Joshua Haiar, South Dakota Searchlight
Personal incomes have outpaced rising prices in recent years despite widespread concerns about inflation, according to data shared Thursday during a Zoom meeting of the South Dakota Governor’s Council of Economic Advisors.
However, some council members worry that rising costs related to housing are undermining the income gains, while inflation and rising wages are affecting businesses.
State Economist Derek Johnson shared the latest S&P Global Market Intelligence data with the council, which illustrated the point: While the cost of U.S. goods since 2021 is projected to have risen 19.8% by the end of this year, incomes are projected to have risen 20.8%.
South Dakota State University Professor of Economics Evert Van der Sluis is a member of the council. He said since 2019, U.S. consumer prices have increased by 22.6% while average hourly wages have risen by 25.3% (28% for those in non-supervisory roles). He said that difference is what matters most for workers and consumers.
“We hear a lot, especially in the popular press, about how all prices have gone up,” he said. “What often is kind of put to the wayside is how wages have gone up, too.”
Some on the council said Van der Sluis’ point needed additional context.
Council member Caleb Arceneaux, CEO of Liv Hospitality in Rapid City, said rising wages and inflation both eat into businesses’ bottom lines.
Council member John Hemmingstad of Elk Point, a director of Avalon Capital Group, said he’s curious how the inflation and income comparison would pan out after factoring in costs like property taxes and homeowners’ insurance, which have surged in recent years.
The latest S&P Global Market Intelligence forecasting for 2024 shows 0.4% growth in the total value of goods and services produced (GDP) for South Dakota. It shows a 2.6% projection for the nation. Nonfarm incomes since 2021 in South Dakota are projected to have risen 25.2% by the end of the year, compared to a 19.8% rise in the cost of goods nationally.
Nonfarm incomes in the state are projected to have risen 5% by the end of 2024, and another 4.7% in 2025. Meanwhile, the cost of goods nationally is expected to jump 3% in 2024 and 2.2% in 2025.