Better off, but for how long?
By Governor Kristi Noem
February 18, 2022
Are you better off than you were a year ago?
Here in South Dakota, we can confidently say, “yes.” Unemployment is down and wages are up. The state economy continues to thrive. However, serious national economic concerns loom on the horizon.
President Biden and his policies have caused inflation to rise to a level not seen in 40 years. South Dakotans have paid the price. Biden’s attacks on the energy industry — canceling the Keystone Pipeline and restricting drilling activity in the U.S. — has led to higher gas prices, just like we knew they would. In fact, it costs $5.40 more to fill up the average pickup in South Dakota than it did a month ago. And one year ago, it would have cost you $22.95 less than today to fill up. Those dollars add up quickly.
The Biden-created supply chain crisis also shows no sign of abating. Both President Biden and Canadian Prime Minister Justin Trudeau imposed vaccine policies on truckers, exacerbating the crisis. Moreover, their policies have not had their intended effect of slowing the COVID-19 pandemic. Instead, these policies have simply caused additional pain for American families.
But wait—there is more! The Federal Reserve appears to realize the very real damage that inflation has caused, but its solution – raising interest rates – will only put more pressure on the family pocketbook. Perhaps the Federal Reserve has little choice, but it will certainly cause the economy to slow down further. Wall Street knows the road ahead, and the stock market has already dropped seven percent so far this year.
These Biden-created challenges may stall the South Dakota economy or even cause it to reverse course. These Washington D.C. realities confront South Dakota elected state leaders as we plan our budget for Fiscal Year 2023 during this year’s legislative session. Moreover, we must also consider drought, decreased consumer demand, and the risk of unexpected natural disaster in planning a conservative state’s budget. Plus, the well of federal stimulus dollars that began flowing in response to the pandemic will dry up too.
South Dakota’s strong economy can only insulate us so much from these severe challenges. Experts recognize as much. The legislature’s own economists have warned that prudence and fiscal responsibility must guide us, just as they always have, as we plan for the future.
Because we have taken the prudent approach during my time as Governor, we have kept taxes low and protected our AAA credit rating. We fully fund our pension — the No. 1 state in the nation for the least pension liability — and balance our budget every single year. We must continue our fiscally responsible approach.
Unfortunately, just this week a few legislators chose to ignore the economic warning signs and the words of their experts, and instead they painted an overly optimistic vision of the economy with their projected state revenue estimates. They see South Dakota’s strong growth and assume it will continue forever at its current record-breaking pace.
Let me be clear – South Dakota is in a far better position than other states because of the responsible approach that we have taken, because we stayed open for business, because people are visiting and moving to our state in huge numbers, and because new businesses moved here or expanded in South Dakota. But we are still a small state, and we must plan for the challenges that we see coming.
When a farmer sees storm clouds on the horizon, she doesn’t say, “It will be fine. We have had a great year, so this storm cannot do any damage.” Instead, she makes sure she has the supplies to handle whatever comes. She checks the generators to ensure they work. And she brings the animals into the barn as necessary to make sure they are protected. Just like the weather, the economy can take a bad turn quickly, and we need to prepare for all scenarios.
South Dakota’s economy is unquestionably better than it was a year ago, but that story is not true around the nation in other states. We did not cause the economic storm, but thanks to President Biden it is coming anyway. South Dakota needs to be ready.