MONTANA BUSINESS QUARTERLY

Volume 44, Number 1, Spring  2006

Montana's Business Environment and the Law

Do They Work Together?

by

Jack Morton and Michael Harrington

Major businesses have located in Idaho (such as Hewlett-Packard’s printer division and Micron Technology) and South Dakota (such as Citibank’s credit card operations and Gateway Computer). These businesses generally don’t have to locate in these states as they can operate from any state. Because of this, Idaho and South Dakota have become the authors’ “states of envy.” The authors have often wondered why Montana hasn’t attracted or grown as many national and international firms. While Montana has a number of significant businesses, nearly all of them are tethered to the state’s rich natural resources. Do the business laws of Idaho and South Dakota create legal environments more conducive to growing and attracting larger businesses?

U.S. Economy was Remarkably Strong in 2005

Expect More of the Same for 2006

by

Paul E. Polzin

During 2005, the news media was full of stories about economic disasters -- high energy prices, high interest rates that might burst the housing bubble, and hurricanes Katrina and Rita. However, there was no noticeable deterioration on the growth rates for Gross Domestic Product. Obviously, the U.S. economy was stronger than anybody anticipated.

Strong Economic Growth Continues in Montana

by

Paul E. Polzin

In 2003, 2004, and 2005, Montana experienced growth greater than 4 percent in each year. The last time there were three consecutive years with 4 percent of more growth was during the 1970s. The big news of the last few years has been the rise in oil prices, which has led to an oil boom in the eastern part of Montana.

Montana's Milestone: 10 Million Nonresident Visitors

by

Norma P. Nickerson, Melissa Dubois, and James Wilton

Preliminary estimates show that Montana’s nonresident visitation reached a milestone in terms of numbers – 10 million visitors – in 2005, indicating a strong year for travel in Montana both by car and by air. Nonresident visitation increased by 4 percent over 2004. Montana’s travel industry showed a strange year for visitation in 2005; visitation increased even with an abysmal snow season and a decrease in national park visitations.

Regulation and Reform

by

Steve Seninger and Daphne Herling

In 2005, total health care spending in Montana is estimated at $4.9 billion, an increase of $400 million (or 7 percent) from the previous year. Montana's increase mirrors that of the nation, with total U.S. spending on health care now at $1.9 trillion per year. Health care utilization will continue to grow, although some expect price increases to moderate over the next couple of years, thereby reducing the pressure on and justification for higher health insurance premiums.

Montana Agriculture

by

David Buschena

Montana’s agricultural sector continues to be a vibrant and essential core sector of the Montana economy. While official data are not yet available for 2004 and 2005, it seems likely that farm cash income in Montana remained at, or increased above its 2003 level of $2.22 billion. The 2006 outlook for Montana farm incomes continues to depend heavily on revenues from the sale of wheat and cattle.

Montana's Manufacturing Industry

by

Charles E. Keegan III, Thale Dillon, and Robert Campbell

Following three years of declining production, sales, and employment, Montana’s manufacturing industry saw improvement both in 2004 and 2005. The U.S. economy is projected to remain strong in 2006, with global economic conditions expected to weaken slightly. However, a weaker U.S. dollar may aid a number of Montana manufacturers.

Montana's Forest Products Industry

Current Conditions and 2006 Forecast

by

Charles E. Keegan III, Thale Dillon, Todd Morgan, Jason P. Brandt, Jeff Halbrook, and Keith A. Blatner

Prices for most wood products were down slightly in 2005 relative to the high prices in 2004. After starting the year at high levels, lumber prices declined in the first half of 2005, then spiked during the hurricanes in late summer and early fall. However, even with the slight decrease in lumber prices, the 2005 average remained considerably above prices seen from 2001 to 2003. In 2006, prices are expected to remain well above the average for the years 2000 through 2003.