UNDATED – South Dakota ranked 35th out of 50 states in CNBC’s 2025 America’s Top States for Business study, earning high marks for business costs but facing steep challenges in innovation, workforce, and economic durability.
Costs Low, Innovation Weak
South Dakota scored second nationwide in business friendliness and 29th in the cost of doing business. However, it placed 49th in technology and innovation, 47th in workforce, and 36th in overall economy. Infrastructure ranked 31st, per CNBC’s category breakdown.
Methodology Favors What States Sell
CNBC evaluated all 50 states using 135 metrics across ten broad categories, weighting each based on how often states promote them in economic development materials. In 2025, “economy” received the heaviest weight, with 222 mentions across state marketing sites—more than any other factor.
Full Scorecard for South Dakota
- Economy: 36th
- Infrastructure: 31st
- Workforce: 47th
- Cost of Doing Business: 16th
- Business Friendliness: 2nd
- Quality of Life: 29th
- Technology and Innovation: 49th
- Education: 35th
- Access to Capital: 28th
- Cost of Living: 16th
Site Selector: Stability Matters
“You want to look for an environment where there is consistency,” said Tom Stringer, site selection leader at Grassi Advisors in New York. “That is very important to businesses, because the stability allows you to operate with a degree of certainty, a degree of cost control, and it also talks to the health of the economy.”
Federal Dollars Fuel a Third of State Budget
According to CNBC, 31 percent of South Dakota’s budget comes from federal funds, placing the state in the middle tier of dependency.
Outside Studies Show Mixed Signals
National economic studies outside CNBC present a nuanced picture of South Dakota’s economic health—strong in some metrics, lagging in others.
- The ALEC-Laffer Rich States, Poor States Index (2025) ranks South Dakota 8th in economic outlook, driven by tax and regulatory policy, and 16th in economic performance, reflecting backward-looking data like GDP and job growth.
- A WalletHub analysis (2025) places South Dakota 47th overall in economic strength, citing weak scores in GDP growth, exports per capita, and technology jobs, though it ranks mid-pack for household income and nonfarm payroll growth.
- The U.S. Bureau of Economic Analysis reports South Dakota was a top-five state for GDP and personal income growth in early 2023, but that momentum slowed in 2024, with only 0.4 percent GDP growth over the year.
- According to USAFacts, South Dakota’s real GDP per capita in 2024 was $62,182, ranking it 24th nationwide—above average but below neighboring states like Minnesota.
Together, these studies suggest a state economy with competitive fundamentals, especially in tax and cost structures, but one that struggles with innovation, export scale, and long-term growth durability.
Neighboring States Show Mixed Performance
North Dakota ranked 25th overall, despite placing 43rd in economy and appearing on CNBC’s list of 10 weakest state economies. Its GDP contracted in 2024 while the national economy grew 2.8 percent. Minnesota placed 10th. Nebraska came in 15th.
North Dakota Struggles Despite Strong Reserves
North Dakota has one of the strongest fiscal cushions—able to operate 235 days on reserve funds, according to Pew—but it’s being squeezed by a 15 percent drop in oil prices, nearing the $65 breakeven point, according to CNBC.
Transparency Will Be Tested
Sheila Weinberg, CEO of Truth in Accounting, told Public News Service that federal cuts will test states’ financial resilience and transparency.
“Citizens need to know how well, financially, their governments are doing,” she said. “Are they putting the citizens in risk of paying higher taxes or receiving less services and benefits?”
Weinberg added:
“And the federal government isn’t sending more money. That’s going to put major pressure on the states.”
Study Available Online
The CNBC study, now in its 19th year, identifies the criteria companies weigh most when deciding where to expand or relocate. Full rankings and methodology are available at CNBC.com.
Additional reporting by Mike Moen, Public News Service.