Economist: Montana’s Slowdown Will Be Shallow, Short
Economist Larry Swanson will talk about the Western Montana economy Thursday at the Holiday Inn downtown. Here, he offers a preview.By Robert Struckman, 12-16-08
Economist Larry Swanson
Larry Swanson will be sharing insights and leading a discussion about the Western Montana economy Thursday, Dec. 18 at the Holiday Inn downtown from 9 a.m. to noon. Admission is free and you can RSVP here.
Montana’s economic slowdown will be shallower and shorter than the national recession mostly because the Big Sky State’s core problem is psychological, not fundamental, said economist Larry Swanson.
Swanson, of the Center for the Rocky Mountain West, said Montana’s dire numbers lag behind national figures. The most recent national unemployment numbers put the rate at about 6.7 percent. Montana’s is about 4.8 percent, according to the latest figures from the Bureau of Labor Statistics.
“When you track the recession as best you can measure it, we’re behind the national slowdown by about a year,” Swanson said.
The most pain, nationally, has come from over-inflated property values. Montana had relatively lower rises in home values and so has a shorter fall, Swanson said.
Montana’s three metro areas tracked by the BLS are Billings, Missoula and Great Falls, all three of which were among the 15 tightest labor markets in the country about 15 months ago. Billings remains in the top 15 for its low unemployment rate, and Missoula and Great Falls remain in the top 50 of 380 metropolitan areas, Swanson said.
“The tight labor markets we developed over the last five and six years have positioned us pretty well,” Swanson said.
While Montana has seen some direct impacts from the slowdown—layoffs in the building and construction industries, for example—the state’s biggest problem is psychological, he said.
“Consumers are hunkering down. Businesses are hunkering down,” he said.
Swanson predicted 30-year-fixed mortgage rates will drop to 4.5 percent by March and will approach 4 percent later in the year. Eventually those efforts will have an inflationary effect, but in the short term it will prop up home values and allow people to buy more stuff, which will help the economy recover, he said.
As for fundamental problems like the high cost of health insurance, low incomes and record levels of consumer debt—Swanson thought those were less important than the mood of the masses.
Once the economy starts to pick up, the psychology will change rapidly, he said.
Swanson predicted the low-point in the stock market is probably already in the past. He gave a date: Nov. 20.
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Building amenity homes for billionaires has slowed down, and will slow even further. Madoff type deals are still out there to yet be discovered. There are pockets picked that are still unknown. There is a whole lot less money, and Montana has built its new economy on being hip and with it, which is hard to bank in times of Wall Street excess going south...or having gone south.
The ONLY reason Montana is not on its ass is that gas prices fell precipitously. If it were still $4.60 a gallon regular, and $5 diesel, Montana would be a lonely place. No state except maybe Texas needs road cars and lots of fuel more so than Montana. Low fuel is allowing people to shop, get to work, actually buy stuff. 5 months ago, all their money was going to the gas station. That, and part of the mortgage money, the credit card payment, the grocery bill. Cheap fuel is saving Montana's ass.
You have to understand that there are whole lot fewer rich people to buy Winston rods, log homes, over priced lots, distressed finish furniture made in China. Gazillionaires already have their places. Some are for sale. And right now, there are a whole lot fewer milionaires being created. Montana lives on that demographic. It will take time to create a new monied class. People do get older, you know, and it is not the old people who buy second, third, fourth, or fifth homes. They sell them. It is the earners who buy. They ain't. Right now. So it will be a while until all the Madoff stuff, and the unfound financial foibles are exposed and the market recovers and makes some people money. That is not going to be a short duration event. A whole lot of businesses have yet to file bankruptcy, and some don't know yet that they will be doing so. That leaves a lot of store fronts to fill, buildings for rent, homes for sale. The fallout has been temporarily delayed in retail by Christmas. Watch how many fail in the next two months. And then tell me how shallow and short this deal is going to be. Not as shallow and short as this article.