MONTANA BUSINESS QUARTERLY

Volume 53, Number 1, Spring  2015

Economic Outlook Q & A with Montana?s Top Economists and Industry Experts

by

Patrick M. Barkey, Paul E. Polzin, Bryce Ward, Norma Nickerson, George Haynes, Todd Morgan, Sue Larew, Paul Olson, Bill Whitsitt

A wide-ranging discussion covering economic topics of interest. The discussions include: the Economy, Healthcare, Tourism and Recreation, Agriculture, Manufacturing, Forest Products, Housing, and Energy. A panel of industry experts and economists provide their responses to important questions regarding Montana?s economy.

More Balanced, but Slower Growth Ahead

by

Patrick M. Barkey

For the past five years, we?ve witnessed something of an economic miracle in the eastern third of our state. Even more so in the western third of North Dakota. Towns and communities that were once depopulating and shrinking to the point where their schools and basic institutions were threatened have come roaring back, thanks to the Bakken oil boom. And for the first time in living memory, the rural portions of Montana ? particularly in the east ? were growing faster collectively than any of the urban areas.

Serving Southwestern Montana

by

Paul E. Polzin

Butte-Anaconda serves as a regional center for Southwestern Montana. Almost a quarter of its economic base is derived from trade center activities. They include people coming to town for retail shopping and obtaining health care services. There are also several professional service and management firms serving clients in surrounding rural areas.

Next Door to a Boom

by

Paul E. Polzin

If Rip Van Winkle were an economist, he would marvel at the changes in the Custer County economy since he went to sleep for 20 years. What was once a regional center for state and federal agencies and businesses serving area farms and ranches has now evolved into a trade and finance center and, most recently, home to firms serving the Bakken oil fields.

Good News in the Latest Data

by

Paul E. Polzin

The most recent federal data report accelerating growth in the Flathead economy. After a crippling decline during the Great Recession, the Flathead County economy posted an increase of 2.4 percent in 2011, about 3 percent in 2012, and a stunning 4.2 percent in 2013. The most recent figures suggest this rapid growth may have moderated in 2014.

An Energy Rollercoaster

by

Paul E. Polzin

Until about 10 years ago, Richland County has enjoyed a relatively stable and prosperous economy based on agriculture, food processing, and a utility company. Then technological advances enabled the extraction of crude oil, which was previously uneconomic. It has been dubbed the ?unconventional energy revolution.?

The U.S. Economy Shines on the Global Stage

by

Patrick M. Barkey

During the late 1980s the high-flying Japanese were buying so many American companies and choice pieces of real estate that we wondered if they?d eventually own everything. And when the housing bubble first burst in 2007, the Germans were feeling smug because they were sure their stolid banking system would never permit anything like the meltdown happening here. But in 2015 those countries and many others will be looking with envy at the American economy. Because as things are shaping up, we may be the only growth game in town. U.S. job growth trends are accelerating, and even if quarterly growth ebbs and flows, it looks like the national economy is moving into a higher gear.

Good News Verified in Latest Preliminary Data

by

Paul E. Polzin

Cascade County is a classic example of why historic data, however accurate, may not be a reliable indicator of what is happening now. Specifically, the latest annual data released by the U.S. Bureau of Economic Analysis do not reflect the new indirect energy-related manufacturing activity that only started to show up late in 2013.

Montana's Economic Growth Leader

by

Paul E. Polzin

The Gallatin County economy has been on an economic roller coaster since the onset of the Great Recession in 2008. The Bozeman-area economy experienced a significant contraction early in the recession. But the economy began to turn around in 2010 and has continued upward ever since. In fact, Gallatin County is one of only two major urban areas in the state (the other being Yellowstone County) to significantly exceed the statewide growth rates during the recovery phase of this business cycle.

A New Source of Growth

by

Paul E. Polzin

The Helena economy has traditionally been non-cyclic because of its dependence of state and federal government. The data corresponding to the Great Recession certainly confirm this notion. Lewis and Clark County was one of the very few urban areas in Montana which did not have at least one year of decline during the last decade.

Slowing Clawing Upward

by

Paul E. Polzin

Economic growth in Missoula?s economy has been frustratingly slow. After three straight years of decline during the Great Recession, the Missoula economy turned upward in 2011. But the growth rates have been have been anemic. The Missoula economy expanded about 1.5 percent per year in 2012 and 2013, as compared to 3 percent to 4 percent annual growth before the recession.

Housing Construction Continues to Lag

by

Paul E. Polzin

Recent economic statistics demonstrate Ravalli County?s economy is slowly emerging from the downturn experienced in the Great Recession.

Energy Impacts Continue

by

Paul E. Polzin

The Yellowstone County economy continues to benefit from the indirect impacts of the Bakken oil field developments on the Montana- North Dakota line. Even though Billings is more than 300 miles and five hours driving time from the epicenter of the drilling activity in Williston, North Dakota, it is an attractive location for the indirect and service activities associated with the oil boom. A number of North Dakota cities are closer to Williston, but at best they have roughly half of the population of Yellowstone County. This means that industries such as finance, wholesale trade, and professional services are probably much larger and have more depth and resources in Billings than in the North Dakota cities.