Economists differ on North Dakota's holiday sales, growth outlook

Flat versus positive, strong versus flat.

The outlook for holiday sales and economic growth in North Dakota depends on who you talk to.

Holiday sales will be flat, but there’s huge potential for economic growth in North Dakota in 2010, according David Flynn, director of UND’s Bureau of Business and Economic Research.

Flynn said Christmas sales will depend on how much retailers will slash prices and how substantive they’ll be with discounts. Sears, Target, Kmart and Wal-Mart have all started promotions early. But while retailers are slashing prices, they’re also keeping inventories thin out of fear that consumers don’t have the cash to go on sprees.

“I would not be too surprised that some consumers who passed on summer vacations and fall vacations have a little reserved cash,” Flynn said.

Economist Ralph Kingsbury said he’s a little more positive on the holiday sales outlook because of the relationship of the Canadian dollar, or “loonie” with the U.S. dollar. The dollar held steady Tuesday after sinking to a 15-month low Monday. The loonie, which has come close to par with the dollar the past few months, closed at 90 cents U.S. on Tuesday.

“Canadians have a lot more to choose from in Grand Forks,” Kingsbury said. “It may mean a lot of day trips, but I think there’s going to be more of an increase in Canadian traffic.”

Flynn said growth in 2010 will hinge on spring flooding.

“If our winter isn’t blizzard upon blizzard, it could be an incredible year for North Dakota,” Flynn said. “Farmers will get into fields, oil production will start sooner, and there’s real strength for employment in North Dakota compared to the nation.”

Flynn said any threat of flooding will tighten wallets, but that could leave people with plenty to spend in the second half of the year.

“This quarter and early next year will be flat, but most commodities will see a run-up,” Flynn said. “We’ve had three-plus years of good economic numbers in North Dakota, and that will attract business and tourism.”

Kingsbury said he expects North Dakota’s economy to be pretty flat all through next year, primarily because of falling crop prices.

“We’re coming off two good years in the ag economy,” Kingsbury said. “It has not been a real good year for crops any place in North Dakota. Wheat yields are OK, but not protein levels. Prices aren’t anywhere near what they’ve been.”

Kingsbury said the only real growth will come in energy prices, which will help the state’s economy, especially in western North Dakota, but may also lead to a setback at the pump.

“I’m afraid gas might go over $3 a gallon,” he said.

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