The state’s top economic forecasters see another year of slow recovery ahead. The University of Montana Bureau of Business and Economic Research began their annual Economic Outlook Seminar series in Helena on Tuesday. The forecasters remain optimistic about 2012 even as they see 2011 numbers coming in lower than expected.
Hundreds packed into a conference room in Helena’s Great Northern Hotel to hear UM Bureau of Business and Economic Research Director Dr. Patrick Barkey say they were wrong about the predictions they made for 2011.
“Yeah, we missed it,” Barkey said. “The U.S. economy stumbled and Montana went right along with it.”
Last year’s Economic Outlook Seminar foresaw a pretty hopeful 2.6 percent growth in the state economy. But that didn’t happen.
“We saw a lot more weakness than we expected to see,” Barkey said.
Montana fell well short of 2 and a half percent growth. Growth ended up at just point 7 percent. That’s almost a full point lower than growth was in 2010. Barkey listed a few reasons for this. He mentioned the national economy, which floundered along especially through the first half of 2011.
Here in the state, a couple key sectors of our economy faced pretty big shortfalls, like Healthcare and Government. Growth in healthcare was slower than expectations. Government declined. Just those two industries brought in $500 million less than predicted in 2011.
The 2011 economy faced another unexpected obstacle: 4 percent inflation. Barkey said normally 4 percent would not be something to worry about, “but it’s considerably higher than the zero inflation we had in 2009 and the 1 percent we had in 2010.”
Even with a less than rosy 2011 behind them, the Bureau is staying cautiously optimistic once again for 2012. They point to several economic bright spots—namely energy and natural resources. “Montana’s New Energy Frontier” is the theme of the whole seminar series. The Bakken oil boom is largely driving Eastern Montana growth. The eastern county of Richland was by far the fastest growing in 2011.
Agriculture and an improving labor market also lead to the bureau’s higher estimates for 2012.
It all shakes out to a projected growth of 2 percent. Barkey said that will seem pretty tepid.
“It’s not going to be enough to lower unemployment rates very much and people will still feel like we should be growing faster because it’s lower than historical average,” Barkey said.
Montana is expected to outperform the U.S. as a whole this year. But Barkey thinks that probably says more about the national economy than Montana’s.