The ‘Other’ Dakota Leads the Nation in Economic Growth

Sully County, S.D., is frequently America's top-producing sunflower county. South Dakota grew its economy with the industry that’s long been the staple of the upper Midwest: farming. PHOTO: LANCE NIXON/CAPITAL JOURNAL VIA ASSOCIATED PRESS

The economy in South Dakota grew at a 9.2% seasonally adjusted annualized rate in the third quarter, far and away the most robust gain in the country, according to data released by the Commerce Department on Wednesday. That’s outsized growth compared with the country’s 1.9% advance in gross domestic product that quarter.

North Dakota, which for several years rode the oil boom to lead the nation in economic growth, went bust. Its economy contracted at a 3.4% pace, worst in the nation. A year earlier the state’s output had expanded 5% in the third quarter. (And that was a slowdown from 18.8% in the second quarter of 2014.)

South Dakota grew its economy with the industry that’s long been the staple of the upper Midwest: farming. The state’s agriculture sector contributed 6.9 percentage points to overall growth. South Dakota’s health care, retail and construction industries also grew at healthy rates.

All but three states increased economic output in the third quarter, but South Dakota was one of just eight states to grow at a more rapid rate compared with the second quarter. Most of the others are also dependent on farming. The Kansas economy expanded at a 6.5% annual pace. Iowa grew at a 6.4% rate and Nebraska advanced 5.4%.

Those gains reflect a turnaround in farm incomes. Farm earnings grew 17.5% in the third quarter of 2015, after falling 4.5% in the second quarter, according to Commerce Department data. Still, the Agriculture Department expects farm incomes to slump in 2016, so the gains could be short-lived.

The largest slowdown in economic growth occurred in Washington. That state’s economy eased to a 0.8% advance in the third quarter from an 8% gain in the second. Weaker real estate and retail sectors dragged on growth.

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