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Montana economy still strong despite national economic downturn.

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The U.S. economic news continues to be bad. Many economists believe that the country may fall into recession because of problems in housing, credit, and financial markets along with increased gasoline prices and other energy costs. The National Bureau of Economic Research--which determines when the country is experiencing an official recession based on % significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales"--has not yet classified the economic slowdown as a full-fledged recession. Even so, Montanans continue to wonder how these national economic events will impact them.

Compared to other states, Montana has not been hit very hard by the economic slowdown. Montanans already have experienced the bursting of the house price bubble and mortgage foreclosures, but not nearly to the extent of other states. Another possible impact of recession is that state tax revenue growth may moderate because Montana taxation is more influenced by national conditions rather than local economic trends.

But overall, the national economic slowdown is not likely to have significant impacts on Montana because the U.S. industries hit hardest by recession are not major players in Montana's economy. These industries include durable manufacturing (particularly autos) and financial services.

Despite the national downturn, Montana's economy is still strong, and the Bureau forecasts that it will continue to grow. Nonfarm labor income grew 4.5 to 6 percent per year from 2005 to 2007, and it should rise 4 percent per year out to 2010. Nevertheless, Montana has felt the impact...

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