By Tim Leeds
Havre Daily News
A Montana economist said the outlook for Hill County and Montana mirrors the forecast for the rest of the United States, with moderate growth in gross domestic product, an increase in job creation, low inflation, and higher interest rates.
"We see a lot of agreement among economists," Paul Polzin, director of the Bureau of Business and Economic Research at the University of Montana-Missoula School of Business Administration, said Friday.
Polzin made a presentation to about 30 elected officials and community organization and business leaders. The Hill County Commission and representatives of the Havre Area Chamber of Commerce, Bear Paw Development Corp. and District IV Human Resources Development Council were among the audience.
Polzin said the recession the country was in from the spring of 2001 until 2002 or even 2003, depending on which economist's view is used, was caused by a variety of factors and was lengthened due to several more, including the 9-11 terrorist attacks, corporate scandals like Enron and Worldcom, and uncertainties before the war in Iraq.
Policies including tax cuts in 2001 and 2003, lower interest rates leading to refinancing of loans, and increased federal spending on defense and homeland security are contributing to economic growth, Polzin said.
A decrease in the value of the U.S. dollar compared with other currencies also is leading to increased exports, which will help the economy, he said.
Polzin said economists expect to see job creation increase over the summer. He also said interest rates are likely to rise, probably with the meeting of the Federal Reserve Board in June.
The economy in Montana wasn't hit as hard during the recession as much of the rest of the country, probably because the state economy isn't very dependent on the industries that suffered the most, he said.
Industries hurt most by the recession included "dot-com" Internet companies, high-tech manufacturing, communications businesses and financial service companies, Polzin said. Montana's main industries are agriculture, mining, wood products, transportation, nonresident travel and the federal government, he said.
That doesn't mean Montana is recession-proof, Polzin said.
"We were lucky in 2001. We were also lucky in 1991," he said. "Future recession impacts in Montana depend on which U.S. industries are affected."
It's also a mistake to assume Montana's economy is dependent on one or two industries, he said. He said a combination of growth or decline in the state's main industries generally lead to economic growth or decline.
Polzin said forecasts are for Montana's industries to create modest growth in the state economy. Hill County is harder to forecast, both because of the volatility of the agriculture side of the economy and because the smaller the sample area, the harder it is to predict, he said.
In the late 1990s, Havre became a more important trade center because Northern Montana Hospital attracted more patients and oil and gas exploration increased. That offset a decline in agriculture, railroad and government job income, Polzin said.
He said the forecast for Hill County calls for continued moderate growth.