Sign Banking PPT North Dakota Now

Industry sign banking north dakota ppt now

good afternoon everyone my name is ron wertz i am regional outreach director for the federal reserve bank of minneapolis i hope i'm supposed to be going here i've been listening in uh on the conference and it's been really interesting david i actually would love to recommend you as like a color commentator in the fox football booth i think you'd be great at that i'm really interested in in following and i appreciate the opportunity to follow the governor in in this conference i hear many of the same stories and the same narrative as the governor was talking about you things are really positive but i'm also someone who swims in a lot of data and i'd like to share some of that with you that offers i think maybe a little bit of a different perspective on how the south dakota economy is doing right now so let me launch right into this and marianne and david just so you're for it just so you're aware i'll try to go i'll try to end at 3 40 or between 3 40 and 3 45 so i'll try to really accelerate this so i apologize i have a lot of content to share i have a much smaller window so i'm just going to try to keep it at a 30 000 foot level um views expressed here are mine and not necessarily those of the bank federal reserve ninth district if you didn't know we're we're supposed to be paying attention to a district that runs roughly western wisconsin over to montana including south dakota so basically what i will tell you is that from a pandemic economy standpoint there was a really strong bounce back in q3 what we're seeing is that there's been a softer q4 and that employment is is flattening south dakota has been i think it's really accurate to say south dakota has been doing well among states the bad news it's a pretty modest bar and there have been some coveted trade-offs in general what i'd also like to show you is not just in south dakota but in general what we're seeing is that small firms and certain industry sectors are bearing up heavier costs in terms of the pandemic so i'm going to give you a lot of detail i'm going to share this uh powerpoint with uh with the chamber and they'll be able to share it later so real quickly in terms of like gross measures gross domestic product shows us that in q3 we saw that big bounce back the problem is for states we don't have anything better than q3 that's the most recent in terms of the nation we have the q4 measure and we see that there is that softening and that from a from a total standpoint we are still several percentage points below where we were pre-pandemic in terms of construction what we are seeing is that south dakota construction sector has been a little bit more resilient than other states that i'm looking at there has been a drop-off we're still above levels that we were at a couple of years ago in terms of employment i think this is one of the more important charts so as you can see south dakota here is the red line okay and north dakota minnesota below it as well as the us so south dakota has been pretty solidly ahead of the pack in terms of employment recovery this is an index so this is basically just rate of change a hundred would be back to normal back to pre-pandemic so everybody's still considerably below pre-pandemic levels and probably more concerning is that everybody's trajectory lines have really flattened out including in south dakota equally important as the governor accurately pointed out south dakota has one of the best uh actually the best unemployment rate in the nation that's what's called the u3 measure there's another measure called the u6 measure it it basically there's a definition at the bottom of this chart basically it's a little bit more expansive a definition for those that haven't looked for work in a while but want to are working part time and what we see here is that the south dakota u6 measure is significantly higher so we think there is a lot more labor slack in south dakota then maybe what that official measure shows that's the same story in other states though uh minnesota's u6 um measure is actually closer to 10 percent so again south dakota doing better on that measure as well unemployment claims this is something we pay an awful lot of attention to we we know that there is the huge spike during the first part of the pandemic things have come down and settled in i think a little bit the thing i want you to take away from this chart levels are increasing and they are higher both from initial claims the people that ask for assistance and it's also higher for those that are receiving assistance than it is normally um by a fairly significant margin and this chart doesn't include those that are also on those new benefit programs that were created in the stimulus packages and that can add anywhere depending on the state that can add sometimes anywhere from 50 to 100 percent more in terms of people receiving benefits so we know that there is a lot of there are a lot of people that are not working as they used to be this is also something that i think you'll have to pay an awful lot of attention to going forward so basically we know that labor force participation is really important in terms of growth and what we're seeing is that there is not only a long-term decline in labor force participation we thought it might be going up actually right before the pandemic kind of looked like it wanted to but what we're seeing is that during the pandemic there's been a lot of friction in labor markets and we're seeing people literally just drop out of the labor market so the people that are included here are not the people that are included in the previous chart with regards to unemployment benefits but the thing is even these measures don't really give us as much information as we would like about what's happening at the firm level so the minneapolis fed is doing an awful lot more outreach to the to the business community we've done 15 different surveys just since last march and we've gotten over 12 000 responses again across that six state region that i showed you earlier right now i'm going to give you some results to our our general business survey we conducted this in mid-january and we do it across the six state region we had over a thousand responses to this and a quick shout out uh to the south dakota chamber they're they've always been a long-term partner with us and i really appreciate their leadership in this we've also managed to include a number of the local chambers who send it out to their members if people are listening here and they're familiar i'd love to get your responses in the future if you've already responded i appreciate the insights that you give us we really pay a lot of attention to feedback from the business community so again in terms of because i only have about 90 responses from south dakota you have to take these as a decent snapshot but this is not scientifically valid basic takeaways what we're seeing is that there a lot of firms have been negatively impacted during the pandemic that's not a surprise south dakota firms tend to be less negative in terms of their revenue trends and other outcomes that are related to revenue size sector state those are really big factors across that six state region that's really what we're worried about we see that those are very big factors in terms of how firms are performing so real quickly how to read this chart red means bad green means good deeper red means worse okay we asked firms essentially to compare recent revenues in q4 to three different time frames the same quarter last year that's the top bar the previous quarter quarter three that's the middle bar and then what their expectations for q1 are compared to q1 of last year 2020. and basically what this chart says is that right now on net most firms are seeing some kind of negative revenue trend and that does kind of fly in the face of some of the things that you've probably heard today i'll have a little bit of an exp of an explanation of why that is so we also ask firms to identify what sector their business is in and generally what we've seen this has been a pretty consistent finding is that we are seeing that consumer facing kind of crowd dependent firms those that deal in accommodation and hospitality entertainment retail those have been those have seen very negative revenue trends really since the start of the pandemic geography also matters so we ask what state they're from and as you can see here south dakota uh in general it has and i would say throughout our survey generally sees better results than the uh than respondents from other states there's a couple reasons for that by first i think you probably are doing a little bit better but composition in terms of respondents also matters and what we see is that in minnesota and up and the up of michigan those that are that saw a little bit worse response they tended to see more respondents in those sectors that were hurt accommodation retail entertainment things like that south dakota on the other hand had more respondents in the banking sector and that sector as the last chart showed that i kind of had to run through quickly that sector is by far the the healthiest in terms of its response and its um its positive revenue trends so composition really matters i think if you were to wait for all those factors i don't think there's any question south dakota would still come out um slightly ahead but i think you'd see a compression of how different the states are from one another more than anything i what i would take if you take one thing away is that i think it kind of explains the negative revenue trends is that size matters size really matters this has been the most consistent finding in our surveys is that small firms have done very poorly during the recession large firms have done significantly better you see not only more firms that are seeing growth you're seeing fewer of them that are seeing negative revenue trends and again in terms of respondents um you know as i think how you take it how you should think about it is this survey is not necessarily a great measure of the overall economy it's a very good measure of how firms uh how firms from a representative standpoint are doing in the economy how you think about that is large firms have a larger share of overall revenue overall output in the economy they have a larger share of overall employment in the economy so if larger firms are doing better that actually means our economy is probably doing a little bit better than what the findings of this particular survey suggest but it is pointing out very clearly small firms are struggling during this time and that includes in south dakota so i would ask you to be careful because the sample sizes in some of these categories are really small but generally speaking you see the same outcome in south dakota as you see in this in the results overall the smaller you are the more likely you are to have seen a negative revenue trend same with generally speaking same with workforce the one thing i would say with workforce that we are seeing is that they've we've seen some negative negative workforce trends um leading up to now there is positive sentiment going forward for q1 in terms of workforce there are lots of challenges we don't have to talk about this i think you already realized there we just basically asked people or asked firms to identify which challenge in south dakota the biggest challenge of labor availability outlook also positive and more positive in south dakota i think likely it's because we have um vaccine regimens out there and i think that is giving people hope quite honestly i think not not surprisingly if there's any trade-off i think everyone in the room is familiar with this um because of the economic openness in south dakota there have been um i would say more negative outcomes in terms of some of the covet measures so south dakota is is on i would say the the wrong side of this particular measure those other states that are on to the right of it are all eastern seaboard with the exception of mississippi that's where the where kovid came in first i think um and states probably didn't have much of a plan of anything again i think there's trade-off i think some of the surveys that i that i watched during the earlier part of this suggests that states very comfortable with its approach so i think these are just the trade-offs whether or not you decide to try to protect the economy more or protect people more i don't know that there's been a great um uh i don't think there's an easy answer to that and i think south dakota seems very comfortable with its approach so quick takeaways um again right now we're we're seeing that q4 was slower we don't see that changing right now the fiscal stimulus probably is going to help for stronger q1 what's not clear is after stimulus what's happening after that after the sugar runs out are we going to be in a place where we can where we can organically grow again again i think the slowing is likely we saw a big surge in infection rates we have seen a very a very clear connection between infection rates and speed of the economy overall it's not a one-to-one but we've definitely seen patterns especially in consumer especially in consumer spending that reflect that unemployment rate is low and it's getting low across the country but there are a lot of other metrics the unemployment claims the labor force participation the a lot of positive sentiment with regards to hiring it's going to depend on whether workers are are going to make themselves available i think and uh overall positive outlook in terms of um getting to post pandemic i don't know how far that is away i hope the governor's right in that um the worst days are in are in back of us um i'm not i'm not ready to say that i think with given some of the virus variants um uh slower than we would like vaccine delivery acknowledging that south dakota's done a great job and getting it's out but in terms of having enough doses getting it out there um as quickly as we can i think there's um we have months before um before we get to the other side at the very least and we've seen that this can um this can ricochet this can boomerang in ways that we don't expect so my hope is that the governor is right and i guess this is these are the things that we're really tracking on a daily basis and and i'm really pleased to be able to come and visit uh and share some of this information with you i'll be sharing this slide deck probably a lot more to glean from this but i didn't want to take the chance just to say thanks for having me today