Published on Sunday, December 21, 2008
Gazette Opinion: Put Montana perspective on recession newsEncouraging words from economist Larry Swanson pierced the pessimism that hung over Billings like ice fog on a subzero morning.
"Billings is almost one of the best places to be in the United States in terms of the current situation," said the director of the O'Connor Center for the Rocky Mountain West. The crowd of business and community leaders in the Montana State University Billings ballroom applauded.
Gazette readers will recall that just two weeks ago, this column featured a cartoon by Gazette artist Victor Ady depicting storm clouds over most of the nation with the sky over Montana partly sunny. That's the forecast Swanson delivered with impressive detail and analysis of U.S. government data. He spoke last week to local leaders and business people at a forum sponsored by MSUB, Billings Clinic, St. Vincent Healthcare, the Foundation for Community Vitality and The Gazette.
The recession is affecting Montana, but much of those effects result from Montanans projecting the national story line into our backyard, Swanson said. Montana's backyard is different. Unlike Eastern and Midwestern states, which have seen years of sluggish growth, Montana's economy has been growing faster than the nation's. Unlike California, Nevada, Arizona and Florida, Montana doesn't have a lot of mortgages in foreclosure. Unlike Michigan and Indiana, Montana's unemployment rate has been running significantly below the nation's for several years. In October, Billings still had one of the lowest unemployment rates of any U.S. metro area.
Recession psychology"The steady drumbeat of bad news produces a psychology of consumers hunkering down," Swanson said.
An online poll conducted last week by the Billings Area Chamber of Commerce appeared to support Swanson's "psychology" theory. Chamber members responding said they had much more confidence in the local economy than in the national economy. Yet 56 of the 115 respondents expected their company sales to be lower over the next six months, while only 21 expected higher sales.
"We need to stay grounded in the fact that we had a lot going when we came into this," Swanson said. "The magnitude of impact in Montana will be lower. We've been through worse."
How do Swanson's encouraging words jibe with the revised, tighter budget Gov. Brian Schweitzer presented earlier last week?
Shrinking state budgetSchweitzer's Dec. 15 budget proposes $193 million less in biennial spending than his Nov. 15 preliminary budget did. It reflects the fact that state revenue estimates for the next two years have dropped. The falling price of oil and gasoline is a godsend to most Montana families. The downside is lower oil tax revenues for the state. The state's biggest revenue stream, personal income taxes, also is projected to be lower next year, largely because taxpayers will have less investment income.
Schweitzer and Montana lawmakers must balance the biennial budget. As Schweitzer and legislative leaders of both parties have said, the state also needs the financial security of a substantial ending fund balance.
Like individual Montanans who react to the national recession by being overly cautious in personal spending, state leaders could go too far on budget austerity. The Legislature and Schweitzer will need to strike a careful balance between saving and spending. State government spending benefits Montanans. It pays wages and purchases goods and services from the private sector. State spending buys health care, runs our prisons, patrols our highways and funds education from kindergarten through college.
In Montana, this is a time for prudence, not panic. More optimism would go a long way toward helping our community and state now and in coming months.
"Most of the impacts of the national slowdown got to us later," Swanson said. "As the national economy picks up, it will get to us sooner."
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