Economic Outlook: More Growth in 2019

State bounced back from stagnant economy, with momentum expected to continue, economists say

By Molly Priddy
Lines of cars wait at the West Entrance to Glacier National Park. Beacon File Photo

The state economy bounced back from stagnation last year with help from western counties and increased construction activity, among other factors, according to economists from the University of Montana visiting last week for the 2019 Economic Outlook Seminar.

State revenues in 2017 were weak due to a stagnant economy in 2016, said Patrick Barkey of the BBER, but 2018 revenues were stronger thanks in part to a surge in construction across the state but particularly in Flathead, Gallatin, and Missoula counties.

The three counties accounted for 75 percent of statewide construction earnings in 2017, with commercial and multifamily projects especially strong. Access to affordable housing remains an issue, as housing-price growth once again outpaced income growth.

Barkey said partial data indicates that 2018 saw continued growth, and that state revenue is off to a good start in 2019. However, this growth has largely missed the agricultural sector, which has faced low prices, drought, fire, and now the prospect of tariff-related disruptions in access to the market. The recently passed federal Farm Bill should help the agriculture industry, he said.

The mining industry saw an earnings increase from 2016 to 2017, including earnings from oil production. In 2016, mining earnings declined by $224 million, but had a $101 million increase in 2017, largely concentrated in Billings.

Health care expansion across the state but especially in Flathead and Gallatin counties, as well as the implementation of Montana’s Medicaid expansion, meant earnings growth, which Barkey said added more to the economic growth overall than any other industry.

High-tech companies continue to grow in Montana, with Gallatin, Missoula, and Yellowstone counties claiming the biggest tech sectors. Manufacturing saw rapid growth and employment in 2017 at 21.3 percent, though the wood and paper products industry in Montana had an employment decline of 16 percent.

Tourism is still going strong, with $6.23 billion total spent on travel-based expenses in Montana in 2017, with nonresidents contributing 54 percent of that and residents making up the remaining 46 percent.

The outlook for 2019 is cheery for Montana’s construction, real estate, and financial institutions, while uncertainties remain for energy and natural resource producers, as well as unknown trade and tariff challenges in the future. Health care continues to grow, but 2019’s outlook will depend on whether the state Legislature reauthorizes the Medicaid expansion.

Here’s a closer look at Flathead County’s economic outlook as outlined by the BBER.

3.3 percent
Projected annual percent change in earnings in Kalispell, 2019-2022

1.8 percent
Projected annual percent change in earnings in Montana, 2019-2022

78 percent
Single-family housing occupancy in Kalispell in 2017, the highest in the state

7.4 percent
Rental vacancy rate in Kalispell in 2017, the highest in the state

Per capita visitor spending in Montana

$1.1 billion
Nonresident spending in Glacier Country

Nonresident spending in Flathead County

10 percent
Increase in ski area visits in Montana in 2017-2018

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