South Dakota’s economy bounced back in Quarter 2 of 2025. A new report said that’s largely due to diversification in South Dakota’s economy.
A new report from the Dakota Institute, a South Dakota-based nonprofit economic research and analysis organization, shows the state made significant strides in annualized growth.
In Quarter 1 this year, South Dakota’s economy saw a 3.1% contraction. That was largely due to tariff negotiations negatively affecting the agricultural economy. However, in Quarter 2, during the spring months, the state saw 5.2% annualized growth in real gross domestic product.
That’s faster than the national rate which sat at 3.8% and tied with Nebraska for the second highest mark among neighboring states. North Dakota led the group at 7.3%
The Dakota Institute’s analysis of the data reveals that South Dakota saw three industry groups leading the charge to reverse 2025’s negative trends early in the year.
The agriculture, finance & insurance and manufacturing industries aided the state in increasing its GDP from Quarter 1.
While agriculture is largely considered “king” in South Dakota, Devan Schaefer with the Dakota Institute wrote that the dollar figures brought in by other industries reveal “a structure far more diversified than the state’s rural image might suggest.”
The finance and insurance industry brought in nearly double what agriculture did in Q2. That points to South Dakota’s efforts to create a banking-friendly environment, and its ties to the credit card and trust sectors. That industry combined with healthcare & social assistance and real estate and rental operations made up 35% of the state’s total GDP. Agriculture accounts for 8% of the state’s economy.
However, not all the data is positive. Retail trade continues to grow negatively in 2025. Schaefer wrote that likely means consumers are still hesitant to spend money right now.
Data for Quarter 3 GDP by the Bureau of Economic Analysis is scheduled to release in December. Some recent data has been delayed due to the federal government shutdown.
