A Real Green Shoot - The Dakotas

While some think this is the home of yellow or indeed brown shoots, I have no problem pointing out green shoots... as long as they are rooted in reality rather than hope. Even as we discussed the coming recession in 2007 (denied by politicians until late 2008, and denied by economists until 3rd quarter 2008) we said there would be regional pockets of strength. The upper plains is one of those regions; we can think of them as mini Australia's or Canada's. Resource heavy (producing product other countries actually want) & running fiscally tight ships. I actually received a fund pledge last week from a reader in South Dakota (struck me, because I believe that's the first from these relatively sparsely populated locales) and he said even these areas are slowing down, but again - it is all relative. What is a slowdown in those areas would be considered a return to growth in parts of the industrial Midwest or some portions of the coasts.

• North and South Dakota and Alaska, the states with the lowest rate of mortgage delinquencies, are also the states with the lowest credit card delinquencies, TransUnion data showed.

We haven't spoken much of the state budget disasters we predicted long ago [Dec 16, 2007: California in a State of Fiscal Emergency - Coming to a Theater Near You] [Apr 25, 2008: Shoes Beginning to Fall in the States] would be coming this year and next of late; in our new policies of harvesting trees for new fiat money, parts of the fiscal "stimulus" are plugging holes and rest assured more will be coming next year. And if push comes to shove... federally backed state debt, bailouts, whatever is necessary will be coming. Because our pockets are endless. Thankfully some states won't be in the position to have their hands out; unfortunately, in the big picture their share of national GDP is tiny.

The Wall Street Journal has a nice article on North Dakota and how they have continued to do well, during the worst post World War II recession in the States.

• California has the Golden Gate Bridge, New York has the Empire State Building, Illinois has the Magnificent Mile. And North Dakota? It has a hefty budget surplus those states would envy. While many states scrounge for ways to repair budget deficits, North Dakota is cutting taxes and fretting over how much of its budget surplus to spend or save.
• ... in a report Thursday that North Dakota and Wyoming remained the only two relative bright spots in a nation mired in recession. Both resource-rich states expect revenue collections to come in above their budgeted forecasts, while 38 states anticipate revenue shortfalls, according to the report on state finances, which was co-written by the National Association of State Budget Officers.
  
• Meanwhile, North Dakota expects to have a surplus of about $700 million in June 2011, the end of its next budget cycle. In the legislative session ended last month, North Dakota lawmakers shifted more of the responsibility for funding education to the state and required local governments to reduce property taxes proportionately, saving taxpayers $295 million. Individuals and businesses also received about $100 million in income-tax cuts. At the same time, lawmakers increased spending on K-12 and college education, health care, infrastructure and other programs.
• The remote Plains state, with a population of just over 640,000, has benefited from spikes in oil and crop prices. While the rest of the U.S. economy was tumbling last year, energy and agricultural commodities stayed frothy before beginning a long slide in the summer. Lately, they have begun climbing again....
• High prices help North Dakota in myriad ways. State revenues rise thanks to taxes on oil production and extraction. Energy-industry workers and farmers pay more in income taxes and spend more, boosting sales-tax receipts.
• Chiefly because of the commodities boom, North Dakota had the fastest-growing economy in the nation last year, as the state's gross domestic product increased 7.3%
• The state also missed much of the bubble in housing prices and dubious lending practices that bedeviled much of the nation, so it isn't struggling as much with foreclosures.
• Republican Gov. John Hoeven likes to credit his administration's efforts to diversify the economy, including fostering "value-added" agriculture, such as food-processing plants, and alternative-energy production, from wind to ethanol and other biofuels. Spinning wind turbines have become a more common sight on the state's rolling plains. North Dakota has 865 megawatts of wind power completed or under development, up from less than two megawatts four years ago.
• State and local officials have been traveling to Ohio and Michigan to recruit laid-off workers. North Dakota's seasonally adjusted unemployment rate -- 4.0% in April -- is the lowest in the U.S.
• Legislators say they want to avoid the roller coaster of spending sprees followed by cutbacks. The state isn't immune to recession ripple effects: Heavy-equipment maker Bobcat Co., the state's biggest manufacturer, recently laid off nearly 250 workers at its plants in the state. Microsoft Corp. and American Express Co. also have announced layoffs or closures.
• Gov. Hoeven said he worries about the federal deficit. "I'm also concerned about some of the states, like California," he said. "At what point does their deficit problem become our collective problem?" (sooner than you think Gov Hoeven; but for now... time to kick the can down the road: print and borrow more. )

[Apr 14, 2009: Cities Turn to Fees to Fill Budget Gaps; States Slash Social Programs]
[Feb 17, 2009: Kansas Joins California in Budget Woes]
[Dec 19, 2008: New York Times - States' Funds for Jobless Dry Up]
[Dec 6, 2008: How Bad is Minnesota's Budget Deficit? Mega-Bad]
[Dec 12, 2008: California - Missed the Budget Shortfall by THAT Much]
[Nov 24, 2008: WSJ - States Cut Services for Elderly, Disabled]
[July 25, 2008: WSJ: States Slammed by Tax Shortfalls]