Economic times are good for Montana—but not that good.
In a presentation in Billings on Tuesday, speakers from the Bureau of Business and Economic Research at the University of Montana gave a generally upbeat overview of the Montana economy, but they warned that 2016 is unlikely to be as good a year as 2015 was.
Despite sharp declines in mining and oil production, unemployment has remained low in Montana, and wages have grown faster than employment, said Patrick Barkey, director of the BBER, in an economic update at the Crowne Plaza. That could mean any of the three things, he said:
♦ Montanans are working more hours.
♦ Higher-paying jobs are coming to the state.
♦ Wages in general are going up.
In Yellowstone County, wages grew in 2015 in every sector except mining. Wage growth in Yellowstone County just about matched the state’s economic growth, and Montana’s economy generally reflects improvement in the national economy.
Although national economic recovery from the 2008 recession has been slow, it has added up over time, and the labor market has by almost every measure returned to or surpassed pre-recession levels, Barkey said.
“Seven years of growth has really healed the labor market,” he said.
The steady improvement has been offset in part by weakness and uncertainty in the global economy. The strength of the dollar means that the cost of U.S. goods has risen abroad. In Brazil, for example, U.S. goods cost 47 percent more than they did just two years ago, and costs have risen 24 percent in Europe during the same period.
One concern is that consumer spending, rather than business spending and global growth, is now powering the economic recovery, Barkey said. The business cycle may be peaking, he said, and Federal Reserve policy remains uncertain.
“There are not a lot of arrows in the quiver,” he said.
Home construction remains slow, increasing only 2 percent in Montana, Barkey said. But that’s far better than in Wyoming and North Dakota, where housing construction has plummeted because of cutbacks in the oil patch.
Yellowstone County, in particular, had a big increase in construction overall in 2015, largely because of building at the oil refineries, Barkey said. Employment in construction in Montana remains low by historical standards, but unemployment in construction also is low.
Twenty-eight percent of construction workers in Montana are Hispanic, Barkey said, and the number of unemployed men under age 55 is shrinking.
Healthcare growth continues in Yellowstone County, Barkey said, with an aging population and with an increasing number of Montanans able to get health insurance. Inpatient stays alone are expected to increase nearly 5 percent because of the Affordable Care Act, also known as Obamacare.
This also looks like a weak year for government revenues in Montana, Barkey said, with declines expected in coal, corporate and oil and gas revenues. Only a small increase is anticipated in individual income tax revenues, he said.
Webb Brown, president of the Montana Chamber of Commerce, began Tuesday’s session with results from a survey that he said was not scientific but reflected concerns of business people in Montana. About 40 percent of Montana businesses expect to add employees this year, he said, and a large majority expect business to improve at least slightly.
Major concerns were about the availability of labor, he said, and about government regulation. Business owners are primarily concerned about regulations in human resources, such as new overtime rules, and on the environment.
Business people are concerned both about the impact of regulations and about the sheer number of them, Brown said. The federal government adds a hundred or more regulations just about every day, he said.