Sponsored By
An organization or individual has paid for the creation of this work but did not approve or review it.



Good, bad and ugly

As you review the statistical tables accompanying this article, you can draw some positive data for Grand Forks and the state. You also may find things to be concerned about. Remember, though, that quarterly data should be used with caution becau...

As you review the statistical tables accompanying this article, you can draw some positive data for Grand Forks and the state. You also may find things to be concerned about. Remember, though, that quarterly data should be used with caution because of the timing issue relating to when data is reported.

The positive data include city sales tax collections, unemployment figures, border crossings and home sales. Data raising concerns include building permit values, state tax department data on taxable sales and purchases in Grand Forks, North Dakota population data, the continuing problem with airline boarding and inflation.

As to the positive data, I have written before about all of them. What should be satisfying is that all of them continue to be so positive. Unemployment for the city, the MSA, and the county are better than a year ago. Even Polk County shows an improvement from last year, while all of Minnesota is only equal in the same time period.

The city sales tax collections are especially satisfying. It is true that the so-called 0.25 percent entertainment tax is down slightly, but by less than 1 percent for the four-month period. The January through February lodging tax is up more than 6 percent, indicating people are still coming to Grand Forks in large numbers. The overall 12-month rolling total of taxes collected is up nearly 5 percent, and that is good growth. Now that Canad Inns is about to open, it will be interesting to watch both the lodging and entertainment tax figures through the rest of this year and into next year.

Border crossing figures also are a good sign for Grand Forks. The big numbers occur at Pembina, N.D. An increase of 17 percent is a lot. The question still is whether or not Grand Forks is losing too many of these people to other cities, particularly Fargo. It seems to me a survey that would provide this data would be very useful to the motel, restaurant, lounge and retail sectors. Again, I expect significant improvement because of Canad Inns.


My final positive comments concern home sales in Grand Forks and East Grand Forks. We have all read about the serious adjustment occurring nationwide. I have written before that this area never experienced the housing boom that hit other areas, and that I did not expect the area to experience the bust to the degree other areas would. These statistics appear to confirm that. In the first quarter, home sales are up significantly. It is true that the average price is about the same, and it would be fair to call the days on market increase as significant. However, given the problems within the housing sector nationwide, these figures are nothing that can not be handled, and the increase in sales at about the same price seems to me to confirm this. A decrease in the value of a home probably slows down consumer spending more than any other factor except unemployment, and that is not happening here.

On the negative side, it is the national figures on inflation, and the taxable sales and purchases data from the state that concern me the most. After many, including myself, concluded the Fed had inflation under control, it rears its ugly head again. On an annualized basis, it is up nearly 5 percent in the first quarter of this year. That is too much, and it cannot be allowed to continue at that level, particularly with what is expected to be a slowdown this year in the U.S. economy. Most economists who concentrate in these types of figures expect earnings growth in the U.S. economy to be just more than 7 percent this year. Last year, that growth was nearly 17 percent. This year's 7 percent growth is not enough to handle a 5 percent inflation rate. In the meantime, China's economy grew by more than 11 percent in the first quarter. At the same time, the U.S. trade deficit in February was nearly $60 billion, and our budget deficit continued to grow larger and larger, financed by China and the oil exporting nations. This may be the year that those problems created by large trade and budget deficits, especially as the budget deficits are financed by foreign money, begin to have a negative impact on our economy.

In North Dakota, and throughout the agricultural states, these problems may be minimized by what appears to be a banner agricultural year. That is what happened in the 1970s. Then, even though the national economy was hammered by a decade of out-of-control inflation and an aging industrial sector, North Dakota, at least in the beginning, was enjoying prosperity because of what was called the Russian wheat deal. This time, it is the alternative energy push that may save us. However, for those on fixed wages and retirement income, and this is especially important in North Dakota today more than in the 1970s, there could be some real problems.

It is when we look at the taxable sales and purchases that I still have my greatest concern for Grand Forks and East Grand Forks. As I wrote in a recent column, the 2006 annual report still has not been completed. But, by adding the four quarters together, we can get preliminary figures that have been close enough in the past to draw some conclusions, and here is what I see: Taxable sales and purchases in Grand Forks had been running even with the other three large cities in North Dakota from 2001 through 2005.

For some, as yet unexplained reason, in 2006, Grand Forks fell behind - way behind. We can understand that the energy market, and government and government related spending, contributed to the huge increase in Bismarck. The energy sector is probably even the difference in Minot's relatively good performance. But, what happened in 2006 that the growth in Grand Forks sales and purchases were only about half that, and less, when compared Fargo and the state as a whole.

The tax department did provide a breakdown for the fourth quarter by industry. That report, if it is valid for the whole year, says we were concerned with the wrong area. Most of us thought it was in the retail sector. It turns out it was in the financial and real estate areas where the problems occurred, at least in the fourth quarter. To know for sure, we will need that report on an annual basis, and I have requested that data from the tax department. These figures just do not make sense. What could have happened in that sector?

My concern with population is twofold. First, even after their adjustment, we know that the Census Bureau estimate for North Dakota's MSAs is still under-reporting the population. The problem is that any business considering location here sees this data. It is up to the people involved in economic development to get the corrections out to developers. The problem is knowing who these people are.

The other population problem is, I think, that while the Census Bureau estimates under report population in the MSAs they also over-report the population in the surrounding rural areas. If I am correct, that means the trade area population may, at best, be stagnant. That would limit available labor and people available to businesses in Grand Forks. It also makes the "destination city" program all the more important.


Finally, the only other comment concerns the building permit value. Because of last year's abnormally high value and the resulting employment those projects created, I expected this years figures to reflect a slowdown. I had hoped for more activity by now, but it just may be too soon. It is possible that all of the uncompleted projects began last year is tying up the labor pool, and any new projects have just been put on the back burner. But, if we do not see significant movement by next month it just may be the Grand Forks has hit a plateau. I would be especially concerned if the slowdown affects the housing market.

Kingsbury writes a weekly column on the local economy. He can be reached at kae@invisimax.com or (701) 738-0028.

What To Read Next
Artificial intelligence can now act as an artist or a writer. Does that mean AI is ready to play doctor? Many institutions, including Mayo Clinic, believe that AI is ready to become a useful tool.
Josh Sipes was watching an in-flight movie when he became aware the flight crew were asking for help assisting a woman who was experiencing a medical problem.
Nonprofit hospitals are required to provide free or discounted care, also known as charity care; yet eligibility and application requirements vary across hospitals. Could you qualify? We found out.
Crisis pregnancy centers received almost $3 million in taxpayer funds in 2022. Soon, sharing only medically accurate information could be a prerequisite for funding.