Author Topic: A Placid North Dakota Asks, Recession? What Recession?  (Read 3169 times)

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A Placid North Dakota Asks, Recession? What Recession?
« on: December 07, 2008, 03:48:35 PM »
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A Placid North Dakota Asks, Recession? What Recession?
By MONICA DAVEY
Published: December 5, 2008
NY Times

FARGO, N.D. — As the rest of the nation sinks into a 12th grim month of recession, this state, at least up until now, has been quietly reveling in a picture so different that it might well be on another planet.

The number of new cars sold statewide was 27 percent higher this year than last, state records through November showed. North Dakota’s foreclosure rate was minuscule, among the lowest in the country. Many homes have still been gaining modestly in value, and, here in Fargo, construction workers can be found on any given day hammering away on a new downtown condominium complex, complete with a $540,000 penthouse (still unsold, but with a steady stream of lookers).

While dozens of states, including neighboring ones, have desperately begun raising fees, firing workers, shuttering tourist attractions and even abolishing holiday displays to overcome gaping deficits, lawmakers this week in Bismarck, the capital, were contemplating what to do with a $1.2 billion budget surplus.

And as some states’ unemployment rates stretched perilously close to the double digits in the fall, North Dakota’s was 3.4 percent, among the lowest in the country.

“We feel like we have been living in a bubble,” said Justin Theel, part owner of a dealership that sells Toyotas, Dodges and Scions in Bismarck. “We see the national news every day. We know things are tough. But around here, our people have gone to their jobs every day knowing that they’re going to get a paycheck and that they’ll go back the next day.”

North Dakota’s cheery circumstance — which economic analysts are quick to warn is showing clear signs that it, too, may be in jeopardy — can be explained by an odd collection of factors: a recent surge in oil production that catapulted the state to fifth-largest producer in the nation; a mostly strong year for farmers (agriculture is the state’s biggest business); and a conservative, steady, never-fancy culture that has nurtured fewer sudden booms of wealth like those seen elsewhere (“Our banks don’t do those goofy loans,” Mr. Theel said) and also fewer tumultuous slumps.

As it happens, one of the state’s biggest worries right now is precisely the reverse of most other states: North Dakota has about 13,000 unfilled jobs and is struggling to find people to take them.

“We could use more people with skills for some of these jobs,” Marty Aas, who leads the Fargo branch of the state’s Job Service North Dakota, said as his offices — where the unemployed might come for help — sat quiet and nearly empty. State employees outnumbered the six clients on a recent afternoon. (Mr. Aas insisted that such a slow afternoon was rare.)

State officials and private companies have begun looking elsewhere to recruit workers, including traveling in October to Michigan, where tens of thousands of workers have been laid off, and, this month, holding an “online job fair,” anything to lure people to a place that is, at least for now, removed from the deep financial dismay — if also just plain removed.

“Our problem is that everybody thinks that it’s a cold, miserable place to live,” said Bob Stenehjem, a Republican and the State Senate’s majority leader. “They’re wrong, of course. But North Dakota is a pretty well-kept secret.”

With 635,867 residents, North Dakota is among the least populous states, and, in the past few years, more people have moved away, census figures show, than have moved here.

Katie Hasbargen, a spokeswoman for Microsoft’s Fargo campus, which is in the middle of a $70 million or so building expansion and is, even now, looking for a few additions to its work force (of more than 1,500), said false perceptions of the state are the problem when it comes to recruiting workers. “The movie,” Ms. Hasbargen said, referring to the 1996 Coen brothers’ film that bears this city’s name, “didn’t do us a lot of favors.”

On a recent evening, as the night shift arrived at DMI Industries, where 383 workers (an all-time high) weld gigantic towers for wind turbines and where a $20 million expansion is under way, Phillip Christiansen, the general manager, wandered the plant, noting those who had been recruited from elsewhere — three from Michigan not long ago, another from Louisiana. “It’s very competitive around here trying to find people,” he said. “In this environment, it’s a little hard.”

Not that people are complaining much. Downtown, in the line of gift shops along Broadway, where shop owners reported sales that were healthy (though always sensible), residents said they were pleased — if a tad guilty — about the state’s relative good fortune.

No one was gloating. No wild spending sprees were apparent. No matter how well things seemed to be going, many said they were girding, in well-practiced Midwestern style, for the worst.

“You’re always a little worried,” Mr. Christiansen admitted. “You get a tickle at the pit of your stomach.”

In truth, economic analysts said North Dakota has already begun showing some of the painful ripples seen elsewhere. Some manufacturing companies here have lately made temporary job cuts as orders for products have dropped nationally. Shrinking 401(k)’s — “201(k)’s,” some here grump — are no bigger here than anywhere else. And, most of all, drops in oil prices and farm commodity prices are sure to sink local fortunes, experts said.

An economist at Moody’s Economy.com recently warned that conditions in North Dakota had “slowed measurably in recent months, and the state is now at risk of being dragged into recession.” In an interview, Glenn Wingard, the economist, described North Dakota as “an outlier” up to now in a broad, national slump.

“It’s not going to hold,” Mr. Wingard said, suggesting that the state would now probably have to suffer through a reversal, or at least, a slowdown, much like other places that benefited from rising fortunes tied to energy, high oil prices and booming farm commodity prices.

Still, Ernie Goss, an economist at Creighton University in Omaha, who conducts a regular survey of economic conditions in nine states through the nation’s middle, found North Dakota to be the only one expected to experience an expanding economy over the next three to six months. “This will hit North Dakota,” Dr. Goss said of the recession, “I just don’t think it’ll ever be as significant.”

Just as state officials in Minnesota — due east of here — this week revealed a staggering $5.2 billion deficit, Gov. John Hoeven of North Dakota gathered with lawmakers at the State Capitol to talk, in part, about the $1.2 billion budget surplus — the result, in part, of increased revenues from oil, and a sum that is all the more astonishing given the size of the state’s total budget, $7.7 billion over the next two years.

Mr. Hoeven, a Republican whose party controls both chambers of the state legislature and who was re-elected last month with more than 70 percent of the vote, offered proposals few other states are likely to hear this year: $400 million in property and income tax relief, $130 million more for kindergarten through 12th-grade education, 5 percent raises for state workers, $18 million for expansion of a state heritage center, and so on.

The surplus, several lawmakers asserted, will actually make their jobs and choices far more complicated.

“Now that there is money,” said State Senator David O’Connell, a Democrat and the party’s minority leader, “I could go to three meetings a day with people who will say they want more money or want a one-time spending package or something.”

Mr. Stenehjem, who likewise complained that “when you have $1.2 billion sitting around, there’s about 50 billion ideas of what to spend it on,” quickly noted that there were worse budget problems to have.

“Don’t get me wrong,” he said. “I would rather deal with this.

“Prudence is important at this point,” Mr. Stenehjem, a lifelong North Dakotan, went on. “North Dakota never gets as good as the rest of the country or as bad as the rest of the country, and that’s fine with us.”
 

From: http://www.nytimes.com/2008/12/06/us/06dakota.html?_r=1&scp=2&sq=north%20dakota&st=cse

This article was actually listed on the front page of the NY Times on Saturday: http://www.nytimes.com/indexes/2008/12/06/pageone/scan/index.html (right below the center image.)


Lets hope this good state of affairs can last.
CampusDakota.com

 

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