Despite National Recession, South Dakota Sees Growth

Agriculture and manufacturing have spurred the South Dakota economy to moderate prosperity in the backwash of the national recession.

Gains on the farm and in some factories have offset soft times in housing and the financial industry, resulting in almost uninterrupted growth for the state in the past decade.

South Dakota’s gross domestic product, a measure of all dollars changing hands, reached $39.8 billion last year, up 4.3 percent from 2009, state officials said.

The federal Bureau of Economic Analysis shows a more modest 2.2 percent gain for South Dakota, but that is before allowing for inflation. Either measure indicates the state weathered the most severe elements of recession.

“We really didn’t get the bubble, and we’re not getting the crash,” said Joe Mahon, regional economist for the Federal Reserve Bank of Minneapolis.

The state’s economy takes less dramatic turns, because agriculture tends to run counter to other industries, Mahon said. World instability, including the financial crisis in Europe, might be pushing farm prices just as it drives up the value of gold and silver. But a bigger factor fueling farm commodities is world demand for food.

“It’s an interesting question, whether in hard times people flee to something tangible and useful,” Mahon said. “But the ag economy is just on a different clock … and that helps smooth out the recession.”

The U.S. Department of Agriculture showed farm income topping $2.58 billion in South Dakota last year, up 11 percent from $2.31 billion in 2009. South Dakota ranked No. 16 among states with $2.4 billion in ag exports in 2010.

The strong farm numbers work in tandem with gains in other industries that have either weathered the recession or adapted to conditions it created.

Showplace Wood Products, a cabinet maker with 380 employees in Harrisburg, Beresford and Sioux Falls, once had about 60 percent of its business go toward new housing. That now is almost totally reversed, to an 80-20 split in favor of remodeling over new construction. That change comes as the manufacturer has been able to expand its volume and place in the national market.

“We’re up about 10 percent year to date this year compared to last,” said Emery Lee, chief financial officer at Showplace. “We strive to make a good product and get it shipped out on time. That’s paid off well for us.”

Daktronics, a manufacturer of stadium scoreboards, billboards and other electronic equipment, ended fiscal 2010 with a net loss compared to 2009 and then showed a gain in revenue this year. Its work force of 2,600 includes 2,100 employees in Brookings and 250 in Sioux Falls.

“South Dakota, in many regards, is better off than a lot of the other parts of the country,” said Jim Morgan, president and CEO.

Daktronics benefits from the nation’s appetite for sports and high-tech stadiums. The manufacturer has outfitted four Sioux Falls football stadiums recently and did Target Field for the Minnesota Twins in 2010.

“Long term, we expect to keep growing,” Morgan said.

Kathy Reeves, a specialist with the Cooperative Extension Service in Rapid City, said the state’s economic growth reflects what has been a generally positive year.

“Corn and the raw materials for ethanol are up. We’ve had good moisture and a pretty decent year. Any time prices are up, people feel good,” she said.

She said problems ranging from national debt to financial chaos in Greece may have surprise consequences, but that self-reliance serves the state’s residents well.

“If things get tough, you figure out a way to make things work,” she said.

Information from: Argus Leader