Slow, Sustained Economic Growth Expected to Continue in Flathead County

Flathead County will continue to see slow but sustained economic growth as construction plugs along, employment numbers increase and wage growth follows statewide trends, according to experts at the University of Montana’s Bureau of Business and Economic Research (BBER).

Speaking at the annual economic seminar in Kalispell on Feb. 10, BBER Executive Director Jeff Michael told the audience at the Hilton Garden Inn that despite slowed nationwide job growth, Flathead County’s job market is leading the state with a 1.8% growth from 2024 to 2025.

Healthcare remains one of the highest ranking job sectors experiencing steady growth as baby boomers age, with more than 1,500 jobs added in the medical sector last year, contributing to a 3.3% growth in earnings.

“Healthcare is important here – here in Flathead County, you do have a little bit of older communities and that leads to a big healthcare sector,” Michael said.

While Flathead County saw a loss in hospitality jobs last year, overall jobs grew by 2% compared to the flat statewide rate as construction and professional and technical services propelled employment numbers after job growth stalled in 2024.

Last year, Michael said the tech and science sector drove earnings with an 8.2% increase in annual growth while resource sectors like farming, mining and wood products experienced losses. The manufacturing sector grew slightly by 0.9% while forestry dropped by 5% and mining dropped 10.1%.

As more jobs are added, statewide wages are growing faster than any other state; in Flathead County, the average paycheck was 3% higher compared to last year, even as nationwide wages stayed flat.

“That’s a really, really impressive figure,” Michael said. “You’ll see a lot of parts of the country are actually zero or below … you’ll see Flathead County is right up there with the state of Montana in 2025 even after adjusting for inflation.”

While Montana saw the highest increase in wage growth last year, the state still appears near the bottom of the list, ranking as the 41^st highest for average wages per job in the country. Still, Michael called the upward mobility a victory.

“Moving up a ranking — that’s really difficult to move up,” Michael said. “In recent years, the U.S. has had a hard time with wages and beating inflation.”

As Montana’s in-migration growth continues and remains an important aspect of the economy, annual population growth has slowed to its lowest level of 0.6% in 12 years, which Michael said has stabilized after the pandemic-era boom.

Statewide, the population increased last year by 7,137 residents compared to 6,945 the year before, according to U.S. Census Bureau data.

“It kind of settled out population growth about the same as in 2025 and it looks more like it’s settling into something that looks like the long-run average,” Michael said.

Even as population growth slows, demand for housing remains high locally and statewide, and while new developments have added to the supply, high mortgage rates have kept the real estate market frozen as homeowners hang on to pandemic-era rates that dropped to 3%.

But BBER economist Derek Sheehan said he expects slow supply shifts over the next three years as the “locked-in effect” loosens, causing owners to eventually sell.

“We’ll start to see homes trickle back onto the market with new jobs, divorce, babies — all the things that life comes with,” Sheehan said.

Aging homeowners, too, will contribute to a boost in supply as baby boomers downsize or exit the housing market.

“Baby boomers are [age] 64 to 82. I won’t dwell on the mechanism for why that’ll impact supply, but it’s coming for us all,” Sheehan said.

After the Legislature passed a controversial tax reform last year, lowering property taxes for many residents while high-valued homes, second homeowners and businesses saw a spike, Michael weighed the benefits of a sales tax, which he said might not outweigh the consequences.

Last floated in the 1990s at the Legislature, a sales tax has remained a controversial subject in Montana, which remains one of few states without one.

Michael said that while a sales tax would diversify the tax system and help reduce reliance on property taxes, it would also impact taxpayers disproportionately.

“We hear that property taxes rise faster than [homeowner’s] incomes, particularly our retirees; it can put a burden and sometimes a shock on them,” Michael said. “A sales tax can be relatively light on these people compared to a property tax, but there’s a completely other set of households for which a sales tax could be quite burdensome.”

Households with young families, for example, consume more. And while they also spend more, they often have less property wealth. Sales tax opponents argue that it’s regressive and negatively impacts low-income households who spend more on taxable goods.

While Flathead County has existing resort taxes in Whitefish and Columbia Falls, an avenue that aims to extract more money from tourists instead of residents, Michael said a statewide tourism tax could potentially shift the burden away from residents in other communities. Since tourists spend significantly on gas when they visit Montana, Michael said a gas tax could help offset property taxes, too.

But Michael was hesitant to fully support a sales tax and said that while it could help diversify taxes, it should not be implemented to offset property taxes.

“As sort of a three-legged stool to diversify revenue and reduce other taxes, that one I’ve got an open mind about,” Michael said. “But I’m not quite ready to go there and I’m not fully persuaded that this is worth the transition costs and the changes to Montana.”

[email protected]