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Official: Economy slower, but not too slowincludes pdf
By BETSY COHEN of the Missoulian

It's not often an economic summit begins with a song, but that's what happened Thursday when community leaders gathered to learn about the Missoula economy and how it fits into the national picture.

It didn't take any prompting; rather, just a heartfelt suggestion shouted out from one person in the standing-room-only crowd to sing the Grizzly fight song.

In unison, members of the business community - some 400 strong - belted out the words to honor the University of Montana football team, which plays for the national championship Friday night in Tennessee.

Then everyone got down to business.

They didn't come to talk, or even to sing. They came to listen to Larry Swanson, a Missoula economist and director of the O'Connor Center for the Rocky Mountain West. His specialty involves extensive analysis of growth and change in the region's economy, emerging economic trends, and the implications of this change for community and regional development.

Ironically, the Grizzly fight song was a fitting warm-up to Swanson's presentation.

Because his overall message could be summed up in three words: "Up With Montana."

If you are going to ride through a recession, Montana and the Rocky Mountain West are good places to be right now, Swanson said.

What's happening nationally, he explained, isn't happening locally.

Here, in Montana, we have an economic slowdown, Swanson said. But it's not the frightening recession reported in places such as Michigan, Florida, Nevada and California.

In Montana and the entire interior Rocky Mountain West, we have low unemployment, we don't have the home foreclosures that are crippling other states, and we don't have the credit crisis, either, he said.

Where other states are seeing the housing market wither and die, our home values are holding, and all the equity related to those homes is holding.

Swanson reminded his rapt audience that the national economic news comes from New York City, at the heart of the financial tumult.

"As long as it's happening there, it's the epicenter of business news," Swanson quipped. "The story line is being shaped where it is centered and we are projecting it on ourselves (here, in Missoula), where it may not apply."

But psychologically, he said, if we believe that the bad news elsewhere is happening here, we can bring ourselves to slow down our economy.

Swanson's comments were echoed by members of the business community, who said there's a widespread hunkering-down mentality.

At Southgate Mall, business has slowed from double-digit growth rates in 2006 to single digits this past year, said Tim Winger, mall manager.

"The slowdown has definitely affected us in the last few months," Winger said. "People are spending less."

Normally at this time of year, longtime Missoula builder Don Garramone said he has several large projects to keep his crews busy through the winter. This year, all those projects have been canceled.

It's not a matter of money for his clients, he said. Rather, they are waiting until the national economy calms.

Not only is it a frustrating time for builders, Garramone said, it's frustrating because fear is holding people back from a great time to build.

Contractors aren't busy, prices are coming down, and interest rates on home mortgages are dropping, Garramone said. "It's been a while since we've seen that happen," he said. "It's a good time to buy, build, remodel or refinance."

To explain, Swanson turned to statistics that track the construction industry.

In other parts of the country, the construction business peaked in the first quarter of 2006. But in Montana, it peaked late in the second quarter of 2007- a year and a fiscal quarter later than the rest of the nation.

That means the nationwide slowdown came much later to Montana, and when construction returns it will return sooner in Montana, Swanson said.

Why? Because Montana squeezed down the unemployment rate from

10 percent in the early 1990s to 2 percent in October 2007.

Although unemployment hovers around 4.3 percent this month, the rate is still more than 2 full percentage points below the national average.

The unemployment statistics have changed because Montana has changed, Swanson said. In the past 15 years or so, Montana's urban centers - Missoula, Great Falls, Kalispell, Billings - have grown in population and become diversified business centers, with an emphasis on small business and entrepreneurship.

The result? Montana is among the top 10 states in the nation, ranking seventh, for total employment growth.

"Employment growth is centered in our urban areas, and most people don't think Montana is urban at all," Swanson said. It's a point even the lauded "regional economists" with the federal banks miss time and time again.

Those East Coast economists who monitor the Mountain West still view Montana as a place dependent on natural resource industries, he said.

Yet data gathered closer to home and examined by those who live here paint a different picture.

Montana's economy is growing and is strong because of the expanding number of businesses connected to its urban centers, Swanson said. The state's fastest-growing economic sectors are related to health care, professional and technical work, state government and construction, Swanson said.

People are still moving to Montana, Swanson said, not away from it.

That's because there are jobs in Montana. Urban centers are strong. People pay their bills. Banks are conservative when it comes to lending. It's a nice place to live.

Statistics show the economy favors small communities, Swanson said, which will work in Montana's favor as the recession nationwide and the economic slowdown in Montana continues through 2009.

Montanans are renowned for our independence - and our economy, even in these uncertain times, is no different, Swanson said.

Again, the numbers are the proof.

"Over the last seven to eight years, we have not followed the national trends," Swanson said.

Reporter Betsy Cohen can be reached at 523-5253 or at bcohen@missoulian.com

 

View presentation on the economic slowdown in Montana