North Dakota boasts low unemployment and a fast growing economy
Last year, the state's economy grew at the fastest pace of any in the US and unemployment, at just 4.2 per cent, is the country's lowest. A fertile mix of
natural resources,
frugality and a plains-state work ethic have made North Dakota one of the most productive states in the US. "It's the nature of the North Dakota people," John Hoeven, the governor, said in an interview with the Financial Times. "They're more conservative than the average American."
Mr Hoeven credits his state's economic development strategy, strict banking rules and growing tourism for North Dakota's financial health. The state has also been one of the more
assertive in using a mix of energy sources such as coal, oil, wind and biofuels. So, it has
reaped the benefits of rising commodity prices even as its manufacturing sector has suffered. But unlike Alaska, which is dependent on oil, it was able to offset the
vagaries in the price of a single commodity.
Located on the northern border neighbouring Canada, Minnesota, Montana and South Dakota, North Dakota is nearly 10 times the size of New Jersey but, owing to its
remoteness and cold winter, has less than 10 per cent of its population.
Unlike most US states, North Dakota has weathered the downturn well. The budget for its fiscal two years ending June 30.2011 shows a surplus of $1.2bn, a sharp contrast to the national situation since the US plunged into the deepest recession since 1929.
States had to close a cumulative $142.6bn gap as legislatures enacted their budgets for the latest
fiscal year, which began on July 1 for 46 of 50 states, according to the National Conference of State Legislatures, a bipartisan research group. The recession has decimated tax revenues, forcing lawmakers to fire state workers, close schools and even
shutter prisons.
North Dakota's cushion has given the state the luxury of debating whether it should use the $600m it received in federal stimulus money now, or save it for another downturn. It has $700m in reserves, the most in the state's history.
With most states bleeding workers, North Dakota wants more investments such as Mr Al-Katib's, and has begun aggressive recruiting campaigns in cities such as Detroit, Chicago, Denver and Minneapolis. In the year to June, the state was the only one to create a significant number of jobs, according to the US Department of Labor, adding 5,400.
Clever budgeting
In the past year, North Dakota has used its budget surplus to slash corporate, property and personal taxes and improve roads, infrastructure and education. By comparison, California has had to cut programmes for children and the elderly as well as close state parks to tackle a $24bn budget gap.
Challenges remain: in a recent report from Standard & Poor's, the ratings agency warned that declines in the state's construction and manufacturing sector could
blunt its growth. And IHS Global Insight, an economic forecasting group, said North Dakota could end up losing jobs in 2009 if the global credit crisis worsened.
Still, many of the state's
quirks seem to have left it well insulated. David Flynn, an economist at the University of North Dakota, argues that tough lending rules and a network of local banks protected it from the subprime loan problem. A population of just 650,000 also helped to stop a housing bubble. "Now we're trying to exploit the downturn in the rest of the country," Mr Flynn said.
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