Austin Kaus, The (Mitchell) Daily Republic, Published December 28 2009
South Dakota sees drop in millionairesMITCHELL, S.D. – South Dakota has seen a decline in its number of millionaires since 2007, and an economics professor said the events that followed the ethanol boom from 2005 to 2007 could be a reason why.
A study released earlier this year shows the number of millionaires in South Dakota decreased by 1,917 since 2007, according to statistics from Phoenix Marketing International, a research firm based in New York City.
The decline echoes a national trend showing a 14 percent overall decline in millionaires in the United States since 2007.
In 2006, South Dakota ranked 44th in the nation with 11,769 millionaire households. While that number rose to 12,563 in 2007, the state’s rank actually dropped to 47th. The state rose to 41 with 12,151 millionaire households in 2008, but dropped to 47 this year with 10,646.
Ralph Brown, professor emeritus of economics at the University of South Dakota, said the decline in oil and gas prices after the state’s ethanol boom is likely to be involved in the state’s decline.
“During that period of time, ethanol plants were making so much money that they were paying for a plant in a single year,” Brown said.
In their study, PMI defines a millionaire household as one with $1 million or more in investable or liquid assets. It does not include sponsored retirement plans and real estate.
Nationally, the number of millionaire households in the nation has dropped from 5,970,929 in 2007 to 5,139,385 in 2009.
David Owen, president of the South Dakota Chamber of Commerce, said he believes many of the former millionaires in the state dropped in financial status because of economic volatility, especially when it comes to investments.
“It is obvious to me that some of this decline (involves) the people who are losing the investment game,” Owen said. “My guess is that during the slight drop in 2008, three-fourths are people whose assets were paper as opposed to owning certain stakes in their own business.”
Nationally, California had the highest number of millionaire households in 2009 with 662,735. However, Hawaii holds the highest percentage of millionaire households relative to total households with 28,363, or 6.41 percent of total households in the state.