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A bit of good news for Grand Forks economy. But are clouds gathering on the horizon?

In North Dakota, as for the rest of the country, it’s not really clear what happens next. Much will depend on how the Federal Reserve continues to manage the economy; even more will depend on how quickly inflation continues to rise.

Grand Forks town sign logo tower Highway 2.jpg
A sign on Highway 2 welcomes visitors to Grand Forks. (Grand Forks Herald)
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GRAND FORKS — Here’s a kernel of good news: professional and business services sector jobs are up in the Grand Forks region, spiking to about 4,000, up from a pre-pandemic lull of about 3,400.

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The shift away from COVID lockdown has been a welcome change throughout the long-term care industry in particular.

Those figures come from Mark Schill, a business consultant with Praxis Strategy Group, who keeps a close eye on federal data for the area. It’s heartening to see jobs up, but it’s hard to say exactly what’s going on, Schill said — whether it’s success for Grand Forks’ cluster of architecture firms, its startup sector or something happening with unmanned aircraft at Grand Sky.

But it’s a good sign, he said, especially given what might come next.

“Any growth in these industries is boosting a weaker portion of the regional economy,” he said, relative to the national average, “which is likely to make the region more resilient in any recession.”

The trend is relatively new, though — with a May 2022 high matching an October 2020 high — and it’s still not clear what happens next.

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“Particularly in the post-pandemic environment, there’s still a lot of shaking out that’s going on,” UND economist David Flynn said.

That might be an understatement. As the pandemic slackens, workers are enjoying a moment of extraordinary opportunity in a tight labor market, and commanding higher wages as a result. But inflation has been surging — for the Midwest, up to a 9.5% annual rate in June. As federal officials try to curb it, they could easily cause a recession as they hike interest rates. Nationwide, 30-year mortgage rate averages have roughly doubled to above 5.5%.

In North Dakota, as for the rest of the country, it’s not really clear what happens next. Much will depend on how the Federal Reserve continues to manage the economy; even more will depend on how quickly inflation continues to rise.

So how could things turn out? Flynn points out that the Great Recession in the first decade of the 2000s was more muted in North Dakota, because its mortgage market was much, much healthier than the rest of the country. And the recession also coincided with the state’s oil boom, which blunted a lot of its effects.

“While the nation as a whole suffered through the financial market effects, and those knock-on issues that just cascaded through major metro areas like New York City, we didn't have the same kind of problems,” Flynn said.

But today’s moment likely wouldn’t spare North Dakota the same way it did in 2008, he said.

“When you look at things like inflation data at the national level, and inflation data at the North Dakota level, North Dakota pretty much follows in lockstep,” Flynn said.

Brian Johnson, CEO of Choice Bank, pointed out how quickly rents seem to be rising (about 0.8% in June nationwide, which is the largest monthly bump since the mid-1980s, according to federal statistics). With everything changing so quickly, it’s a different economy now.

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“This impact will be more felt by today’s residents versus 15 years ago,” Johnson said. ”Maybe not psychologically … but a family unit, I would say, if they were planning to go to Disney World for four days, they’re going to go for two now, because that’s all they can afford.”

A big part of that problem is a combination of inflation, which is driving up costs everywhere, and rising interest rates, which are making mortgages more expensive. Renters might find themselves trapped in a tighter rental market with fewer options.

It’s not all bad news. The quit rate — a proxy for how comfortable workers are heading off to new opportunities — is still near a two-decade high, according to federal data . The current moment is a once-in-a-generation opportunity for many Americans to change jobs or even career fields.

And most everyone hopes a recession isn’t where this is all headed — especially given the tumult from supply chain snarls and Russia’s war in Ukraine. Flynn points out that the Federal Reserve is hinting that inflation might not fall back to the roughly 2% until 2024.

“The economy here is very strong,” said Barry Wilfahrt, head of the local Chamber. “The Grand Forks economy now is as strong as I’ve ever seen it. Will it be six months from now is anybody’s guess.”

Related Topics: ECONOMY
Sam Easter is a freelance reporter who has been a regular contributor to the Herald since 2019. He covers a variety of topics, including government and politics.

In 2015, he joined the Herald’s staff as City Hall reporter, covering North Dakota politics at all levels and conducting Herald investigations through early 2018, when he began his freelancing career.

Easter can be reached at samkweaster@gmail.com or via Twitter via @samkweaster.
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