South Dakota Economy Rebounds Amid Drought and Labor Shortages

The state of South Dakota's economy is looking rosier than initially feared, with revenue exceeding predictions by $29.7 million in the last fiscal year. The Governor's Council of Economic Advisors met to provide insights on economic factors that influence tax revenues. State sales tax revenue saw a 12.8% increase in July compared to the same period last year.

Farm income has rebounded, with beef prices rising and grain prices increasing, according to Marnie Herrmann, chief banking officer at Security First Bank. However, outside factors like drought and federal policy shifts create uncertainty for farmers. Roughly 75% of the state is experiencing drought, which will impact corn yields.

The labor force participation rate is declining due to childcare and housing challenges. South Dakota's unemployment rate was 2% in July, but with three job openings per unemployed person. Efforts to address the childcare shortage have stalled, including a bill offering financial assistance that Governor Larry Rhoden vetoed.