FARGO — North Dakota’s economy shrank in 2015 by almost 6 percent, ending a decade of mostly robust growth that saw the state’s output of goods and services more than double.
North Dakota’s gross domestic product last year dropped to $54.8 billion, down from $58.2 billion in 2014, or a decline of 5.8 percent, according to the U.S. Bureau of Economic Analysis.
Agriculture and petroleum, the two main drivers of North Dakota’s wealth, saw significant declines last year.
Mining, dominated by oil and gas extraction, plunged 34.2 percent from 2014 to 2015. During the same period, agriculture declined 11.6 percent.
Bright spots in the economy included health care, which grew 6.7 percent, educational services, which rose 6.6 percent, and utilities, up 6.5 percent, according to Bureau of Economic Analysis figures.
David Flynn, an economics professor at the University of North Dakota, said the decline should be viewed in the context of years of impressive growth. Until the last few years, both oil and agriculture were booming simultaneously.
“We’re talking about an amazing change in our state’s economy,” Flynn said. North Dakota might have to accept the sharp decline in oil last year as the downside of a phenomenal growth spurt.
“This is still a track record I think many states would gladly swap with North Dakota,” he said. The drop in the state’s economy reflects the volatility of commodities.
“It’s not a good time,” Flynn said. “There’s a lot of volatility.”
Nonetheless, he predicted the price of oil, which recently has shown signs of stabilizing, will increase in the future.
“North Dakota is going to continue gaining from it,” Flynn said, referring to petroleum. “I think we’ll be seeing growth from that sector” in the future.
Al Anderson, commissioner of the North Dakota Department of Commerce, said the decline was anticipated, given the unprecedented growth in 2014, when the economy grew 7 percent, following an intense growth spurt of 16.9 percent in 2010-11 and 23.9 percent in 2011-12.
If agriculture and mining were subtracted from the gross domestic product figures, North Dakota’s economy would have grown a modest 1.3 percent last year, Anderson said.
The decline in agriculture last year actually was less severe than in the two previous years. The ag sector shrank 16.6 percent from 2013 to 2014 and plummeted 24.4 percent from 2012 to 2013. The declines in the farming sector followed a series of years with mostly healthy growth, including an increase of 47 percent in 2011 to 2012 when crop prices were much higher.
The 34.2 percent decrease in mining marked the first decrease in the sector that includes petroleum since 2008 to 2009, during the Great Recession, when it fell 6.8 percent.
The drop in the value of goods and services produced from 2014 to 2015 is North Dakota’s first decline in a series of gross domestic product figures kept by the Bureau of Economic Analysis dating back to 1997.
Anderson expects North Dakota’s economy to rebound. The economy has diversified in recent years. Although agriculture and mining have struggled in recent years, manufacturing continues to grow steadily, state figures show.
“I fully expect us to continue to grow,” Anderson said. “I’m very optimistic for the future.”
The state’s struggling economy in the face of slumping farming and energy prices has been a leading issue in the hotly contested North Dakota GOP gubernatorial primary on Tuesday.