The EMSI blog has a post with lots of new economic data on America’s “economic miracle state” - North Dakota. Here are some highlights from the post “North Dakota’s Oil and Gas industry Just Keeps Growing“:
1. In 2012, North Dakota’s Gross Regional Product was $39.3 billion, an enormous figure for a state with only 690,000 residents and an increase of $6.4 billion from 2010.
2. For real per capita GDP in 2011, North Dakota ranked No. 7 in the country at $50,096.
3. Since the beginning of the state’s oil boom in 2005, North Dakota’s oil and gas industries have grown by an incredible 396.5%, compared to the nation’s otherwise impressive growth of 32.5%.
4. While North Dakota’s oil and gas industry is growing by leaps and bounds, it still only directly employs about 22,000 workers. North Dakota’s economy is booming because of the remarkable effect that energy production has on other industries. Since the beginning of the oil boom in 2005, the average growth across 4-digit-level NAICS industries with at least 500 jobs in the state is a whopping 20%. Many industries are expanding at astronomical speed, for example:
a. Jobs in “support industries for mining” have increased by almost eight times, from 2,307 in 2005 to 18,191 in 2012, at an average annual salary of more than $106,000.
b. Jobs in “architectural and engineering services” have more than doubled since 2005, and the average annual salary for North Dakota architects and engineers at $91,500 is above the national average of $89,500.
c. Trucking jobs in North Dakota have tripled in the last seven years, and drivers there earn almost $81,000 per year on average, which is a premium of almost 50% above the national average of $54,000 for truck drivers.
d. Employment for the “Industrial and equipment rental” industry has increased almost six-fold since 2005, and the average annual pay of $106,000 in North Dakota is 36% above the national average for that industry of less than $78,000.
Overall, employees in the 24 fastest growing industries in North Dakota earn an average annual salary of more than $80,000, which is a wage premium of more than 29% above the national average salaries for those industries as a group.
5. EMSI research finds that job multipliers in North Dakota range from 1.76 for oil and gas pipeline construction to 5.37 for petroleum refineries. Therefore, for every direct job that energy production creates in the state adds an additional 1 to 4 jobs elsewhere in the North Dakota economy.
6. North Dakota’s labor force participation rate (LFPR) has held steady at between 71 to 74% since 2007. In contrast, the national LFPR has been falling since 2000, is currently at 63.5% and has never been higher than about 67%.
EMSI concludes that there is “no reason to expect North Dakota’s economy to slow down any time soon,” and that “energy production seems poised to continue having a powerful effect on one of the United States’ most remarkable state economies.”
MP: My contribution to the discussion on “America’s economic miracle state” would be to point out that the shale revolution there helped to completely insulate the state’s housing market from the housing bubble and significant correction in home prices that affected most of the rest of America over the last five years. The chart above shows the dramatic difference in the quarterly FHFA house price index in North Dakota compared to the FHFA index for house prices nationally. WIth both FHFA house price indexes set equal to 100 in the fourth quarter of 2002, we can see graphically the dramatic difference in housing prices:
a) US house prices peaked in early 2007 and then dropped by 20% by 2011, and have recovered modestly in 2012. Nationally, house prices at the end of last year were still 16% below their 2007 peak.
b) Thanks in large part to the shale oil boom, neither the Great Recession nor the nationwide housing correction stopped North Dakota home prices from appreciating, and house prices there in Q4 2012 were 20% above prices in Q2 2007 – the quarter when nationwide house prices peaked.
In other words, house prices nationally at the end of last year were 16% below their 2007 peak on average nationally, while house prices in “Saudi Dakota,” thanks to shale oil and the energy revolution, were 20% above their level in 2007. The shale revolution in North Dakota is not only creating thousands of “shovel-ready jobs” at salaries well above the national averages for most occupations, but it’s also generating benefits for homeowners throughout the state, by insulating them from the housing shocks that have adversely affected many parts of the country.