A Placid North Dakota Asks, What Recession?
- From: Chim <ChimS1@xxxxxxx>
- Date: Sat, 6 Dec 2008 06:36:30 -0800 (PST)
http://www.nytimes.com/2008/12/06/us/06dakota.html?hp=&pagewanted=all
By MONICA DAVEY
Published: December 5, 2008
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.”
.
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