17 posts categorized "Natural Resources"

More recharging personal batteries at national parks

Even in the digital age—or maybe because of it—the great outdoors continues to be a tourism draw, as evidenced by growing visits to the country’s national parks, according to data from the National Park Service (NPS). And those visits are translating to the Ninth District economy.

Attendance has been trending upward at many parks, especially since the recession. Last year, attendance grew 6 percent among the 13 national parks in the Ninth District with annual attendance of at least 100,000, and is up almost 20 percent since 2008 (see Chart 1). In 2014, attendance at these district parks hit 9 million for the first time.

Among these large national parks in the district, two of them—Mount Rushmore in South Dakota and Glacier National in Montana—are responsible for half of all visitors. (The list does not include Yellowstone, portions of which are in Montana, but which lies mostly in Wyoming.) The biggest jump in attendance last year occurred at the Apostle Island National Park. Located in Lake Superior off the northern tip of Wisconsin, it saw attendance double to almost 300,000 in 2014 thanks to an impressive formation of ice caves on the island, coupled with a uniquely long viewing period.

Those visitors are spending money and creating jobs, according to a separate NPS database. Visitor spending hit nearly $1.2 billion last year, supporting more than 20,000 jobs (see Chart 2) in district states.

National parks

Ninth District economy grew in January and February

Oil has dominated the headlines, but the Ninth District economy continued to expand in January and February, with many indicators exhibiting strength and labor markets appearing to have tightened. Several sectors, particularly energy and other commodities, are dealing with low prices. But counteractive, positive conditions for consumers and others helped limit the negative effects. Mild winter weather has had similarly mixed effects.

A wide swath of sectors saw growth. For example, a manufacturing index increased, indicating expansion in the Dakotas and Minnesota. A manufacturer of capital equipment reported that demand in January was stronger than expected. In the services sector, a merger and acquisition services firm noted increased consulting activity and a web design and programming firm noted increased interest from newer firms. In addition, railroads plan to invest more in capital equipment in 2015, and several retailers noted sales increases.

Labor markets continued to tighten, as unemployment rates dropped in many areas of the district. Business owners in South Dakota and western Montana noted difficulty finding workers to fill open positions. A Minnesota staffing firm reported that finding workers was difficult and that competition for those workers increased recently.

As labor markets have tightened, wage pressures appear to have increased in some areas. While data suggest that overall wage increases have been moderate, there were more frequent reports of wage increases above 3 percent during the past couple of months. A recent ad hoc survey by the Minneapolis Fed also found that more employers planned to increase starting pay. Nevertheless, overall wage increases generally remained moderate. Lower energy and other commodities prices affected different regions of the Ninth District.

Lower oil prices affected producers as they cut back on new development in North Dakota and Montana by nearly 30 percent from the beginning of the year, leading to reduced hours and layoffs of oilfield workers (see chart). The number of job postings in the region has also decreased, but several companies in various sectors are still looking for employees. Wage pressures and apartment rental prices have eased somewhat in the energy-producing region.

Beige book blog 3-10-15

Among other commodities, the evidence is mixed. For example, lower metal prices caused a Montana copper-silver mine to shut down. Even though iron ore prices have been dropping, an iron ore analyst expects production to increase slightly in 2015. Low crop prices have hampered farmers, but benefited animal producers due to lower feed costs.

While some sectors have suffered from lower commodity prices, district consumers have benefited. For example, Minnesota gasoline prices in mid-February were over a dollar per gallon lower than a year ago. This may have helped boost consumer spending, as district retailers noted growth in retail sales. For example, a North Dakota mall noted that sales were up in January compared with a year ago, and a bar and restaurant chain in Minnesota reported strong sales during January compared with last year. Recent light truck and car sales were relatively solid in Montana, according to a representative of an auto dealers association.

The increasing value of the dollar has made U.S. products more expensive for foreigners. For example, the stronger U.S. dollar and Canadian exchange rate dampened demand from Canadian tourists and shoppers as border crossings and related sales decreased in district states.

The winter has been relatively warm and dry, which aided commercial construction firms that were able to build more and required less heating. Ranchers benefited from less winter stress on their animals. However, not all benefited from mild weather. Several auto body shops complained they had less demand due to better driving conditions that reduced accidents. Some apparel stores had difficulty selling winter clothing due to relatively mild weather conditions during December and January. In addition, a lack of snow slowed winter tourism activity in several areas.

Ad hoc survey: Ninth District businesses plan to ramp up hiring, increase starting pay

The Ninth District economy is in growth mode and employment is expected to increase, based on a recent poll of 140 business contacts from around the district (see methodology below).

Businesses are expecting to expand, with 46 percent of respondents planning to increase employment at their firms and 58 percent of these firms citing anticipated high sales growth as the most important factor behind increased employment. Only 3 percent plan to decrease employment. In the same survey a year ago, 41 percent planned to increase employment and 9 percent planned to cut jobs (see chart).

Other important factors cited for new hiring were overworked staff, the need for additional skills and improved financial condition of firms. The vast majority of respondents plan to use current employee referrals, word of mouth and advertising to get new employees. Forty-eight percent plan to use a recruiting firm, which is up from 22 percent of respondents in last year’s poll. Twenty-seven percent of respondents also plan to raise starting pay compared with only 8 percent last year.

Feb ad hoc survey Ch1+meth -- 2-13-15

Methodology: On Dec. 1, 2014, the Minneapolis Fed emailed a web-based survey to about 600 Beige Book contacts from around the Ninth District. By Feb. 12, 140 contacts had filled out the survey. The respondents come from a variety of industries (see table).

A look at rising veteran disability

The incidence of working-age, civilian disability, as measured by enrollments in the largest federal disability programs, has been rising for the better part of three decades (see discussion in the January fedgazette). But one other federal disability program has been witnessing even faster growth of late: veteran disability.

Veterans’ disability compensation, as it’s called, is paid to veterans who incur a disability during active military service or are diagnosed with a post-service disability that is presumed to be related to military service. After seeing little growth in the 1990s, the number of veterans qualifying for disability compensation rose by 62 percent from 2000 to 2013, according to the U.S. Department of Veterans Affairs (see Chart 1). During this time, the population of eligible veterans also shrank by 17 percent, according to the Congressional Budget Office.

Though historical data on veteran disability by state are not publicly available, recent data suggest that the same growth trend is occurring in Ninth District states. From 2011 to 2013, every district state saw growth of at least 7 percent in veteran disability; Minnesota’s 12 percent growth topped the national average (see Chart 2).

Veterans disability Ch1-2

Across district states, 187,000 veterans received disability benefits in 2013. That translates to a small but notable portion of the district labor force—ranging from about 2 percent (Wisconsin) to almost 4 percent (Montana), with most district states above the national average (see Chart 3).

Veterans disability Ch3

While veterans receiving disability compensation are spread throughout a given state, they tend to be more concentrated around military bases, such as Camp Ripley in central Minnesota, Ellsworth Air Force Base in Rapid City, S.D., and Malmstrom Air Force Base near Great Falls, Mont. (see map).

Dulguun Batbold, research analyst, contributed data to this article.

Veterans disability -- Map 2-4-15

 

Beige Book recap: Modest growth in Ninth District

Over the past two months, the Ninth District economy has seen modest growth, according to the latest Beige Book information released by the Federal Reserve Bank of Minneapolis. Increased activity was noted in consumer spending, professional services, manufacturing and non-energy mining. Activity was level in tourism and mixed in commercial construction, commercial real estate and agriculture. Energy, residential real estate and residential construction were down. Labor markets continued to tighten since the previous report. While overall wage increases remained modest, there were examples of steeper increases in some regions and industries.

Consumer spending and tourism: Consumer spending increased moderately. Mall and retail representatives across district states reported solid traffic and sales. Overall tourism was about level with a year ago, according to a variety of sources. Construction and real estate: Construction activity was mixed in the district’s larger cities. In Sioux Falls, S.D., the value of November commercial permits increased from a year ago, but fell in Billings, Mont.

Residential construction: Activity was mostly lower. In the Minneapolis-St. Paul area, the value of December residential permits decreased 9 percent from a year earlier and also dropped in the Bismarck, N.D. area (November data). Residential activity was stronger in Billings and Sioux Falls, however. Home sales were generally lower from a year earlier (in November). In the Sioux Falls area, home sales were down 12 percent, inventory increased 1 percent and the median sales price increased 6 percent relative to a year earlier. Sales were also down in northwestern Wisconsin, and the median sales price was 6 percent lower. Minnesota home sales were down 13 percent, inventories of homes for sale increased 5 percent and the median sales price rose 3 percent. Home sales in the Bismarck area were about level with last year.

Manufacturing: Activity increased slightly. A manufacturing index increased in December from the previous month in Minnesota and South Dakota, but fell slightly in North Dakota. However, the index pointed to continued expansion in all three states. Through October, manufactured exports in district states were up 1 percent compared with the same period a year earlier.

Energy and mining: The energy sector slowed slightly in response to lower output prices. Oil and gas exploration activity decreased in late December compared with a month earlier in Montana and North Dakota. Mining activity increased slightly. District iron ore mines were operating at or near capacity, with November production slightly higher than a year earlier.

Agriculture: Conditions remained mixed, with livestock and dairy producers faring better than crop farmers. A Minneapolis Fed third-quarter survey found that a majority of farm incomes had fallen from a year earlier and that capital spending also decreased. The fourth quarter outlook was also weaker, according to the survey. Prices received by farmers in December decreased from a year earlier for corn, soybeans, wheat, hay and milk; prices increased for cattle, hogs, eggs and poultry.

Employment and wages: Labor markets continued to tighten since the previous report. Overall wage increases remained modest, but there were examples of steeper increases in some regions and industries. Some construction firms in the Minneapolis-St. Paul area noted that labor costs have increased recently. In addition, some managers at Minneapolis-St. Paul area restaurants indicated that they were increasing wages to attract employees.

See the full Beige Book report for more details on the national and Ninth District performance.

Fish on! License sales slowly rebounding in Ninth District

Fishing is a favored pastime for many residents in Ninth District states, and after years of decline, district sales of fishing licenses have been rising in recent years and are higher on balance over the past decade.

License sales have been strongest in the district’s most populous state, Minnesota (see Charts 1a and 1b). Montana licenses have been quite stable over this period, while South Dakota has seen a general decline, and North Dakota is experiencing a small revival in recent years after dipping during the recession.

Fishing charts 1a-1b -- 8-19-14

A variety of factors have affected the recent uptick in district residents spending their summers trying to land a big catch, or trying their luck on frozen lakes. The most obvious factor is economic. The Great Recession reduced household disposable income available for nonessential goods, and as a result fishing licenses decreased in the years immediately following (2009-11). Since then, however, fishing licenses have rebounded significantly as households have regained their disposable income. This is particularly the case in Minnesota, which was hit much harder by the recession than either of the Dakotas.

Another factor is demographic. The recent increase in license sales can be partly attributed to the baby boom generation. As the baby boomers (now age 50 to 68) begin their retirement years, more are spending their free time on the lake. According to the St. Paul Pioneer Press, the Minnesota Department of Natural Resources has found that fishing participation rates have stabilized in Minnesota due to the increased participation of the baby boomers. Because this generation is so large, their increased participation outweighs the downward participation trends of the other age groups.

Nonresident licenses are also an important source of license sales and especially revenue, given higher prices charged to out-of-state anglers. However, states vary in their ability to attract them; in 2013, nonresident tourists bought 44 percent of all licenses in Montana, but just 20 percent in Minnesota, with the Dakotas in the middle.

But nonresident licenses have been trending modestly upward in Minnesota and North Dakota, possibly due to cheaper costs—$45 in both states for an annual license, compared with $60 and $69 in Montana and South Dakota, respectively, where nonresident licenses have been falling (see Charts 2a and 2b).

Fishing charts 2a-2b -- 8-19-14

A leaky drinking water system

The heat of summer is probably the best time to let you know your drinking water infrastructure is badly in need of some upgrades.

In 2011, the Environmental Protection Agency began a nationwide assessment of drinking water systems, randomly surveying more than 2,700 medium and large community water systems. The survey collected data on capital improvement projects that system respondents deemed necessary over the coming 20 years. Improvements included replacement or rehabilitation of existing infrastructure due to age or deterioration, as well as new or expanded infrastructure necessary for current population needs or to comply with regulatory requirements.

Last month, the EPA released its final report, which estimated nationwide needs of $376 billion, a slight increase in the amount identified in a similar 2007 survey ($369 billion). Among Ninth District states, the report pegged capital investment needs for Minnesota and Wisconsin at $7 billion and $6.7 billion, respectively. (These were the only district states with enough surveys to allow for a state-based breakdown.) Needs in Minnesota rose more than 8 percent from the 2007 survey, while Wisconsin drinking water needs rose by almost 2 percent.

The report broke down needs by system size as well as capital investment categories (distribution, treatment, etc.). The needs of the two states were very similar in terms of categories—for example, the majority of investment needs in both states lie in transportation and distribution systems (see Chart 1). But Minnesota has a larger need among medium-sized drinking water systems (see Chart 2).

Drinking water -- 7-17-13

A long road back for wood products firms

There’s good news for the Ninth District’s wood products industry: After years of retrenchment caused by the housing collapse and subsequent recession, the bleeding appears to have stopped.

Sawmills and manufacturers have reported increased output and revenues this year as the U.S. economy slowly improves, increasing demand for construction lumber and other wood products. After bottoming out in 2010, industry employment in Minnesota, Wisconsin, South Dakota and Montana rose slightly last year, according to government labor figures (see chart).

Wood products Ch 1 10-18-12

The bad news is that the industry has a way to go to recover thousands of jobs lost over the past decade. Montana saw the steepest drop in wood manufacturing jobs; employment fell by more than half between 2001 and 2010. The state’s sawmills were already in decline before the housing crisis, due to rising operating costs and log prices.

Employment in Minnesota and Wisconsin followed a similar downward path after the housing crash as demand sagged for oriented strand board, paperboard and office paper. Wood products workers in South Dakota fared better; during the housing downturn, many firms shifted their focus to the home remodeling market, shoring up sales and preserving jobs. But wood products manufacturers in the state still shed about 250 jobs over the past decade.

It’s questionable whether wood products employment will ever return to the levels seen at the height of the housing boom. In recent years, rising productivity has reduced the number of workers needed to run sawmills, paper mills, particle board plants and other forest products operations. Neiman Enterprises, a large sawmill operation in the Black Hills of South Dakota, has ramped up its lumber production since 2010. But over the same period, investments in automation have allowed the firm to reduce its headcount, said resource manager Dan Buehler.

And in western Montana and the Black Hills, a persistent infestation of mountain pine bark beetles has killed millions of pine trees, threatening to restrict future log supplies. (For much more on the impact of the pine beetle outbreak on the wood products industry, watch the fedgazette website for the upcoming article, “The beetle and the damage done.”)

Research Assistant Dulguun Batbold contributed to this Roundup post.

Beige Book, Minneapolis: Ninth District economy slowly improving

The Ninth District economy expanded modestly during late summer and early fall, according the most recent Beige Book released this week by the Federal Reserve Bank of Minneapolis.

Each of the 12 Federal Reserve district banks drafts a similar report, which in sum are a summary of regional economic conditions across the country, in preparation for the Oct. 23-24 Federal Open Market Committee meeting, where interest rates and other monetary policy issues are decided.

In the Ninth District, improved activity was seen in construction and real estate, consumer spending, tourism and professional services. Energy and mining continued to perform at high levels, while agriculture varied widely, with crop farmers generally in better condition than animal producers. On the softer side, manufacturing activity slowed in late summer, and wage increases remained subdued, although stronger increases were reported in some areas. But labor markets tightened somewhat, and price increases were generally modest.

For those interested in other regional, national or historical Beige Book reports on economic conditions, the Minneapolis Fed offers everything in one spot.

Minnesota’s lakes: More impaired, but don't be afraid to jump in

In the land of 10,000 lakes, the Minnesota economy has a unique relationship to water that is widely used for fishing, general recreation and even moving goods to market. So it raised some eyebrows when the state announced that more than 600 bodies of water were added this year to its list of impaired lakes and rivers.

But before the “ick” factor makes you put away that canoe, or pull the kids from their favorite swimming hole, it helps to get the background story. Turns out that the measure is more building block than condemnation—a work-in-progress assessment for preserving one of the state’s most valuable natural resources.

Since the mid-1990s, the federal government has required states to assess their water quality. Since then, the number of impaired bodies of water—those that don’t meet various federal water quality standards—has risen steadily and now stands at more than 3,600 (see chart). A map shows that these impaired water bodies are widespread (see map).

MN impaired lakes CH1 -- 9-28-12  MN impaired lakes map -- 9-28-12

While this might not be “good” news for boaters and anglers, neither is it necessarily cause for great concern, according to officials with the Minnesota Pollution Control Agency, which puts the list together. The state has an incredibly large amount of water—92,000 miles of streams alone—and the growing impairment numbers “are indicative of our growing monitoring efforts,” said David Christopherson, who does environmental reporting and special studies for the agency’s water division.

Water bodies make the list if they exceed any number of water quality standards, like turbidity (excessive sediment), eutrophication (too much nutrient, often phosphorous from farm run-off), presence of fecal coliform or a host of other standards. In putting together its biennial impairment report, the agency “uses all available data” from internal and external sources with information about any of the state’s water bodies. As a result, the data are neither comprehensive nor systematic; given that the list comes from a partial assessment, it’s not even a random sample that could be considered scientifically representative.

The list also is highly sensitive to evolving standards for water quality. For example, a huge spike in listings in 1998 was the result of a first-time federal advisory on mercury and fish consumption, and mercury impairment is by far the biggest source of listings. Christopherson added that the state will be applying additional nutrient standards in the near future, “and I would expect to see a big jump (in impairments) then too.”

As a result, he said, “I don’t think (the impairment list) gives us much indication of overall water quality” in the state. Instead, Christopherson said the impairment list is more like a slow-growing benchmark that will give policymakers and others the data necessary to develop a more comprehensive approach to improving and maintaining water quality. “This is a primary driver in terms of what we’re doing” to improve water quality. “Once they get on the list, we have to deal with them.”

He acknowledged that “there are a lot of water quality issues out there. It’s a big issue and will take a long time to address … (but) I don’t think anyone here is particularly surprised” by the growing list of impaired lakes and rivers. The agency generally believes that about 40 percent of water bodies could stand some improvement, and the list “matches what we’ve been finding for years and kind of expected. A lot of other (states) are worse.”