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The Montana economy zooms along.

Article Excerpt
Wheat selling at greater than $8/bushel turbocharged the crops sector of Montana agriculture during late 2007. Montana's economic base is now firing on almost all cylinders, and the state is completing a record-breaking streak of four straight years of greater than 4 percent real growth. Looking to the future, annual growth of 4 percent is likely to continue into 2008 and maybe even beyond.

The state's strong economic performance is attributable to buoyant conditions in most basic industries:

* The metal (especially copper) and energy-related sectors of mining have been mushrooming because of worldwide demand growth associated with China and other developing countries.

* Moderate (but persistent) 2 percent overall increases in nonresident travel, despite gas prices rise.

* Robust commercial and residential construction activity (especially in Gallatin and Flathead counties).

* Although it occurred earlier in the decade, right after Sept. 11, the federal government expanded as a result of homeland security (military and border-related) activity.

* The wood products industry is the one exception. There have been several mill closings as a result of a long-term decline in timber availability and numerous market-driven curtailments in 2006-07.

* The other manufacturing sectors (which include Montana's small but robust high-tech producers) continue to expand, counter to the national trend.

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The major risks to the forecast are:

1) A worldwide bumper crop, which would quickly depress wheat prices.

2) The U.S. economy does go into recession, and the recession takes an unanticipated turn that impacts important Montana industries.

3) Terrorist attacks and/or geopolitical events (such as financial or political crisis) that could dampen fast growth in developing countries and slow the natural resource boom.

4) After bucking the national trend, Montana construction activity nosedives.

Figure 4 Labor Income in Basic Industries, Montana, 2005-2007 [percent of total] Mining 12% Wood and Paper 10% Ag. and Related 11% Travel 11% Selected Manufacturing 15% Transportation 11% Fed. Military 9% Fed. Civilian 21% Sources: Bureau of Business and Economic Research, The University of Montana-Missoula: Bureau of Economic Analysis, U.S. Department of Commerce. Note: Table made from bar graph. Figure 5 Actual and Projected Percent Change in Nonfarm Labor Income, Montana, 1994-2007 Actual Projected '94 3.3 3.2 '95 1.9 1.0 '96 2.5 1.8 '97 2.5 1.8 '98 2.5 5.7 '99 3.1 2.9 '00 3.5 4.2 '01 1.1 No Data '02 1.2 1.8 '03 1.4 3.1 '04 3.0 5.5 '05 2.6 4.4 '06 4.9 5.9 '07 4.2 4.5 Sources: Bureau of Business and Economic Research, The University of Montana-Missoula; Bureau of Economic Analysis, U.S. Department of Commerce. Note: Table made from bar graph. Figure 6 Actual and Projected Change in Nonfarm Labor Income, Montana, 2005-2011 Actual '05 4.4 '06 5.9 '07 4.5 Projected '08 4.1 '09 4.0 '10 4.0 '11 4.1 Source: Bureau of Business and Economic Research, The University of Montana-Missoula. Bureau of Economic Analysis, U.S. Department of Commerce. Note: Table made from bar graph.

Missoula County

The Missoula area economy is the largest and most diverse in Western Montana. It continues as the dominant trade and service center in the region, but the opening of chain stores and other establishments in nearby communities has meant that retail trade is no longer a significant contributor to Missoula County's growth. Health care and business and professional services continue to grow and attract customers from surrounding rural regions. Missoula's rapid growth in 2007 was partially due to the opening of the new Direct TV call center. From 2001 to 2005, the largest contributors to Missoula's growth were The University of Montana and state government, nonresident travel (including conventions), the federal government, and health care. The shutdown...

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