Montana's economy: For better or worse?

By Tim Trainor - 02/08/2009

It will be a difficult year for Butte and Montana's economy. Walter Hinick/The Montana Standard

Everyone wants to know what Larry Swanson is thinking.

Swanson, the director of the University of Montana's O'Connor Center for the Rocky Mountain West, is one of the state's most respected economists.

And he is thinking that many of Montana's current woes are psychological rather than economical.

"People in Montana are scared and anxious," said Swanson, who spent much of December traveling Montana and presenting economic studies that show the state should sidestep much of the national downturn.

"(Montanans) get anxious from the national news, but they forget to look at how vastly some of the threads in those stories differ regionally. Things are much better here than elsewhere." But that's not to say times aren't tough anywhere you look.

"It's going to be a difficult year in Montana, no doubt about it," he said.

But Swanson thinks the recession that took nearly 10 months to reach Montana may just as quickly move away, and its residents need to take note.

"Going into a national recession, one of the best places to be is western Montana. It's not going to be fun, but go compare it to Michigan, Las Vegas, Florida or most other areas and you'll see just how we're doing." He said many have yet to realize that.

"We've got business folks taking the worst of the national storylines. We've got customers hunkering down and not buying. And that's translated to reduced activity here," he said.

Swanson doesn't see the reason why.

He said the housing crash didn't kick up much dust anywhere in the state, save small parts of Bozeman and the Flathead Valley.

"The foreclosures we hear so much about, more than half of them are confined to four states," Swanson said. He noted that California, Arizona, Nevada and Michigan saw housing prices plummet, but that affected few Montanans.

Job losses were concentrated in the Midwest and the Wall Street meltdown influenced 401(k) values, but didn't change the daily income of most Montanans.

"Everything you lost in your 401(k) is going to come back," Swanson said. "There's no question about that." In fact, Swanson said the recession, which statisti-cally reached Montana in the fall of 2008, will provide the area with a great option.

Swanson said business owners, customers, home-buyers and investors can use these "once in a lifetime" prices on houses, cars and stocks to get ahead. Interest rates have dipped low enough for financing — and refinancing — to become a "golden opportunity for home ownership." Still, Swanson said the market is forcing investors to be cautious.

"You've got to be careful with that type of thing," he said. "You don't want to get yourself overextended." However, Swanson is confident that the real estate, construction and stock markets will bounce back — but not for about a year.

Swanson believes the national recession, which began in 2007, will probably extend through 2010 with unemployment rising as high as 9.5 percent.

In Montana, Swanson thinks unemployment could hit 8 percent, but the economy will bounce back sooner, possibly towards the end of this calendar year.

He said higher unemployment rates at that level would not be "unfamiliar territory" in Montana and Swanson noted that "in very recent history we've had unemployment rates at 6 or 7 percent at times when our overall economy is improving." Swanson said Butte is an especially good place to be during a depression.

"It's an enduring place," said Swanson. "They know the economy goes up and down, but it survives. That's the hallmark of Butte." Swanson said that the experience of local business leaders and the durability of the city's residents are assets in struggling economies.

"In an economy like this, it's all about endurance," he said. "We'll get through this thing, it'll just take a little time." — Reporter Tim Trainor may be reached via e-mail at tim.trainor@lee.net.