Four claims made by the Trump administration last week about South Dakota’s economy are verifiable, while two appear to be inflated and one is too vague to fact-check, according to an SDPB analysis.
The White House released a South Dakota economic fact sheet to media outlets in conjunction with the president’s State of the Union speech Feb. 4.
The fact sheet offered support for broader economic claims Trump made during the speech.
“Three years ago, we launched the great American comeback,” Trump said. “Tonight I stand before you to share the incredible results. Jobs are booming, incomes are soaring, poverty is plummeting, crime is falling, confidence is surging, and our country is thriving and highly respected again.”
Although Trump and other presidents often take credit for economic success, economist Don Frankenfeld, of Rapid City, said presidents typically have less influence on the economy than they claim. In email correspondence with SDPB, Frankenfeld said the biggest U.S. economic drivers in recent years have been low interest rates – which are controlled mostly by the Federal Reserve – and a generally favorable investment climate compared to other countries.
"I personally believe that Trump's efforts at deregulation, plus tax cuts, have had a mild stimulative effect,” Frankenfeld wrote, “but mostly Trump, like every president, is like a small boat in a large ocean, bobbing up and down as external forces dictate.”
Here are the claims the White House made about South Dakota’s economy, with SDPB’s fact-check findings.
Claim 1: South Dakota’s unemployment rate is 3.2 percent.
Fact check: True.
Explanation: The preliminary rate for December was 3.2 percent, according to the Bureau of Labor Statistics.
Claim 2: Since President Trump’s election, 16,000 jobs have been created in South Dakota — including 4,000 manufacturing jobs.
Fact check: True.
Explanation 1: In November 2016 when Trump was elected, 439,875 people in South Dakota were employed, according to the BLS. The preliminary employment number for December 2019 (subject to potential revision) was 455,504 people. That’s a difference of 15,629 employed people.
Explanation 2: Regarding manufacturing jobs specifically, there were 42,000 manufacturing jobs in South Dakota when Trump was elected in November 2016, according to the BLS. The preliminary number for December 2019 was 45,500, which is a growth of 3,500.
Claim 3: South Dakota’s falling poverty rate has lifted 35,000 people out of poverty.
Fact check: Inflated.
Explanation: According to one set of Census Bureau estimates, there were 110,962 poor South Dakotans in the year of Trump’s election, 2016. There were 111,626 poor South Dakotans in 2018. That’s a reduction of 664, not 35,000.
Another source is the website TalkPoverty.org, a project of the liberal-leaning Center for American Progress. According to its data, the number of South Dakotans in poverty was reduced by 4,972 between 2016 and 2018 (the latter is the most recent year of data published by the organization).
Claim 4: Over the last year, wages increased 9 percent for manufacturing workers in South Dakota.
Fact check: Inflated.
Explanation: The BLS says growth in manufacturing wages in South Dakota during the most recent 12-month period was 2.4 percent.
Claim 5: The 25 opportunity zones in South Dakota are attracting investment to previously forgotten communities, including in Beadle, Minnehaha, and Pennington counties.
Fact check: Unclear.
Explanation: There have apparently been some Opportunity Zone projects in South Dakota, including the Third Avenue Lofts apartment project in downtown Sioux Falls.
But it’s difficult to determine whether there have been more. The Economic Innovation Group tracks some of the projects on an interactive map, but at the time of this report, the map didn’t show any Opportunity Zone investments in South Dakota.
Opportunity Zones were created by the Trump tax cut bill in 2017. They are low-income census tracts, and there are 8,700 zones across the country (including 25 in South Dakota). Investors who’ve made money and owe capital gains tax can defer, reduce or even eliminate that tax by putting their gains in an Opportunity Fund. An Opportunity Fund can invest in businesses, equipment and real estate in Opportunity Zones. The program aims to get unrealized capital gain dollars flowing into lower-income areas to create economic activity. By one estimate, there is $6 trillion nationwide that could be invested in Opportunity Zones.
Claim 6: Entrepreneurship is booming, as new business applications in South Dakota are up 24 percent since the election.
Fact check: True.
Explanation: According to the Census Bureau, there were 1,456 new business applications in South Dakota when Trump was elected during the fourth quarter of 2016. There were 1,804 in the fourth quarter of 2019, which is a 24 percent increase.
And there is actually more and better news on this front. From 2004 (the earliest year of easily available data) through 2016, South Dakota never had a year with more than 6,000 new business applications. Then, there were 8,077 in 2017, and 9,226 in 2018, and 7,735 in 2019.
Claim 7: As more South Dakotans are working, Unemployment Insurance claims are down 19 percent since the election and have hit a record low under President Trump.
Fact check: True, or perhaps understated.
Explanation 1: According to the U.S. Department of Labor, initial South Dakota unemployment claims at the time of Trump’s election in the fourth quarter of 2016 were 2,773. In the third quarter of 2019, they were 1,835. That’s a decline of 33 percent.
Explanation 2: Unemployment insurance claims in South Dakota did in fact hit a record low under Trump, at 1,755 claims during the third quarter of 2018. That’s lower than any other quarter all the way back to 1971, which is the oldest year of statistics available on the U.S. Department of Labor website.
What the White House didn’t say
Agriculture: The White House statistics didn’t address agriculture, which is a big part of South Dakota’s economy. During the Trump presidency, farm income in South Dakota dropped to a level in the fourth quarter of 2017 that was its lowest since 2002, according to the Federal Reserve Bank of St. Louis. It’s rebounded since then but is still far less than it was at one point during the Obama presidency.
Native Americans: Poor economic conditions on South Dakota’s Native American reservations have persisted under all presidents. For example, 48 percent of people are poor on the Pine Ridge Reservation in South Dakota, according to the Census Bureau. That compares to South Dakota’s statewide poverty rate of about 13 percent, and the national poverty rate of about 12 percent.