Forecast shows economy should grow at 2 percent after 2003

Montana’s economy should grow at modest annual pace of almost 2 percent beginning next year, due to slight improvements in key industries such as tourism, livestock, health care and manufacturing, a new economic report says.

By BOB ANEZ
Associated Press Writer

In the yearly Economic Outlook presented Monday to lawmakers and legislative staff, the Montana Bureau of Business and Economic Research offered its first look at its guess about the health of the economy over the next four years.

Paul Polzin, bureau director, said statewide growth this year — as measured by nonfarm income — is expected to be just 1.4 percent. That compares with 2 percent growth last year and 3 percent in 2001.

In 2004-06, the state’s economy should improve at the rate of about 1.8 percent annually.

Polzin attributed the slowdown this year to closure of the Stimson Lumber Co. mill in Libby and layoffs by Decker Coal Co. But the state’s budget deficit also will play a role, because it is expected to result in a pay freeze for state employees and workers for private human services companies.

Polzin’s report noted some risks even in the forecast of moderate growth. Uncertainty for major employers, such as Stillwater Mining, Touch America and NorthWestern Energy, continued drought, potential labor shortages, and another quick recession are causes for concern, he said.

Although Montana’s short-term economic health seems relatively good, that’s only when compared to the rest of the country, Polzin said. "It’s not a sudden improvement in our economy. Rather, it is due to the deterioration of the U.S. economy."

The report predicts growth in tourism between 2 percent and 5 percent this year, but that depends on the country’s ability to avoid both war with Iraq and another recession on the heels of the last one.

Health care is the largest private employer in the state and the industry nationwide can expect about 7 percent annual growth in spending over the next five years, the bureau said.

In agriculture, the report sees a sluggish market for wheat due to low demand and high production. Montana wheat prices are likely to drop from $4 a bushel last year to $3.25 this year.

Ranchers will fare better thanks to continued strong demand and dwindling herds over the past six years, the report said. Cattle prices should reach record highs in 2003 amid projections for a 5 percent decline in beef production, it said.

Manufacturing employment in Montana is expected to begin growing again, so long as there’s no second recession, the bureau said. National analysts have estimated a 30 percent chance for such a "double-dip" downturn.

Timber markets should improve slightly this year, due to increases in repair and remodeling projects offsetting a small drop in housing starts.

The bureau report also contained an analysis of the people moving into Montana during the latter half of the 1990s. It said about 111,530 people moved in and 104,600 moved out.

Most of the new residents are older, wealthier and more conservative than those leaving. Their lack of young children helps explain the drop in elementary school enrollment and their political leaning accounts for the strong Republican hold on the state, the bureau said.

The biggest gains in new residents between 1995 and 2000 occurred in Gallatin, Ravalli and Flathead counties, all dominated by GOP lawmakers.

The states supplying the largest number of new Montanans and accepting the most former ones during the period were Washington, California and Colorado.

http://www.greatfallstribune.com/news/stories/20030128/localnews/865858.html