Economist: Montana’s Slowdown Will Be Shallow, Short

By Robert Struckman, 12-16-08

	Economist Larry Swanson

Larry Swanson will be sharing insights and leading a discussion about the Western Montana economy Thursday, Dec. 18 at the Holiday Inn downtown from 9 a.m. to noon. Admission is free and you can RSVP here.

Montana’s economic slowdown will be shallower and shorter than the national recession mostly because the Big Sky State’s core problem is psychological, not fundamental, said economist Larry Swanson.

Swanson, of the Center for the Rocky Mountain West, said Montana’s dire numbers lag behind national figures. The most recent national unemployment numbers put the rate at about 6.7 percent. Montana’s is about 4.8 percent, according to the latest figures from the Bureau of Labor Statistics.

“When you track the recession as best you can measure it, we’re behind the national slowdown by about a year,” Swanson said.

The most pain, nationally, has come from over-inflated property values. Montana had relatively lower rises in home values and so has a shorter fall, Swanson said.

Montana’s three metro areas tracked by the BLS are Billings, Missoula and Great Falls, all three of which were among the 15 tightest labor markets in the country about 15 months ago. Billings remains in the top 15 for its low unemployment rate, and Missoula and Great Falls remain in the top 50 of 380 metropolitan areas, Swanson said.

“The tight labor markets we developed over the last five and six years have positioned us pretty well,” Swanson said.

While Montana has seen some direct impacts from the slowdown—layoffs in the building and construction industries, for example—the state’s biggest problem is psychological, he said.

“Consumers are hunkering down. Businesses are hunkering down,” he said.

Swanson predicted 30-year-fixed mortgage rates will drop to 4.5 percent by March and will approach 4 percent later in the year. Eventually those efforts will have an inflationary effect, but in the short term it will prop up home values and allow people to buy more stuff, which will help the economy recover, he said.

As for fundamental problems like the high cost of health insurance, low incomes and record levels of consumer debt—Swanson thought those were less important than the mood of the masses. 

Once the economy starts to pick up, the psychology will change rapidly, he said.

Swanson predicted the low-point in the stock market is probably already in the past. He gave a date: Nov. 20.

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