A Spotlight on the Plains States: The Kiplinger Letter

Picture of Pierre South Dakota waterfront.

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Labor markets in the Plains region are still tight, with higher than average job opening rates and labor force participation rates with low unemployment rates. Healthcare is showing a very strong uptrend in all states in the region. Some agricultural prices have been returning to pre-pandemic levels, such as corn, wheat and pork, creating difficulty for farmers whose costs have risen. But soybean prices remain elevated, and beef and chicken prices are still near record highs. Overall 2024 farm income should decline from a drop in crop insurance indemnities. Insurance payments will normalize in 2024 after peaking in 2022 and 2023.

South Dakota will enjoy the fastest job growth among the Plains states, with
1.8%, with a super low unemployment rate of 2.0%. It’s the only state in the region to benefit from net in-migration. Besides healthcare, tech and business services will lead the way. A new convention center is coming to Sioux Falls, but construction may take six years. The huge ethanol industry is pushing for approval of pipelines to carry carbon dioxide generated by ethanol plants, but local opposition has so far blocked those plans. The annual August motorcycle rally in Sturgis continues to attract roughly 600,000 visitors, with four-fifths coming in from outside the state.

Minnesota, with job growth of 1.3%, is next. Construction and healthcare are doing well, but financial firms are struggling. The unemployment rate is 2.9%, and Minnesota has the most job openings in the region. Iron ore shipment levels at Duluth are the highest in nearly three decades. Minneapolis is seeing a surge in office-to-apartment conversions, which could help its struggling downtown area. Rotary International is holding its 2029 worldwide convention in the Twin Cities. 15,000 are expected to attend. Delta, which has a hub at the Twin Cities airport, expects business travel to pick up this year. Business travel on Delta is now at 90% of pre-pandemic level.

Close behind is North Dakota, set for employment growth of 1.2% in 2024. The unemployment rate is a microscopic 1.9%, and jobs are going begging. Oil drilling activity has eased, but the state remains the third-biggest oil producer in the country (after Texas and New Mexico). Construction is flat, due to the drilling slowdown. The portion of a proposed CO2 pipeline ending in North Dakota got the green light from the state’s utility regulator. But opposition in neighboring states could nix it.

Kansas is growing a bit slower with jobs up 1%. Its population growth is the slowest in the region, limiting increases in the labor force. Outside of healthcare and construction, most sectors are flat or down. The recent drought is easing, though. One bright spot is the aviation industry in Wichita, home to Bombardier’s Learjet and Spirit AeroSystems, Boeing's airframe supplier. Spirit was not at fault for the recent issue of the door plug that fell out on a 737-MAX flight, but it is still tied to Boeing's ups and downs. Quickstep, an Australian aerospace firm, plans to open its first U.S. facility in Wichita. 

Nebraska is constrained by a tight labor market, with unemployment of 2.3% and projected job growth this year of just 0.8%. Again, the recent drought is easing, and the cattle industry is benefitting from high prices. Food processing in
general will continue to do well. Omaha, long a Midwestern financial center, has lost jobs in the sector for four straight years, but it should be near the bottom. The metro area as a whole has seen steady job growth, though, and a 7,000-seat soccer stadium will anchor the development of an entertainment district

Iowa is in line for the slowest job growth — just 0.5%. Technology and finance are struggling, and drought will continue to weigh on farmers. Pork producers are getting hit with high feed costs and demand that has lagged behind supply growth. But, healthcare, manufacturing and construction are up. Microsoft is building a sixth data center in West Des Moines. A challenge for state decision-makers is whether to approve Iowa’s participation in a regional liquid carbon pipeline proposed by Summit to allow ethanol plants to generate carbon offsets that could be rewarded with billions of dollars in federal tax credits. Half of the state’s corn crop is used to make ethanol, and the state has twelve ethanol producers, but the proposal has met fierce local resistance over safety concerns.

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This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.