Your economic puzzle for the day comes from the Bureau of Economic Analysis, which finds that, in the third quarter of 2016, South Dakota had the fastest growing economy in the nation:
So how does South Dakota grow its economy twice as fast as the national rate but still see limp sales tax revenues that undershoot last year’s budget projections by $55 million?
The problem, according to BEA data, is that our GDP gain is all relative. Our Q3 2016 GDP is actually down 0.3% from Q3 2015. We saw declines in GDP of 9.8% in Q1 and 1.0% in Q2, so as of Q3, we were still in the hole for the year.
Even with low crop prices, agriculture still generated 2.01 percentage points of our Q3 gain, followed by finance and insurance with 1.69 points, wholesale trade at 0.75, durable-goods manufacturing at 0.40, and government (ah, sweet government!) at 0.39. Real estate/rentals and educational services sandbagged us a bit, posting the only sector declines (0.12 and 0.02 points, respectively).