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South Dakota’s economy bounces back

South Dakota has recovered to pre-pandemic levels for a variety of economic measures earlier than other Ninth District states

October 27, 2021


Haley Chinander Research Assistant
Farmers in a field
Jake MacDonald/Minneapolis; Fed Getty Images

Article Highlights

  • Real GDP in South Dakota returned to pre-pandemic levels early on and continues to grow
  • South Dakota employment is higher than before pandemic began
  • Unemployment rate in South Dakota is lowest in Ninth District
South Dakota’s economy bounces back

As waves of the pandemic continue to ebb and flow across the country, state economies have had to battle those waves. So far among Ninth District states, South Dakota has been the best swimmer, recovering to pre-pandemic levels for a variety of economic measures earlier than other states, according to a regional economic indicators dashboard published by the Minneapolis Fed.

For starters, the state’s overall economy has been outperforming other district states through the second quarter of this year, though Montana and North Dakota have been closing the gap recently (Chart 1). South Dakota was the first district state to see output reach pre-pandemic levels (in the third quarter of 2020), and its real GDP has grown nearly 5 percent over the past two years.

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In line with growing output, the state was also the first to see employment return to pre-pandemic levels, which it accomplished in October 2020, while Minnesota, North Dakota, and Wisconsin have yet to do so. Despite some employment volatility in South Dakota near the end of 2020—when the second COVID-19 wave washed over the state and much of the country—total employment rebounded and has grown consistently for much of this year. South Dakota is now one of only two states in the Ninth District to have higher employment levels this summer than before the pandemic. (The other is Montana. See Chart 2.)

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One reason for the state’s comparatively stronger employment trend appears to stem from its labor force participation. Across the country, labor force participation fell with the onset of the pandemic, rebounded only partially in most states, and has remained mostly flat this year.

South Dakota’s labor force participation took a similarly steep initial hit early in the pandemic but was fairly quick to fully rebound. Aside from a brief hiccup late last year, the state’s labor force participation rate has either matched or exceeded the pre-pandemic rate for close to a full year. The state now boasts the highest labor force participation rate in the Ninth District and one of the highest in the country.

Strong employment growth has also helped South Dakota achieve one of the lowest unemployment rates in the country, returning to pre-pandemic levels earlier this year, along with Montana (Chart 3).

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For more data on economic indicators across the Ninth District—updated monthly—visit our Regional Economic Indicators dashboard.