Economist: Butte remains resilient

By Tim Trainor - 02/15/2010

Larry Swanson

Butte's excellent economic position before the current crises allowed it to stay ahead of much of the nation in 2009.

According to Larry Swanson, director of the University of Montana's O'Connor Center for the Rocky Mountain West, western Montana has been dragged into the national recession but remains better off than most.

The recession officially started nationwide in December 2007, when Butte's unemployment rate of 2.6 percent was near historic lows.

The excellent health of the local economy back then has served it well now, more than two years later.

"It's held up pretty well," said Swanson. "The recession started and magnified in places where unemployment was already high." In November, unemployment in Butte-Silver Bow was 5.4 percent, below the national average of 6.1 percent and well below some of the hardest hit areas, where unemployment has jumped into the double digits.

But there is no doubt the recession has found its way to the area. Income growth was almost nil for most Montanans last year, said Swanson.

"It's been sluggish, but the reality is that we're holding in there in pretty good standing," he said.

Swanson said Butte has reason to be confident, even compared to its western Montana neighbors.

"We are very vulnerable in these soft economic times to bad news," Swanson said. "A lot of how fast we bounce back depends on how an area, its consumers and its businesses respond to bad news." Swanson said that Butte, as compared to Missoula where he lives and works, handles the bad news better. Many businesses here are more experienced and have weathered economic storms before.

The Butte economy is also not dependent on two of Montana's worst performing industries last year: lumber and construction.

Local stalwarts, such as mining, fared much better.

"Commodity prices are at higher levels right now," Swanson said. "Copper waits for the pickup of industrial and manufacturing and because of the slowdown inventory was drawn down, and now that's getting built back up." Economies in places like Butte, "the work-a-day world" according to Swanson, didn't get over-inflated. That meant they didn't fall as hard in 2009, but questions remains about how fast they will climb back into the black.

"We are going to get to the other side of this," Swanson said. "I think we'll continue to work ourselves out of it. But so much for the area is psychological. The longer these things last the harder it is to keep your head up." Swanson said Butte residents should take the long view, however, and see things are better off here than most everywhere else.

"All things considered, we couldn't have been in better shape going in, we're going through it right now, but we're through the worst of it." — Reporter Tim Trainor may be reached via e-mail at tim.trainor@lee.net or call 496-5519.