Specialists at an economic outlook seminar in Havre Wednesday said the economy seems to be turning around, but people shouldn’t expect a boom in growth any time soon. “The recovery is going to be difficult this time,” Patrick Barkey, director of the University of Montana’s Bureau of Business and Economic Research, said during the Outlook 2010 seminar. Barkey said the nature and depth of the recession — two-thirds of the world’s nations were in recession, the most since 1930 — will hinder the recovery. The fact that a large cause of the recession was the collapse of the financial industry and home construction and sales will slow growth, he said. Many people cut their spending because they had significantly less money, and with slow growth in the financial industry and low consumer confidence, spending is not expected to pick up significantly soon. “This recession has targeted our net worth,” Barkey said. “It made us feel poorer because we are poorer.” The U.S. and other world governments took extraordinarily quick action to combat the recession, Barkey said. The U.S. government was taking actions to stimulate the economy within six to 13 months, compared to a delay of several years before action in the Great Depression. Japan took even longer when it experienced economic Collapse in the 1990s. The recession hit Montana hard, as it did the rest of the country, Barkey said. Every industry was hit and the recession crept into every corner of the state, although not all at once. “Eventually this recession was a trap that we all fell into,” he said. Barkey said Montana has some areas of strength that could help in the recovery and some problems that could hold it back. One strength is the housing market. While construction and home sales dropped, and Montana has experienced an increase in mortgage foreclosures, it was not hit as severely as other parts of the country. Another strength is agriculture, one of the drivers of Montana’s economy. While the industry is not experiencing great growth, it has not been hit as hard as some other industries. George Haynes of the Montana State Universi ty Department of Agricultural Economics and Economics, said there are problems in that industry. Exports are down, with the United States now competing with countries such as India, China and former members of the Soviet Union expanding their wheat production, and the beef industry still trying to recover from lost exports after the discovery of bovine spongiform encephalitis, or mad cow disease, in the United States in 2003. Other commodities also are starting to come back from the severe drop they experienced early in the recession, which bode s we l l for much of Montana’s natural resources industries, Barkey said. One is not, however. “The wood product industry is in really bad shape,” he said. Along wi th the loss of demand due to the bursting of the housing bubble, the loss of several lumber mills and the state’s only paper mill will make the recovery of that industry difficult, both he and Todd Morgan, director of the bureau’s Forest Industry Research said. Several presenters said industries in Montana are optimistic about the future. The number of businesses that expect better sales and better employment figures in 2010 have more than tripled from the 2009 surveys, in some cases.
Published: Thursday, March 18th, 2010
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