U.S. Economic Growth Slows

Low prices impact state economies
Low prices impact state economies

Data is beginning to surface on the U.S. economic growth for the first quarter of 2015 and its not looking good.

Marketwatch reports that the gross domestic product expanded by only 0.2% annual pace, well below what was forecasted. Gains over the prior three quarters were 2.2%, 5% and 4.6% respectively.

Related: Low Crude Prices Not Good for All

Much of the blame is being placed on the downturn in the energy industry. The 50% plunge in crude prices in 2014 initiated a domino effect through the economy. U.S. energy producers have been forced to slashed investment and have cut at least 30,000 jobs since January, according to the Commerce Department and it is estimated that the reduction in energy-related spending may have shaved 0.6% percentage points off of U.S. growth.

Many had predicted that the low oil prices would actually spark economic growth as consumers found more disposable from lower gasoline prices.

Scott Hoyt, director of consumer economics at Moody’s Analytics shared an optimistic with Marketwatch, saying that “Energy-related investment and jobs are falling rapidly. However, these cuts will soon begin to fade, and the benefit to consumers from the lower oil prices will grow,

The Economic Impact of Shale Oil


During a recent event dubbed “Energy Day” in Bismark, N.D. various groups came together to recognize the impact of the oil and gas industry. The day included legislative committee hearings, an education session and facts and figures regarding the industry’s importance to North Dakota’s economy.

According to one study, presented by Dean Bangsund of ND University, oil and gas had a $43 billion economic impact on North Dakota in 2013 and affected many parts of the aspects of the state’s economy. Highlights include:

  • Retail trade saw the largest impact, accounting for $11.3 billion of the total.
  • Personal income saw the second-largest impact at $9.3 billion.
  • The finance, insurance and real estate industry ($4.5 billion) overtook the government
  • $4.4 billion in government revenues
Researcher Dean Bangsund told Bakken Magazine “This study helps confirm that the petroleum industry is one of the largest basic-sector industries in North Dakota. Although activity is concentrated in the western part of the state, the magnitude of the contributions to both the state and local governments and the sheer volume of secondary economic effects in nearly all sectors of the North Dakota economy would suggest that the economic effects of the industry are felt statewide.

With unstable pricing environment, the future is unknown. Most economic indicators remain strong, though unemployment ticked up slightly in January and Bangsund believes that North Dakota will continue to reap positive benefits from the oil and gas industry for some time.

Photo: CC