Economic Indicators: February 2021

March 03, 2021

Written By: Tom Johnson

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On this day in 1972, Elton John released the now famous single Rocket Man, which would go on to peak at #2 on the pop charts. Over the years the song was rumored to have been inspired by drug use or David Bowie's Space Oddity. The truth is much more mundane, as the song is a reference to a short story by science fiction writer Ray Bradbury.

This month’s economic indicators are a bit like Rocket Man. Sales tax, building permits, and wages are still going high as a kite: up 15%, 12%, and 8% over where they were a year ago. While airport passenger boardings and hospitality job numbers are a bit more mundane and continue to hold out for a post-pandemic return to normalcy. 

It’s hard to know what to make of the residential real estate market right now in the Rapid City area. We don’t believe this month’s price average listing price is accurate, simply because the anecdotal evidence shows houses continuing to fly off the market the day they are listed and for prices well above asking price.  It’s safe to assume it’s not a buyer’s market, and we have some evidence, like Rapid City’s housing market being the second-hottest in the country right now.  And we think it’s gonna be that way for a long, long time (see what we did right there?).

Commercial real estate is a bit of a different story.  While not even close to as hot as the residential market, things may be starting to stabilize, as we see a second straight month of decreased vacancy rates—certainly better than the national average.  Sometimes being on an island five hours from other major metro markets has its advantages. 

One final note:  Inflation is coming—actually, it’s already here.  Commodities are rising, and it’s not just reflected in the price of corn listed here (check out the price of gasoline the next time you fill up or go check out the price of a 10-year bond right now).  And with a new stimulus package on the way and the Feds already targeting at least 2% inflation this year, any post-pandemic recovery is sure to send prices higher. 

That’s not a bad thing necessarily. A little inflation is good for the economy.  Whether it burns too hot we’ll only know in the coming months. 

-Tom Johnson,
President & CEO

To see past economic indicator reports click here.