Before they got to complaining about how the Governor’s taxpayer-funded self-promotion has not eased the workforce shortage, the Governor’s Council of Economic Advisors got to look at lots of cool slides and graphs from state economist Derek Johnson from the Bureau of Finance and Management. This information will figure centrally in the Governor’s budget request coming in December and the Legislature’s appropriations during the 2024 Session.
In good news, Johnson told the council that inflation should continue to ease, down from 8.0% in 2022 to 4.1% this year and 2.4% next. Job growth may slow in 2024, but even the more pessimistic projections in Johnson’s slides don’t foresee a recession:
Johnson projects South Dakota’s economic numbers will track reasonably closely to national numbers. Oddly, Johnson projects South Dakota will see a larger increase in its unemployment rate than the change nationally:
Alas, high interest rates are slowing new house construction (though still not below pre-pandemic levels), leaving the single-family housing inventory low, the housing market tight, and thus housing prices double what they were a decade ago:
Personal income in South Dakota continues to rise, thanks pretty much entirely to nonfarm work. Income from “the foundation of South Dakota’s economy and our number one industry” appears to generate only one out of 13 income dollars in South Dakota and has shown notably less growth than nonfarm income:
State revenue is looking pretty good so far. In the first three months of Fiscal Year 2024, total ongoing revenues were 6.0% higher than the first quarter of FY 2023 and 5.9% higher than the Legislature banked on in the budget it adopted last March. Sales tax collections are down 3.1% from Q1 FY 2023, but the Legislature expected that when they approved cutting the state sales tax from 4.5% to 4.2%. Even with that sales tax cut enacted on July 1, sales tax revenue is actually up 0.4% from the Legislature’s adopted projections for this fiscal year.
Keep these figures and projections handy, legislators—the budget address is coming up at the beginning of December, and you start appropriating in January!