The Economic Outlook quarterly report uses the North Dakota Forecast Model to predict economic trends for the state of North Dakota and its three largest metropolitan statistical areas: Fargo, ND-MN; Bismarck, ND; and Grand Forks, ND-MN. The model uses past trends and empirical relationships in data to predict (forecast) future trends. These forecasts focus on key economic indicators such as wage growth, labor force participation, unemployment, and the housing price index. Like all forecast models, this method faces limitations and the specific values in the forecast should not be direct cause for decision-making. Rather, forecasting provides information about what is possible and can help establish expectations. The Economic Outlook report is released each quarter with updated data from the forecast model. 

The COVID-19 pandemic has disrupted the global economy. Many predict the United States will experience an economic downturn alongside a historic increase in unemployment. These factors alone suggest concern for the North Dakota economy. Moreover, these events are coinciding with a collapse in oil prices, a critical source of revenue for the state of North Dakota. This report details the possible effect of expected increases in national unemployment and a decrease in oil prices on the North Dakota economy. We use the North Dakota Forecast Model to estimate a series of scenarios. The model predicts North Dakota will experience a decrease in salaries and wages, a decrease in the labor force, an increase in the unemployment rate, a decrease in gross state product, and a decrease in total tax collections.

Key Points

• Due to the use of historical data and lags in the model, this forecast does not include recent changes to economic conditions brought on by the coronavirus pandemic.

• This report represents forecasts based on the most recently available data when the model was run in April 2020. (For some series, the most recently available data is from 2019.) These forecasts serve as a baseline for how the economy was projected to grow before the economic shocks brought on by the pandemic.

• To see updated forecasts that incorporate economic shocks in national unemployment and falling oil prices, read the Economic Outlook Special Report: A forecast of the effect of COVID-19 on North Dakota.

The views expressed in these reports belong to the researchers and do not represent the views of North Dakota State University.