South Dakota ranked in the top five states for growth in gross domestic product and personal income during the first quarter of 2023, according to the U.S. Bureau of Economic Analysis.
The state’s real GDP went up 10.1% and personal income went up 9.2%.
“Second, third and fourth quarter of 2022 we had quarter-to-quarter negative growth," Joseph Santos, Ph.D., the director of South Dakota State University's Ness School of Management, said. "So that first quarter of 2023 really stands out, but then it also stands out in terms of the recent history of state real GDP growth. So, we had negative, negative, negative and then this big positive bump. I don't know if this is something that we should expect to see persist or not to be very honest.”
Santos also said he thinks the economy is currently strong overall.
“The economy, nationally and the state economy, is doing quite well. The biggest challenge we face right now is a headwind from increasing interest rates,” he said.
Santos said South Dakota’s labor market is an indicator of the economy doing well. The Department of Labor and Regulation’s most recent data shows the state’s unemployment rate is 1.9%.
Reynold Nesiba, Ph.D., an economics professor at Augustana University, said unemployment is just one important factor.
“South Dakota continues to have some of the poorest counties in the entire country and we simply don't talk about them," Nesiba said. "GDP isn't the only way, or necessarily even the best way, to try and analyze economic progress or economic prosperity. I think you have to look at people's everyday lives. We talk about South Dakota having a really low unemployment rate and that's good news. But the bad news is that in a city like Sioux Falls more than 40% of the kids are still qualifying for free and reduced lunches.”
Agriculture, forestry, fishing and hunting were the largest contributors to the state’s real GDP growth.
The agriculture sector contributed 9.3 percentage points to the state's 10.1% growth in real GDP, according to the U.S. Bureau of Economic Development.
"If you have an increase in the in the price of corn, it really does lead to an increase in personal income in the state of South Dakota and we've seen it's even correlated with increases in our in our sales tax revenue," Nesiba said.
Nesiba and Santos both said that how well the agriculture industry is doing varies with the price of commodities.
Source: sdpb.org
Photo Credit: gettyimage-jamesbrey
Categories: South Dakota, Business