With glimmerings showing of a potential improvement to the U.S. economy in the next 12 months, a leading economist is saying the Havre area may also see a modest, if not robust improvement in its economy in 2011.
Part of the reason it may not be as strong as other parts of the state and of the nation is because it never was affected as heavily during the recession of the last two years, Bureau of Business and Economic Research Director Patrick Barkey said Wednesday.
“Hill County, Fergus County, some of the eastern (oil-producing) counties, did better than everywhere else,” Barkey said, adding that Hill and Fergus counties fared the best in weathering the recession than the rest of the state.
Signs point to a modest national recovery
While nothing is certain, some signs are showing the country may be turning around.
Despite continued consumer doubt, retailers reported their best Christmas-season sales in five years. That comes with initial reports of the best rates of people applying for unemployment insurance in two-and-a-half years.
The U.S. Department of Labor reported today that the number of people applying for unemployment dropped by 34,000 to 388,000, the lowest since July 2008.
That comes in the midst of up-and-down employment figures, with November’s national jobless rate at 9.8 percent, up from 9.6 percent in the previous three months.
But economists are citing the spending and unemployment figures, along with other statistics, as evidence that the economy may see stronger growth in 2011.
Hill County weathers the storm
The unemployment rate in Montana has been better than the national rate throughout the nation, with Hill County staying considerably better than most of the state throughout the recession.
The state unemployment rate in November dropped slightly, from 7.3 percent to 7.1 percent.
Last month Hill County saw a slight increase, but stayed 2 percent points better than the state average: the county rate was listed at 5.1 percent, up from 4.8 percent in October.
Local retailers have indicated that the strength of the holiday shopping also spilled into the area, with some saying they saw more traffic and sales through the season.
Barkey said both Hill and Fergus counties have a wider, stronger base than many of the areas in Montana that saw a sharp economic decline — issues like the bursting of the housing bubble, and loss of major companies, in areas like western Montana did not hit north-central Montana as hard. It was the counties that saw extreme, rapid expansion earlier in the decade that saw the biggest declines.
“The ones that flew too close to the sun really were hit,” Barkey said, adding that Hill County’s diversified economy helped as well.
Hill County Commissioner Mike Anderson said much the same. Having major businesses providing services and jobs, like Northern Montana Hospital, Montana State University-Northern and the Burlington Northern Santa Fe Railway operations in the area, helped stabilize the region, he said.
Commission Chair Mike Wendland said another issue also helped, although it is not listed in the employment statistics — agriculture, especially with a year of very high harvests and prices.
Commissioner Kathy Bessette added the industry has had a tangible impact — when agriculture producers have a good year, it translates into other sales in the support industries.
Barkey said his bureau does not have statistics on the impact of BNSF on the local economy, although it may have had a stabilizing influence later, when trade and transportation started to rebound.
When the recession cut into foreign trade, “BN took it right on the chin, right in the teeth,” he added.
The railroad’s work apparently has increased in the last 12 months, after a sharp drop in the number of trains running through the area and many employees furloughed as a result.
The increase led to the railroad company’s taking miles worth of cars stored on the tracks between Havre and Big Sandy and Great Falls and Helena out of storage and putting them back into service.
Comments from spokesman Gus Melonas were not available by deadline this morning.
Bessette said that a shifting of the number of people working for BNSF in Hill County to other areas over the last few decades also has helped reduce the impact of cuts in the railway's operations, increasing the diversity of the economy.
Looking to the future
Barkey said many indicators show north-central Montana should see a fairly healthy economy in the next year.
“It’s showing up in a lot of areas,” he said, adding, “the base has been a little more stable.”
Anderson, Bessette and Wendland all agreed that projects MSU-Northern is working on could do a lot to improve the economy, including work to test the usage of biodiesel tested at Northern in BNSF railroad locomotives and a new testing center for unmanned aerial drones that will be administered at the college.
The BNSF testing already helped the local economy, with Brett Earl and Logan Fisher of Earl Fisher Biofuels in Chester, where the biodiesel is produced, saying the test has increased the demand for their product exponentially and keeping employees working through the winter.
Several other economic stimulants also are in the works, with the county progressing on the creation of the Montana Agro-Energy Industrial Park south of Havre. The industrial park is intended to bring in companies working in the fields of value-added agriculture products and renewable energy.
The relatively high prices — and good yields on crops this year — also could continue the economic stimulation of agriculture.
“The ag situation is sort of a new story,” he said. “It’s been developing but now we can see ag prices look to be reasonably healthy.”
While nothing is solid, Barkey said, there is evidence that oil and gas exploration and production also may start picking up in the next year.
Another potential bright spot is Canadian visitors. Havre Area Chamber of Commerce members have reported an increase in Canadian traffic over the last few months. Part of the increase could be due to near-parity in the U.S.-Canadian dollar exchange rates.
The Havre Chamber is trying to capitalize on that, along with extended summer hours at the Port of Wild Horse north of Havre, giving truckers and visitors longer hours to cross at the border.
Debbie Vandeberg, executive director of the Havre Chamber, said the Chamber is working to advertise in Alberta to bring more visitors here. That includes listing the extended summer hours when applicable, which begin March 1 instead of the standard May 15.
The push to expand the port — the members of Montana’s congressional delegation support a push by a local committee and activists to upgrade the port to 24-hour, commercial status — also could add to the economic impact.
Governments try to make it to recovery
Bessette said the county commission hasn’t seen evidence of an increase in oil and gas production — and that the drop in that production over the last two years has led to budgetary problems in the local governments.
Other problems, including delays in revenue from property tax increases, has exacerbated the problem.
Hill County implemented county-wide budget cuts, including cutting positions from full- to part-time and eliminating jobs through attrition. If the revenue situation doesn’t improve, more cuts would be needed.
With the legislative session about to begin, the county governments are anxiously waiting to see what the impacts of that session will be — if state funding is cut, the economy improving this year may be too late to save many county services, Bessette said.
“I just am more concerned about more loss of revenue for Hill County … ,” she said. “I hope they remember the local governments.”