Tim Leeds Havre Daily News email@example.com
While indications are the nation may be headed into recession, speakers at a seminar in Havre Wednesday said Montana is likely to continue to have economic growth. “We’re forecasting continued growth at about 4 percent for the next four years,” said Bureau of Business and Economic Research Director Paul Polzin during the 33rd Annual Montana Economic Outlook Seminar in Havre Wednesday. Polzin said that from the start of the seminars two months ago Havre was the last of nine stops in its tour of the state there were more questions about the state of the nation’s economy than there are now. “The answer is, it is looking more and more like we are in a recession,” Polzin said, “it looks the U.S. economy is going into recession.” But the causes of the recession “Usually it is not just one reason, it is a trend,” Polzin said may not hit Montana very hard. Polzin said this recession will be consumer-driven, caused by a lack of money for people to spend. The three big shocks, he said, are the burst of the housing price bubble, stopping people from using equity on their houses to fund purchases; a credit crunch caused largely by mortgage defaults leading lenders to only loan money to the least-risky borrowers; and the price of oil leading to high expenses at the pumps. Those are not likely to hit the factors driving Montana’s economic growth to any extreme, Polzin said. “Some things will impact Montana, some things won’t,” he said. Polzin said 90 percent of the activity in Montana’s economy are driven by nonresident travel, or tourism; mining; manufacture including wood and paper products; agriculture; and the federal government. The primary causes for the four years of straight growth in the state’s economy are fairly simple, he said: increased mining, including oil and gas; increased manufacturing, which does not follow the national trend; a steady 2 percent annual increase in nonresident travel; increased presence of the federal government following the 9/11 terrorist attacks; and, recently, the increase in money in agriculture. “This actually represents an economic boom for Montana,” Polzin said about the four years of growth. He said that while the activity in agriculture is more recent, with slightly better growing seasons than the drought-ridden start of the decade and wheat prices jumping from about $2.50 a bushel to $8 a bushel or even more, the increase in price of other commodities like oil, copper and zinc have been driving the mining industry for some time. The increase in the federal government’s activity can easily be seen in Hill County, he added. “You can see that with the number of Border Patrol cars at the hotel last night,” Polzin said. While many unexpected turns could hit the factors driving Montana’s economic growth, there is no sign that a downturn is likely, he said. The main factor driving the higher prices for commodities is growth in lesser-developed nations, like China and India, Polzin said. While many factors including political or financial troubles could rein that in, he said, it is likely to continue. Another factor driving Montana’s economy is continued growth in construction and housing. Polzin said that is bucking the national trend, although it cannot be expected to last forever. He added that the mortgage foreclosure rate in the country, which is part of the problem leadIng the economy toward recession, is being felt in Montana but not in most of the state. The foreclosure rate is being felt mostly in urban areas, and more urban parts of Montana like northern Ravalli and Missoula counties are closer to the national average. More rural areas like eastern Montana are much lower, however, he said. Scott Rickard, director of the Center for Applied Economic Research at Montana State University-Billings, said he expects new home construction to probably slow but continue, while appreciation of value of new homes is likely to show modest if any growth. That will be better than many areas of the country, he added. “I think we will be quite happy with that when we look at some of these other states,” he said. Charles Keegan III of the Bureau of Business and Economic Research said while Montana is not a heavily industrialized state, manufacturing has increased and generated about $8 billion in 2007 and about $1.2 billion in earnings for about 24,000 jobs. That is expected to continue except in the timber and paper industry, Keegan said, which had the only major decline from 2001 to 2007.