December 27, 2013
Economic Forecast OUTPUT AND EMPLOYMENT
WHAT THE TABLE SHOWS: 2012
United States Real GDP $ billions (fourth quarter) % change over the four quarters Nonfarm employment Job count (fourth quarter) % change over the four quarters Average monthly change North Dakota Real GDP $ billions (fourth quarter) % change over the four quarters
2013
2014
2015
2016
2017
2018
2019
North Dakota’s GDP forecast is derived from the national forecast by allocating
$15,540 2.0%
$15,907 2.4%
$16,464 3.5%
$17,081 3.8%
$17,722 3.8%
$18,342 3.5%
$18,984 3.5%
$19,554 3.0%
134,462,667
136,729,000
138,288,195
140,277,551
142,295,525
144,148,171
146,024,938
147,527,236
1.6% 181,333
1.7% 181,333
1.1% 181,333
1.4% 181,333
1.4% 181,333
1.3% 181,333
1.3% 181,333
1.0% 181,333
output to each of the 50 states based on employment shares. Forecast misses reflect surprises in the aggregate forecast as well as unexpected shifts in a state’s GDP share. The state’s economy is soaring as it develops the Bakken shale gas and oil field.
$39 10.0%
$41 5.3%
$44 6.7%
$47 7.2%
$51 6.8%
$54 6.4%
$57 5.8%
$60 5.4%
KEY MESSAGES: Nonfarm employment Job count (fourth quarter) % change over the four quarters Average monthly change
437,700 7.0% 2,386
454,851 3.9% 1,429
472,957 4.0% 1,509
496,057 4.9% 1,925
519,491 4.7% 1,953
541,004 4.1% 1,793
562,797 4.0% 1,816
580,242 3.1% 1,454
North Dakota’s economy is forecast to continue to expand at a fast pace. The broadening of the state’s economy built on its energy assets is expected to sustain the state’s supercharged growth pace for the next half decade. Note: GDP figures are based on quarterly values that are interpolated from annual GDP estimates using quarterly employment changes. Unbolded figures are reported actual values and bold figures represent forecasts. Sources: US Department of Commerce; US Department of Labor.
Regional Perspectives: North Dakota Economic Outlook
Commercial Banking
2
December 27, 2013
The Economy’s Structure PERCENT OF TOTAL GDP DERIVED FROM SELECTED INDUSTRIES
WHAT THE CHART SHOWS: The figure compares the relative importance
14
of selected industries to the state’s economy
12
with the national footprint of each industry
10
8
US industry mix
(state and national figures reflect the value
North Dakota industry mix
added of each industry as a percent of
6
aggregate state or US nominal GDP,
4
respectively). The agriculture and government (defense)
2 Government
Other services
Hotel and food service
Arts, entertainment, and recreation
Health care and social assistance
Educational services
Administrative and waste management services
Management of companies
Professional and technical services
Real estate
Finance and insurance
Information
Transportation
Retail trade
Wholesale trade
Nondudrable manufacturing
Durable manufacturing
Construction
Utilities
Mining
sectors account for a much larger share of Agriculture
0
the region’s GDP compared with those industry’s share of the national economy. Dependence on health care and government activity is also a source of stability.
KEY MESSAGES: The strength of the agriculture and energy sectors are a plus for North Dakota. Source: US Department of Commerce. Updated through 2011.
Regional Perspectives: North Dakota Economic Outlook
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December 27, 2013
Bankruptcies RATIO OF BANKRUPTCY FILINGS TO THE 2007 Q4 NUMBER
WHAT THE CHART SHOWS: The figure illustrates trends in bankruptcy
9
9
filings by businesses and persons relative to the number of filings in 2007 Q4, prior to the
8
8
Business bankruptcy filings Nonbusiness bankruptcy filings
7 6
7
The number of bankruptcy filings is negligible.
6
All US bankruptcy filings (shaded area)
5
recession.
5
4
4
KEY MESSAGES: Indicators of financial stress are a useful coincident indication of economic distress. The state’s business community remains
3
3
2
2
1
1
0 1990
vibrant. Source: Administrative Office of the U.S. Courts; Updated through September 2013.
0 1992
1994
1996
1998
2000
Regional Perspectives: North Dakota Economic Outlook
2002
2004
2006
2008
2010
2012
Commercial Banking
4
December 27, 2013
Oil & Gas Activity NUMBER OF DRILLING RIGS ON LAND, INLAND WATERS, AND OFFSHORE
WHAT THE CHART SHOWS: The illustration identifies trends in the Baker
3,000
2,500
200
United States (left scale) North Dakota (right scale)
2,000
175 150 125
Hughes rig count. Drilling activity continues to surge, providing the key spur to the state’s economic boom.
KEY MESSAGES: Robust demand for energy is an important cushion for North Dakota.
1,500
1,000
100
Source: Baker Hughes rig count. Updated through 2013 Q3.
75 50
500
0 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Regional Perspectives: North Dakota Economic Outlook
25 0
Commercial Banking
5
December 27, 2013
Private Business Surveys REAL GDP (% CHANGE 12 MONTHS EARLIER)
DIFFUSION INDEXES (50 = NO CHANGE)
WHAT THE CHART SHOWS: The figure features a survey of purchasing
6 5
90 Forecast
4
3 2 1 0 -1
-2 -3 -4 Real GDP in the Great Lakes region (left scale) -5 Business Barometer Index, Mid-America Purchasing Managers (right scale) -6 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
80
70
managers in the Midwest and real GDP growth in the Great Lakes area. Business activity in the Midwest has moderated but this has little impact on North Dakota’s economy.
60 KEY MESSAGES:
50
Diffusion indexes, like those based on responses from purchasing managers, are a
40 30
20
timely indicator of activity in the state and these may be moderating. Business surveys point to slightly subdued activity compared with the early years of the recovery.
10 Note: Business Barometer data unavailable prior to 1997. Sources: Institute of Supply Management; US Department of Commerce. Updated through 2013 Q3 (survey) and 2013 Q3 (GDP).
Regional Perspectives: North Dakota Economic Outlook
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December 27, 2013
Initial Jobless Claims RATIO OF INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE TO THE 2007 Q4 LEVEL
WHAT THE CHART SHOWS: The figure tracks layoffs in North Dakota and
4.00
4.00
the national level of claims.
3.75
Weekly layoffs, both the state and national
3.50
tallies, are illustrated in the figure as a ratio
3.25
3.25
to the level of layoffs in the fourth quarter of
3.00
3.00
2007, prior to the recession.
2.75
2.75
2.50
2.50
2.25
2.25
2.00
2.00
1.75
1.75
1.50
1.50
1.25
1.25
1.00
1.00
0.75
0.75
3.75
North Dakota US (solid area)
3.50
0.50 2007
Layoffs are up slightly this year.
KEY MESSAGES: The state has the wind at its back. Source: US Department of Labor. Updated through November 16, 2013 (state) and November 23, 2013 (US).
0.50 2008
2009
2010
Regional Perspectives: North Dakota Economic Outlook
2011
2012
2013
2014
Commercial Banking
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December 27, 2013
Economic Growth REAL GDP GROWTH (PERCENT CHANGE FROM FOUR QUARTERS EARLIER)
WHAT THE CHART SHOWS: Real GDP growth in North Dakota (the line in the figure) is superimposed on top of US
13 12 11 10 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5
North Dakota US
Forecast
13 12 11 10 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5
real GDP growth (bars in the figure). The state’s economy remains strong, swimming against the national tide.
KEY MESSAGES: The strength of the agricultural and energy sectors is expected to power North Dakota’s economy in 2013. Development of the state’s energy assets is expected to sustain rapid growth for a while. Source: US Department of Commerce. Updated through 2012 (state) and 2013 Q3 (US). Quarterly estimates for states after 2012 are interpolated from employment figures, based on the historical correlation of state and national employment changes.
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Regional Perspectives: North Dakota Economic Outlook
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December 27, 2013
Economic Output REAL GDP LEVEL (RATIO TO 2000 Q4)
WHAT THE CHART SHOWS: The figure illustrates the evolution of real
3.00
3.00
GDP of the state and the overall US economy since the fourth quarter of 2000, the peak of the previous business cycle— that is, at any point in time the lines trace the
North Dakota
2.50
2.50
ratio of real GDP to its level in 2000 Q4. The state’s economy has doubled in size over the most recent 13 years even as the
Forecast
2.00
2.00
national economy has expanded only 25 percent in that time.
KEY MESSAGES:
1.50
1.50
North Dakota was untouched by the national recession and now is expanding rapidly
US 1.00
1.00 2000
2002
2004
2006
2008
Regional Perspectives: North Dakota Economic Outlook
2010
2012
2014
2016
2018
Source: US Department of Commerce. Updated through 2012 (state) and 2013 Q3 (US). Quarterly estimates for states after 2012 are interpolated from employment figures, based on the historical correlation of state and national employment changes.
Commercial Banking
9
December 27, 2013
Employment Growth NONFARM PAYROLL EMPLOYMENT (PERCENT CHANGE FROM 12 MONTHS EARLIER)
WHAT THE CHART SHOWS: North Dakota’s employment trend,
10 9 8
10 North Dakota US
9 Forecast
compared with the nation’s. Employment is booming.
8
7
7
KEY MESSAGES:
6
6
Employment is expected to continue to grow
5
5
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
-3
-3
-4
-4
-5
at a robust pace. Source: US Department of Labor. Updated through October 2013.
-5
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Regional Perspectives: North Dakota Economic Outlook
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December 27, 2013
Employment NONFARM PAYROLL EMPLOYMENT (RATIO TO THE 2000 Q4 LEVEL)
WHAT THE CHART SHOWS: The figure illustrates the evolution of employment in the state compared with the
1.50
1.50
1.45
1.45
previous business cycle. The lines trace out
1.40
1.40
the ratio of employment at the time to
1.35
employment in 2000 Q4.
1.35 1.30 1.25
North Dakota
Forecast
US
1.30
nation since 2000 Q4, the peak of the
North Dakota’s employment base stands 25 percent above the level a decade ago.
1.25
1.20
1.20
1.15
1.15
1.10
1.10
1.05
1.05
1.00
1.00
0.95
0.95
KEY MESSAGES: North Dakota stands apart from most regions. Source: US Department of Labor. Updated through October 2013.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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December 27, 2013
Intrastate Employment NONFARM PAYROLL EMPLOYMENT IN SELECTED COMMUNITIES (RATIO TO 2000 Q4 LEVEL)
WHAT THE CHART SHOWS: Job trends in local communities within the
1.50
1.50
1.45
1.45
1.40
1.40
1.35
1.35
1.30
1.30
1.25
1.25 Forecast
1.20
1.20
1.15
1.15
1.10
1.10
1.05
1.05
1.00
1.00
US forecast
state. The strength in the state’s economy is fairly diverse.
US
KEY MESSAGES: Bismarck
Fargo
North Dakota enjoys unprecedented growth. Source: US Department of Labor. Updated through April 2013.
Grand Forks
0.95
0.95
2001
2003
2005
2007
2009
Regional Perspectives: North Dakota Economic Outlook
2011
2013
2015
North Dakota forecast North Dakota
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December 27, 2013
Unemployment UNEMPLOYMENT (PERCENT OF THE LABOR FORCE)
WHAT THE CHART SHOWS: Unemployment rate trends in North Dakota,
12
12
compared with the national average. Unemployment is negligible in the state.
10
10 Forecast
8
North Dakota
The unemployment rate is the single best
8
US (shaded)
indicator of the relative economic performance of a region.
6
6
4
4
2
2
0 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018
0
Regional Perspectives: North Dakota Economic Outlook
KEY MESSAGES:
Economic activity is robust, judging by unemployment trends. Source: US Department of Labor. Updated through October 2013.
Commercial Banking
13
December 27, 2013
Relative House Prices RATIO OF THE STATE’S HOUSE PRICES TO THE NATIONAL AVERAGE (1995 Q2 = 1.0)
WHAT THE CHART SHOWS: The figure tracks the relative price of houses
1.3
1.3
in the state versus the nation—that is, it reflects the ratio of the state price index to
1.2
1.2
the national house price index, with that ratio set to unity in the summer of 1995. A drop in the line means that house prices in the
1.1
1.1
state lag the national trend. States that did not suffer from speculative conditions saw a
1.0
1.0
decline in the relative price of houses in this last decade. The state’s energy boom is lifting real estate
0.9
0.9
0.8
0.8
0.7
0.7
values.
KEY MESSAGES: North Dakota is not plagued by the housing excesses that were common to the south
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
and the west. Source: FHFA. Updated through 2013 Q3.
Regional Perspectives: North Dakota Economic Outlook
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December 27, 2013
Real Estate Markets HOUSE PRICES IN SELECTED COMMUNITIES (RATIO TO THE 1995 Q2 LEVEL)
WHAT THE CHART SHOWS: The figure tracks the cumulative percentage
2.25
2.25
deviation in house prices since 1995 in selected local markets and compares those
2.00
US Grand Forks
2.00
Bismarck
1.75
with the national average. Real estate values are marching to a different drummer in North Dakota.
1.75 KEY MESSAGE:
1.50
1.50
Trends across the state are similar. Source: FHFA. Updated through 2013 Q3.
1.25
1.25
1.00
1.00
0.75
0.75 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Regional Perspectives: North Dakota Economic Outlook
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December 27, 2013
New Home Building HOUSING STARTS (RATIO TO THE JULY 1990 LEVEL)
WHAT THE CHART SHOWS: The pace of new home building (housing
12
12
starts) in North Dakota, compared with the
11
11
national trends.
10
10
US North Dakota
9
Naturally, home building activity is booming.
9
KEY MESSAGES:
8
8
The housing outlook is quite favorable in
7
7
6
6
5
5
4
4
3
Forecast
Source: Census Department. Updated through August 2013.
3
2
2
1
1
0
North Dakota.
0 2000
2003
2006
Regional Perspectives: North Dakota Economic Outlook
2009
2012
2015
Commercial Banking
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