Economic Update: Still Going Strong

Mid-year report from economist, chamber of commerce shows growing economy but tougher hiring market

By Molly Priddy
Beacon file photo

The economy is still booming, a fact that when paired with the rapid aging of the Montana population could make an already tight job market even tighter for employers.

That was the main message behind the annual Economic Update from the Bureau of Business and Economic Research (BBER) and the Montana Chamber of Commerce (MCC) on Aug. 1 in Kalispell.

“It’s an issue that we’re hearing (from businesses) across the state,” said MCC President and CEO Todd O’Hair. “We are going to need to be more creative and innovative on hiring.”

The good news, Patrick Barkey of BBER said, is that the national economy continues a 10-year growth streak, without inflation in sight. Interest rates have fallen, in what Barkey said was the “longest growth streak in post-war history.”

Nationally, manufacturing growth is down after years of growing rapidly, and the service economy is “in charge.” International trade has what Barkey called “stormclouds” looming, with the recent trade war in China and increased tariffs. When tariffs on China’s steel increase, Barkey said, then China’s tariffs on U.S. agricultural goods go up, affecting Montanans.

In Montana, the state’s economic growth since 2016 has continued; high tech remains a growing sector, whereas the potential for Powder River basin coal has decreased.

The state’s economic earnings slowed in 2018, growing by less than 2 percent. Most of that recent growth has been in construction and manufacturing, as well as financial and business services. Mining had a slight comeback, and health care continues steady growth.

Wage increases in Gallatin County outpaced the rest of the state, with the Flathead seeing the fifth highest growth of the 56 counties since 2018.

Despite the gains, Montana’s earnings growth of 1.5 percent in 2018 is low compared to other Western states, with Washington at 5.7 percent, Idaho at 3.9 percent, Wyoming at 2 percent, and North Dakota at 1.9 percent.

But while growth continues, the labor market continues to tighten. What was an already tough hiring season last summer has gotten even harder on employers this year, Barkey said.

More than 2,800 Montanans turned 66 years old in 2018, while at the same time the state only added 2,712 18-year-olds. Projections show the gap widening in 2024, when 3,146 Montanan will turn 66 compared to 3,042 new 18-year-olds. Current projections show the pattern reversing in 2030, with slightly more 18-year-olds aging into the working age population than those retiring.

The median age in Montana is 39.8, making it the oldest of the Western states, and the median age in Flathead County is 42.3. The county’s population growth has continued since dipping in 2011.

Barkey said population trends show people leaving the largest U.S. cities, while counties with under 500,000 people are seeing population increases. This will likely affect the continuing labor shortage, requiring employers to get creative with solutions.

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