Flood dampens N. Dakota’s economic success

FARGO, N.D. (AP) — North Dakota has largely escaped the recession, enjoying slow but steady growth and even a budget surplus. But as the floodwaters begin to recede, the swollen Red River still threatens to wash away some of that prosperity.

One economist predicts the economic disruption will probably exceed $100 million in lost sales, missed pay for workers and crop-planting delays. And that figure could grow as the flood threat lingers.

Last week, Fargo officials urged “nonessential” businesses to shut down to keep streets clear for emergency workers. Now the city is under pressure to let them reopen.

Even so, officials have asked businesses to remain closed until midday today as a snowstorm moves through. Only gas stations, restaurants and grocery, hardware and medical-supply stores are exempt.

“Of course, we think all businesses are essential,” said David Martin, president of the Fargo Moorhead Chamber of Commerce. “Businesses want to be open and available, and to welcome their customers and pay their employees.”

On Tuesday, stiff winds lashed Fargo on the trailing edge of a blizzard that threatened to dump as much as 18 inches of snow. Authorities had worried that wind-whipped waves could weaken the sandbag levees protecting the city from the river, but the waves did not materialize, and there were no reports of significant leaks.

Richard Early, owner of Paradox Comics-N-Cards, said he supported city officials’ efforts to curb traffic outside businesses, but by Monday he thought it was time to reopen. He has allowed his five employees to stay home to take care of their property.

Fargo Mayor Dennis Walaker thinks the city is in good enough shape financially to absorb its share of the immediate storm costs and bounce back from the business disruption.

“We’re doing pretty well,” said Walaker, who appeared in a TV spot before the flood saying that “negative economic news doesn’t apply here.”

North Dakota has been a rare bright spot in the national recession.

Strong prices in the oil and agriculture industries have helped the state grow and kept unemployment stayed low. It was at 4.2 percent in January, around half the national rate.

People here also are frugal. Many families acquired the habit during the ups and downs of farming and oil drilling, enabling North Dakota to avoid the brunt of the housing and credit crisis.

The state even has a nearly $1 billion budget surplus, but that has dwindled as oil and commodity prices have tumbled, and flood costs will eat into it further.

“The longer this goes, that’s a significant disruption,” said David Flynn, who directs the bureau of business and economic research at the University of North Dakota.

Damage estimates and flood cleanup costs are still being compiled, but Flynn said the business disruption will probably cost more than $100 million in Fargo, where the local economy helps drive the state economy.

Besides the lost sales for business, the closures mean lost paychecks for many employees.