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Montana's headline-grabbing growth continues.

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Montana's economic boom is spreading, with all major sectors of the economic base now participating. Growth has taken place in manufacturing, nonresident travel, agriculture, mining, and the federal government. Buoyant conditions in construction and real estate may add a short-term boost in certain parts of the state.

The metal (mostly copper) and energy-related sectors of mining have received much of the attention. This natural resources boom is caused by long-term worldwide demand conditions rather than short-term supply interruptions, like those associated with past oil price peaks. The growth rates during this boom appear to be less than those during previous ones, but this boom may last longer.

Montana continues to buck national trends when it comes to construction, real estate, and house prices. Despite more than two years of rising interest rates, the state's construction industry remains at record levels. Flathead and Gallatin counties especially are benefiting from vibrant construction activity and expanding real estate employment.

The latest data (Table 1, page 10) confirm the often heard claim at least around Bozeman--that, the state's highest home prices are in Gallatin County. Missoula County is a close second. The bust in home prices has not yet hit Montana. During the third quarter of 2006, Montana home price increases (Table 2, page 10) continued above the national average, with the exception of Yellowstone County.

Risks

There are always concerns about the weather, insects, and volatile agricultural prices. But worldwide geopolitical events that dampen the fast growth in developing countries could quickly slow the natural resources boom--such as financial crises or political turmoil. Certain areas, Flathead and Gallatin counties in particular, have become (some may say dangerously) dependent on the construction and real estate industries. Nationwide, both the construction and real estate industries have slowed.

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Table 1 Median Value, Owner Occupied Homes, 2005 Montana $131,600 Cascade County $112,600 Flathead County $183,000 Gallatin County $216,900 Missoula County $204,000 Yellowstone County $133,300 Source: U.S. Census Bureau. Table 2 Index of Single-Family Home Prices, Annual Percent Change Missoula Cascade Yellowstone County County County 2005Q3-2006Q3 11.3 13.2 6.3 2004Q3-2005Q3 10.1 8.1 10.9 2003Q3-2004Q3 13.7 5.0 9.7 United Montana States 2005Q3-2006Q3 12.9 7.7 2004Q3-2005Q3 12.7 12.7 2003Q3-2004Q3 11.3 12.7 Source: U.S. Office of Federal Housing Oversight. Table 3 Population, Montana and Regions, 1990-2010 Thousands of Persons Actual Projected 1990 2000 2005 2010 Montana 800 902 936 974 West 335 400 416 445 Missoula 79 95 100 106 Flathead 60 75 83 90 Silver Bow 34 35 33 37 Lewis and Clark 48 56 58 61 Ravalli 25 36 40 43 Rest of West 89 103 102 108 North-Central 181 183 183 184 Cascade 78 80 80 82 Hill 18 17 16 17 Fergus 12 12 12 13 Rest of North-Central 73 74 75 72 Southeast 284 319 337 345 Yellowstone 114 128 137 145 Gallatin 51 68 78 86 Richland 11 10 9 11 Custer 12 12 11 12 Rest of Southeast 96 101 102 91 Average Annual Percent Change 1990- 2000-...

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