2019 is unveiling to be a year of continued growth, according to the state’s premier economist, Pat Barkey of the Bureau of Business and Economic Research (UM), in a mid-year update of Montana’s economy, last week. “It’s a good news story,” he told his audience at the Northern Hotel in Billings.
Even though early figures indicate it might be lower, Barkey said he is standing firm with his prediction of 2.2 percent growth for the state in 2019.
Yellowstone County’s growth rate is bouncing back after having lagged other areas of the state for a while – perhaps because of a tentative recovery in the oil patch. Only Gallatin County is currently outpacing Yellowstone County’s growth rate.
The state’s rural counties are also performing better. In aggregate they are outperforming some urban counties, coming in third behind Gallatin and Yellowstone.
According to Barkey the state has been growing steadily since 2016.
The labor market continues to tighten in Montana, which is a very serious problem, which will require “very real solutions,” which will have to come from the private sector, he said. Over the next ten years Montana will be 50,000 people short of being able to fill the anticipated available jobs.
Contributing to the labor shortage is the aging of the babyboom generation. The median age of of the state’s population – 39.8 years — makes Montana the “oldest” western state, said Barkey. Population growth or net migration has been mitigating that impact, but in 2014 and 2015 population growth in Yellowstone County stalled. The median age for Yellowstone County is 38.3 years.
Karen Baumgart, Director of BillingsWorks, reviewed some of their efforts to help coordinate training and education of workers, and to retain and attract workers. She outlined why potential workers are “Better off in Billings,” from cost of housing and commute times, to access of the outdoors and life style amenities. Billings has some compelling benefits over cities like Denver and Seattle, said Baumgart, although it is tougher to sell our weather, but not necessarily, if they are talking to people in Minneapolis.
State government revenue growth in Montana has been good.
Negatives looming on the horizon include a worsening global economic environment and dark clouds over Powder River basin coal.
Also, recovery for Montana’s agriculture and energy producers has not been smooth.
A national economy that continues a ten-year growth trend is a benefit to Montana, but internationally that growth surge is a “global outlier.” (Germany has suffered declines for the past 18 months.)
Barkey warned that a recession is always a possibility and they are not easy to predict. Currently 107 countries in the world are in the midst of recessions and only 19 of those recessions were predicted.
Other national factors that influence the state’s economy includes higher growth and bigger deficits. Inflation is “nowhere in sight.” Interest rates are on their way down.
Nationally, trade and housing are laggards, consumer and business spending is “carrying the load.”
The services economy is in charge, nationally; manufacturing growth is stalling.
Montana’s positive prospects are based upon tech related businesses and the construction industry.
Passage of the farm bill has helped farmers; and real estate and financial institutions are set for another good year. Transportation industries are slowly improving.
It is surprising, said Barkey, that the health industry is not leading the way in spurring Montana’s economic growth.
Uncertainties exist for Montana in the energy and natural resource producers. And there appears to be challenges ahead for tariffs and international trade.
Barkey said that he is not in favor of tariffs: “They cause more harm than good, but that is not to say our trade is not out of wack,” he said.