Tough Economic Times Head West After Recession

By Beacon Staff

WASHINGTON – A delayed decline in home prices and drops in manufacturing and tourism have caused unemployment in western mountain states to rise faster in the past year than in any other region.

The jobless rate in the eight-state Mountain West region has jumped to 9.3 percent from 8.7 percent a year ago. That’s still lower than the 9.6 percent national average. But the gap is narrowing with the rest of the nation. The jobs crisis in regions with higher unemployment has mainly stabilized.

The lagging pace represents a sharp turnaround for a region that had been growing at a healthy pace before the recession. And it illustrates how broadly the Great Recession and its aftershocks are affecting the country.

A rush of young people and California transplants helped make the region — covering ground from New Mexico to Montana — one of the fastest-growing parts of the country in the past decade. Housing boomed in Boise, Salt Lake City and in Denver.

Thriving cattle farms, wheat crops and copper mines insulated much of the region from the level of layoffs the rest of the country experienced in 2008. And while Nevada and Arizona were among those hit hardest when the housing bubble burst, the six other states in the region had milder housing booms and fewer subprime borrowers.

Still, as the economy and home prices soured elsewhere, fewer people were willing or able to move for work. Home sales slumped. Prices fell. Idaho, Colorado and Montana lost thousands of construction jobs. Timber companies lost business.

The states’ snow-capped mountains and prized national forests received fewer visitors. And the ones who did arrive after the recession traveled on tighter budgets.

A big blow to Idaho came in early 2009, when technology companies such as chipmaker Micron Technology and Hewlett-Packard Co. laid off thousands of workers. The industry has rebounded, but the jobs haven’t come back.

In Idaho, the number of people receiving food stamps has surged.

“We got pulled in a little bit later than the rest of the country,” said Larry Swanson, an economist at the University of Montana and director of the Center for the Rocky Mountain West. Now “we are catching up,” he said.

After previous recessions, the region has usually benefited from rebounds in homebuilding, tourism, and other service industries, said Addison Franz, an assistant economist at Moody’s Analytics. But those trends haven’t helped this time. Consumers around the country are still cautious and housing is still weak.

“You would expect (the region) to catch the wave of recovery, but they haven’t been able to this time,” she said.

Montana, for example, has seen its unemployment rate rise by the most in the country since September 2009, to 7.4 percent from 6.5 percent. The state has lost jobs in its timber and tourism industries. People aren’t spending as much even when they do visit popular sites like Glacier National Park or Yellowstone, according to Patrick Barkey, an economics professor at the University of Montana.

Montana’s Flathead Valley, which includes Glacier National Park, a popular ski resort and blue-ribbon fly fishing, has one of the highest unemployment rates in the state. It reached nearly 14 percent at its peak in March.

After visitor numbers flagged last year, many seasonal employees weren’t hired back this summer. The timber industry’s continued slide also added to job losses in the region.

The situation appears to be turning around, in part spurred by Glacier National Park’s centennial celebration this summer. That’s caused the number of visitors to rebound. But employment and hiring hasn’t followed.

Darwon Stoneman, a co-owner of Glacier Raft Co., which guides tourists on rafting and fishing trips, said business was better this year and he expects it to be good next year, too. But while he is building new guest cabins, he is still being cautious about hiring.

He doesn’t expect to add back the guide jobs that he didn’t fill last year or this year.

Idaho has seen the second-steepest rise in unemployment in the nation since the recession began, to 9 percent from 3.5 percent in December 2007.

In Boise, home prices are still falling faster than the national average, Franz said. The housing slump has cost the state 4,000 construction jobs in the past year.

A 75-unit condominium high-rise downtown offers a stark symbol of the downturn.

Scott Kimball, a Boise developer, built it in 2008, just as the state’s unemployment rate was starting to bulge and housing values started to slump.

Two years later, sales have been slow and only half the building is occupied. Last month, he held an auction to generate sales and interest, setting a minimum bid for studio and 1-bedroom units of $99,000 — half the previous asking price.

“My plan was to build through the recession and come out on the other side when people were looking to buy and move in,” Kimball said. “I thought this would be a typical recession …. But this one has been different.”

Only Nevada — an epicenter of the foreclosure crisis — has seen its unemployment rate rise faster than Idaho. Other states with high rates, such as Michigan and California, were struggling before the recession began.

One painful impact of that change is that Idaho’s food stamp rolls have jumped by 40 percent in the past year, the largest increase of any state. Nevada has seen the second-largest and Utah the fifth-largest.

“Idaho actually has had one of the worst times during this recession of any state,” Franz said. It’s gone from “a relatively fast-growing, vibrant state to a state experiencing job losses and home prices declining. It’s a pretty stark change.”

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