Good news for the Grand Forks economy. But are there clouds on the horizon? – Herald of Grand Forks

GRAND FORKS — Here’s a gist of good news: Professional and business services sector jobs in the Grand Forks area are rising to about 4,000 from a pre-pandemic doldrums of about 3,400.

Those numbers come from Mark Schill, a management consultant at Praxis Strategy Group, who keeps a close eye on federal data for the area. It’s encouraging to see jobs rising, but it’s hard to tell exactly what’s going on, Schill said — whether it’s success for Grand Forks’ cluster of architectural firms, its startup sector, or something to do with unmanned aerial vehicles Happened to planes at Grand Sky.

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

“Any growth in these industries will boost a weaker part of the region’s economy,” he said compared to the national average, “which will likely make the region more resilient to any recession.”

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

“There is still a lot to do, especially in the post-pandemic environment,” said UND economist David Flynn.

That is perhaps an understatement. As the pandemic subsides, workers are enjoying a moment of exceptional opportunity in a tight labor market and are demanding higher wages as a result. But inflation has skyrocketed — for the Midwest to an annualized rate of 9.5% in June. If federal officials try to contain this, they could easily cause a recession by raising interest rates. Nationwide, 30-year mortgage rates have roughly doubled to over 5.5% on average.

In North Dakota, like 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 fast inflation continues to rise.

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

“While the nation as a whole suffered from the impact of financial markets and these follow-on problems that cascaded through major metropolitan areas like New York City, we didn’t have the same problems,” Flynn said.

But today’s moment probably wouldn’t spare North Dakota like it did in 2008, he said.

“If you look at things like national-level inflation data and North Dakota-level inflation data, North Dakota is pretty much following suit,” Flynn said.

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

“These impacts will be felt more by residents today than they were 15 years ago,” Johnson said. “Maybe not psychologically … but a family, I’d say, if they were planning on going to Disney World for four days, they’re going to do two now because that’s all they can afford.”

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

It’s not all bad news. The churn rate — an indicator of how comfortably workers are moving toward new opportunities — is still near a two-decade high, according to federal data. The current moment is a golden opportunity for many Americans to change jobs or even career fields.

And almost everyone is hoping it all doesn’t lead to a recession — especially given the turmoil from the growl of the supply chain and the Russian war in Ukraine. Flynn points out that the Federal Reserve is suggesting that inflation may not fall back to around 2% by 2024.

“The economy here is very strong,” said Barry Wilfahrt, chairman of the local chamber. “The economy of Grand Forks is now as strong as I’ve ever seen it. Nobody can imagine whether it will be in six months.”