By Mark McNeillie
On Thursday, members of the Federal Reserve Bank of Minneapolis took a tour of the Bakken area. The trips was planned so that Bank President Narayana Kocherlakota and his staff could gather more information on what is currently happening in the region from an economic standpoint.
“Obviously, what’s happening here in the Bakken —we took a tour today between Minot and Williston—is quite special,” said Kocherlakota in meeting with the press after the tour. “Just the level of economic vitality is quite different her relative to anywhere else.”
With all the struggles in the national economy, western North Dakota is seen as a beacon of light. Kocherlakota said he felt it was important for his bank, and the nation as a whole, to know that not everyone is going through the same things economically.
“I think it helps convey the important notion that there’s a lot of differences across regions and districts in the United States,” said Kocherlakota. “Very often when we’re making policy, and appropriately so, we really focus a lot on the numbers for the country as a whole, but beneath that is masking a lot of differences across regions, and I think it’s important for us to keep that in mind.”
The oil boom has brought a shock to the labor market in the area, and many things are still trying to catch up.
Kocherlakota said the Bakken is an interesting example of something most people only know through economics classes, and that can help when the Federal Reserve makes policy.
“It’s hard to get labor markets to function as they might in an economics textbook,” said Kocherlakota. “I think being on the ground level here, for me to go back to Washington and talk about what I’ve seen, helps bring that point forward.”
The Federal Reserve Bank of Minneapolis oversees the Ninth Federal Reserve District, which includes North Dakota, South Dakota, Montana, Minnesota, Northwestern Wisconsin and the upper peninsula of Michigan. While the Bakken Region is booming, its overall effect on the district, and the US as a whole, is not as big as it seems, Kocherlakota said.
“When you do the calculations, if you’re thinking about the Ninth district as a whole, there’s just a limited amount that what’s going on here can influence that entire economny,” said Kocherlakota. “The population of the Ninth District is about 9 million people, the population of North Dakota is about 600,000, and then we get into western North Dakota, and it’s an even smaller slice than that. So I think what’s going on the Bakken is extremely important for western North Dakota, it’s very important for North Dakota.”
Despite the small impact the boom has had on the national economy Mary Brainerd, President and CEO of the Class C directors at the Federal Reserve, did see some positives that could help the US.
“I think it’s fair to say that some of what we were hearing about today about technology and new approaches, it sounds like there’s hope that that would have a broader implication than just the Bakken region,” said Brainerd. “That was clearly one of the highlights from my perspective.”
With a boom, there usually comes a bust, and despite all the prosperity, Kocherlakota said people should be aware that it won’t last forever, and to use some of the changes in the area to keep things going.
“I think people should think about this as a windfall,” said Kocherlakota. “I think we should take the viewpoint that it’s not going to last for ever, but what do you do when you have a windfall that isn’t going to last forever, you should invest it, and I think the right way to be thinking about this is how do we want Williston and Western North Dakota to look like in 20 years, and how can we take the resources, as a society, and make Williston what we want it to be.”