Phoenix, Las Vegas, Boise all Hurting
Economic Recovery Lags in Mountain West
By Jonathan Weber, 12-17-09
The Mountain West has been hit harder than the rest of the country by the Great Recession, according to a new study from the Brookings Institution, though the data is heavily skewed by the terrible performance of three major metro areas: Phoenix, Las Vegas and Boise.
The new “Mountain Monitor,” a companion product to Brookings’ national MetroMonitor and created as part of a partnership between Brookings and the University of Nevada at Las Vegas, looks at the economy in six states: Colorado, Idaho, Utah, Nevada, Arizona and New Mexico.
“Across the region, the deflation of a massive housing “bubble,” widespread job losses, and the onset of a significant public-sector fiscal crisis have wreaked havoc on many communities,” says the report. “In many Intermountain region locations, the sheer abruptness of the shift from hyper-growth early in the decade to a severe contraction in the last year has spawned a sense of almost existential whiplash.”
But the economic trends are very uneven across the region. The dramatic collapse of the real estate markets in Phoenix, Las Vegas and Boise have pushed unemployment way up, and house prices in those cities continue to decline. All three cities - along with Portland, Oregon - are among the weakest performers of the top 100 metro areas in the country.
On the other hand, the Denver metropolitan areas has fared relatively well, with house prices beginning to tick upwards, and cities including Albuquerque and Colorado Springs have performed at or above national economic norms and appear well-positioned for recovery.
Overall, the ten largest metro areas in the region saw significantly higher job losses than the national average. While economic recovery has begun, it generally lags the national recovery, according to the report.
Cities and towns with a highly educated population have fared much better than those at the other end of the spectrum, which helps account for the relative strength of greater Denver (Boulder, in fact, has the most educated population in the country, with 54% of residents boasting a college degree). In Lake Havasu-Kingman, on the other hand, only 11% of residents have a college degree, and the community suffered the biggest loss of unemployment of any small city in the region.
[End of article]I believe one reason for the hard hit to this area is the environmentalist assault on the people and their occupations. They want no more fossil fuels (unless of course they are takin a jet private or other wise to protest extraction of said fossil fuels). They also want to rid the west of the food producers, especially livestock. Until they get cold and hungry (along with the rest of us) nothing is going to change.
Comment By Todd Wilkinson in Bozeman (not the other Todd), 12-17-09Jonathan, Keep up the solid reporting. Among the questions I have are those pertaining to sustainability. Having written dozens of reports on the travails of events in and around Big Sky, you are in a position to provide some much-needed analysis. With the benefit of hindsight, do you believe that the development boom at Big Sky, based upon inflated real estate values and a constant injection of leveraged debt, was sustainable? In Bozeman, we still hear the lament: "If only things could return to the way they WERE...." My hunch is that we'll never see that kind of (irrational) exuberance again. Thoughts?
Comment By Dave Skinner, 12-17-09Of course the metros took a hit. So many of these inmigrants came for the amenities with the hope the economy would follow. The bubble held up for a while, but the basics did not.
Comment By Mickey Garcia, 12-17-09Folks on food stamps higher than its ever been in Idaho and folks drawing Unemployment hasn't bottomed out yet either.
Comment By Mike, 12-18-09Two things:
One, is focusing on housing the best, or even only, measurement of economic recovery? And two, while there is a direct correlation between an educated population and economic prosperity, why are states like Colorado continuing to cut education spending at a much higher rate than other states?
Mike,
IIRC Colorado hasn't cut education spending. They're just spending less than they had previously budgeted. Of course those budgets the last few years had huge increases as govt. income soared.
However you want to couch it, the need for more investment in education throughout the West, from Colorado to California, is a major concern. Let us hope that the politicians and university administrators can come to some sort of long term solution or all of the region's promise will be for not.
Comment By lfehl, 12-18-09To "the other Todd"
Everywhere even outside of Bozeman you hear the same lament about the "glory days" of wealth, exuberance and gross over spending. those days are gone as the financing structure has now seismicly changed. Gone (and good riddance) are the "liar loans" and all the other mechanisms that allowed people to completely over-extend themselves; use their home as an ATM and stop saving completely. I have heard it phrased that we have moved from an 'era of indulgence" to a new "era of responsibility" where our action have consequences.
Our economy is creeping back to life, but Montana will most likely lag behind, as usual. I don't say that to be mean spirited, but it seems that has always been the case. It boils down to population density and job creation. Like many others, I grew up in Montana and had to move away after college to find work in my field. Both coasts and the sun belt will continue to be population draws, and therefore spawn the most businesses. Hopefully the new/reviving economy in Montana will not solely be supported by those who make and spend the majority of their income elsewhere. That is certainly not healthy (particulalry for local residents) nor sustainable.
NewWest...please, please please help us out and put a spell checker on this comment box...thank you.
Why is there a need for even more spending, Mike? We've just gone through years of HUGE increases. We're spending $20k, $25k a student and in some cases even more. What we need are better outcomes. And as we've seen in the past, spending more money is unlikely to result in better outcomes.
Comment By Jonathan Weber, 12-20-09Hi all and thanks for the comments. Todd in Bozeman, it seems very clear that the huge boom in the real estate market around Bozeman was not sustainable at the rate experienced 2003-2007. This was obvious even at the time, prices in Big Sky tripled over a three year period and there is just no way that kind of thing can go on for long. The higher you fly the harder you fall, so the Bozeman area is hurting. That said, I think the long-term demographic and psychographic trends that are driving people to live in Bozeman remain pretty strong. So growth will resume, but much less frenzied.
As to education spending, I think it's interesting and important that educational level of the population does correlate to economic success. While more spending doesn't always lead to better outcomes, less spending almost always leads to worse outcomes and I think Western politicians are often very disingenuous about the obvious connection between education funding and economic & social health. In Montana state support for higher education is very weak and I don't think it's a coincidence that the state has the second-lowest wages in the country.
I would disagree Jonathan about the education spending. Home schooling is producing some great results and much better averages than public schools. Some charter schools are doing the same. I'm afraid teacher's unions have created far more problems than they may have solved.
As for the Big Sky area, it is never wise to buy high and have to sell low.