Montana’s “atypical” economy did not protect the state from feeling the devastating impact of the recession, but analysts see encouraging signs of an economic rebound
When Patrick Barkey, director of the University of Montana Bureau of Business and Economic Research is asked to describe Montana’s economy in a word, he replies, “Atypical.”
Not that Montana, a state of less than a million people, escaped the recession, the longest and deepest since World War II. The state was plagued by business closures and high unemployment in 2010. But the fact that the timing was the same for Montana as elsewhere in the country was not the norm, Barkey told MillionaireCorner.com. “A normal headline,” he said, might have been “U.S. going into recession. Will Montana notice?”
Because, he explained, the factors that mainstream forecasters study to get a read on how economies are doing, such as manufacturing and hours worked are “quite frankly not all that relevant here. Manufacturing is fairly small and Montana is a very entrepreneurial state. There is a heck of a lot of employment here that isn’t wage and salary. We’re natural resources, agriculture and tourism based economy. Having said that, we sure as heck noticed the last one.”
But it was “a wealth recession,” Barkey said. “It was consumer spending, it was trade. We certainly didn’t escape it.” State lawmakers, he said, are facing “a tremendous amount of budget pressure (though) we’re not as prolifigate as Illinois or California.” But there are encouraging signs. “Mining (including oil) and agriculture are looking reasonably optimistic on the price and production side. Tourism and transportation is rebounding.”
Wood products, though, he said, are devastated. Beyond the downturn in the housing market which cut demand, Barkey also said that the wood industry is “shifting to the south” because of the declining and vanishing availability of timber from federal lands. “They won’t let you cut any trees,” he said.
According to 2010 census figures, Montana’s population increased over the last decade 9.7% to 989,415. Had the population hit the million mark, it would have been enough for Montana to regain a second congressional seat that was lost after the 1990 census. Montana is now represented by one lone congressman, Rep. Denny Rehberg.
The census also revealed that Montana’s Hispanic population is growing seven times faster than non-Hispanics. In the past 10 years, it has grown 58 percent, but it comprises less than 3% of the state’s population. Bozeman, home to Montana State University and a haven for small high-tech companies, grew nearly 36%, while Billings, the state’s largest city grew 16%.
Montana, which has no sales tax, ranks among the ten best states for taxes, according to the website EconPost’s 2011 state tax climate study.
Republicans, who control the Legislature, paint a dire portrait of the economy. Dem. Gov. Brian Schweitzer’s proposed $3.8 billion budget, some note, spends more than it takes in. The state has had to rely on transfers from its so-called “Rainy Day Fund” and other sources to stay in the black. “Our state is ranked near the bottom in the United States in take-home pay, and one in four Montanans work more than one job,” Rep. Senate President Jim Peterson stated in his formal response to Schwitzer’s more optimistic State of the State address earlier this year. “Our business climate is not conducive to helping families prosper and raise their children.”
Schwitzer, whose final term expires next year, had spoken of an economy that has turned the corner. “Montana’s best days are ahead of us,” he proclaimed. “I would ask that Montana’s leaders join the chorus. Remember, the optimist built the airplane; the pessimist thought of the parachute.”