(The Center Square) – North Dakota’s shrinking labor force and inflation could dampen the state’s economy, according to researchers at North Dakota State University.
Although wages are up and unemployment is down, North Dakota’s post-pandemic workforce is shrinking, reported NDSU Professor Jeremy Jackson, who is also director of the Center for the Study of Public Choice. and Private Enterprise of the university.
Although the state’s unemployment rate has essentially returned to pre-pandemic levels and remains below the national rate, North Dakota is struggling to attract the labor market, according to Jackson.
Prior to the COVID-19 pandemic, the state workforce was on a growth trajectory, but that trend appears to have reversed.
“It’s still one of the key things that if we mean what’s holding back economic growth in the state, well, having a workforce is one of the big things that helps our state to growing and we have a problem right now with having enough workers in our businesses,” Jackson said.
This comes as Real Gross State Product, which measures economic activity at the state level, is also down.
“We’ve actually had two consecutive losing quarters,” Jackson said.
Using economic forecasting models, Jackson predicted that the state’s real gross product would rise and follow an increasing trend.
“I will note, however, that the forecast model had a growth prediction for each of the quarters in the past where we saw a decline,” Jackson said. “But bear in mind that a lot of this decline in our gross state product is actually because the CPI, or inflation, has been so high. So one of the main things holding back our state’s economy in terms of real growth is really the trends in the national price level.
Inflation is expected to continue its upward trend and push prices even higher, according to Jackson. He also warned that the yield curve, which looks at the difference between the yields of a long-term Treasury bill and a short-term Treasury bill, is currently negative. When that happens, Jackson said, it’s a big indicator of a recession.
“That’s when, as an economist, I look at this and say yes, we’re seeing real GDP growth right now in the country, but we’re definitely still at risk,” Jackson said. . “There are still certainly indications on this idea that we could see a recession coming. And of course, part of that has to do with what’s going on with interest rates in the economy as well as the Federal Reserve Bank continuing to push interest rates higher. This tends to stifle consumer demand as well as business investment decisions. So there are still reasons to be cautious about our prospects in the domestic economy.