well as a cursory look at budget math. It would clearly represent a tax cut and, not surprisingly, would disproportionately benefit wealthier individuals and households.

There is more complicated and nuanced issue under the surface. Frankly, I would be very worried about the supply and demand aspects within asset markets as the result of such a change. It would seriously impact the willingness to sell at a given price when the seller is facing lesser after tax implications. As a result buyers likely face higher prices for a variety of assets.

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Fertility Stability in North Dakota

September 12, 2019

*The data and analysis from this post are part of an ongoing population projection being down with colleagues at UND.

Among all the concerns related to North Dakota the population has long been at the top of the list. This is as it should be since population is a significant constraint on economic activity. There are two possibilities for the source of the issue: fertility or migration. Why do I leave out mortality?

There is no evidence that mortality experience in North Dakota is largely different from the US experience (I am acknowledging that I am not addressing that there are subpopulations in the state for which there are enormous differences such as Native American males). The fact is that significant deviations from the mortality experience from other places would be

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Yield Curve Inversion and North Dakota

September 5, 2019

With all the concern about recession at the national level due to the inversion of the yield curve it seemed a natural thing to take a look at the circumstances in North Dakota when the curve inverts. The results are a bit puzzling and will require some further thought before finalizing them. 

Looking at the 10-2 spread and the total income for North Dakota since 1976 gave me a few opportunities to look at inversion and state performance in this regard. I varied the time horizon between 4 and 8 quarters after the yield curve inverted. On average the annual percentage change in total income in the four quarters after a positive 10-2 spread is around 2 percent. for the four quarters after the yield curve inverted it is almost 9 percent. 
If we extend it out to eight quarters the

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