As North Dakota’s oil boom has faded the state has seen a big spike in the number of unemployment filings, as you might expect.
Unemployment filings have been the metric to watch for the state’s economy. Because so many of the workers losing their jobs are also leaving the state they haven’t had much impact on the state’s unemployment rate. But they collect unemployment insurance from the state no matter where they go, but a press release from North Dakota Job Service today (see below) says the number of filings seems to have peaked in January and has declined ever since.
Job Service’s claims for unemployment benefits historically peak in January, and four months ago the agency received an average of 1,624 claims per week. Since then, claims have continued to decline to an average of 916 fewer claims per week.
Additionally, North Dakota has gained more than 1,700 new online job openings since January. Today, North Dakota has more than 15,000 online job openings, and the state continues to have one of the lowest unemployment rates in the nation.
Since we’re in an election cycle, and economic chaos is good for those who want to unseat the status quo, there has been a lot of effort put into a “sky is falling” narrative for the state.
But the evidence at hand doesn’t seem to suggest any such thing.
The fiscal situation for the state and local governments are another matter entirely. Spending exploded during the boom years, adding a lot of new employees and facilities and cost burdens to what taxpayers must pay for. We’re going to see a painful retraction from those boom-era levels of spending. But that’s to be expected.
You can’t triple the general fund budget on the back of an oil boom without expecting a fiscal hangover.
Yet the state’s private sector economy? It seems to be weathering the storm just fine. So far. We’ll see what the summer brings. All indicators are a tough year for agriculture, and that could have greater ramifications for the state than the fading oil boom. And in some places, notably oil patch communities, things may never get back to a level again to support some overbuilt areas like housing.
As for the energy sector, there are a lot of reasons for long-term optimism. The state’s top oil regulator is predicting that when oil activity begins to rebound it will do so in a rush. Energy infrastructure projects like pipelines to serve the state’s oil and gas production continue to move forward, a bet that drilling and production here will continue long into the future.
Heck, the most exciting news is that Hess exported the first ever shipment of Bakken crude to the global marketplace, illustrating just how important lifting the ban on exporting domestic crude oil was for the state.
Oil industry folks have told me for a while now that they expect oil prices to creep back up into the mid-$50 per barrel range later this year, or early next year, at which point we’ll see activity in the oil patch start to pick up again.
The oil boom is over. It’s not coming back. But there’s plenty of reasons to eschew politically motivated cynicism for optimism about where things are heading.
Here’s the full press relesae.
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