In the heart of the Great Plains, South Dakota’s economic landscape finds itself at a pivotal juncture, impacted by global trade policies, technological advancements, and labor dynamics. On September 24, 2026, industry leaders and economic scholars converged in downtown Sioux Falls for the Sioux Falls Metro Economic Briefing, aiming to dissect these influences and chart the path forward for local businesses.
Moderated by Joe Santos, a seasoned economics professor from South Dakota State University, the panel featured insights from Crystal Lail, Chief Financial Officer of NorthWestern Energy, and Brian Gramm, CEO of Journey Group. The discussion probed deeply into the economic constraints wrought by recent federal tariffs, automation, and an evolving labor market.
“I think it’s important, if we’re going to be really productive with our time, to focus on constraints to growth for the region,” Santos emphasized, setting the stage for a candid conversation. “That’s not pessimism. It’s just reality that we have to understand what’s limiting our potential.”
Tariffs imposed during the Trump administration have notably increased material costs for construction staples, significantly impacting South Dakota’s industries. Brian Gramm lamented how higher metal prices, spurred by these tariffs, have posed challenges for Journey Group. “Metal prices for commercial construction jumped because of tariffs and have stayed high,” Gramm explained. “On multi-year projects, when costs increase between contract signing and project completion, it eats into contractor’s margin.”
Similarly, Crystal Lail discussed the escalating costs of essential components for NorthWestern Energy, such as transformers. Lail noted, “The costs of transformers — which adjust the voltage of electricity so it can be delivered to homes and businesses — are up more than 400% since 2020.” This dramatic rise, compounded by tariffs and supply chain slowdowns, highlights the urgency for infrastructure resilience in South Dakota.
The narrative further unfolded with discussions on how the demand for artificial intelligence infrastructure is escalating interest rates. As AI technologies permeate more aspects of business, the need for data centers grows, driving up borrowing costs. “AI runs on physical infrastructure — data centers that must be built and powered,” explained Lail. This has contributed to elevated interest rates, further strained by the Federal Reserve’s recent rate hike — the first in three years.
Importantly, South Dakota itself is not insulated from these economic pressures. Despite boasting a remarkably low unemployment rate of 2%, the state grapples with a declining labor force participation rate. This demographic shift presents a significant challenge for businesses eyeing expansion. “Scaling requires people,” Gramm articulated. The local labor shortage means that firms struggle to find the workforce necessary to simultaneously manage rising costs and pursue growth.
A strategy for some firms, like NorthWestern Energy, involves mergers to mitigate these pressures. Pursuing a merger with Black Hills Energy, as Lail revealed, is aimed at achieving scale advantages: “Larger utilities can get better pricing on transformers and other equipment.” This reflects a broader trend where companies seek partnerships to harness economies of scale amid increasing economic challenges.
The economic briefing underscored the interconnectedness of global and regional dynamics. South Dakota businesses, while encapsulated within a rich tradition of self-reliance, must navigate broader economic tides. From tariffs to technology, and from labor shortages to interest rates, the state’s economic narrative is compelling and complex.
In closing, Joe Santos offered a sobering reminder of the persistent nature of these issues. “All of this is to say that the price pressures we see in the form of inflation are probably longer lasting than any of us would like them to be.”
The Sioux Falls Metro Economic Briefing not only highlighted these challenges but also served as a clarion call for the South Dakota business community to continue finding innovative solutions in the face of evolving economic realities.