Economic picture brightens

The basic message at Thursday’s Midyear Update to the Economic Outlook seminar held in Kalispell: Things are at least looking better in Montana.

“We have some better news than we have in the past,” Webb Brown, president of the Montana Chamber of Commerce, said to open the seventh annual event, which travels to other cities in the state over the next week.

Pointing to surveys by the Montana and U.S. chambers and the Federal Reserve Bank of Minneapolis, Webb said business owners and executives have improved outlooks about their own operations and their state and local economies.

That optimism fades when it comes to the national economy.

Surveys have found continued opposition to the Patient Protection and Affordable Care Act. They also have found widespread concern and uncertainty about the “fiscal cliff” looming at the start of 2013, when tax rates are on track to increase significantly unless Congress acts.

“Confidence is recovering almost everywhere except about the national economy,” Webb said, adding that the outcome of the upcoming election is adding to jitters. “But we are continuing to see a gradual recovery.”

PATRICK Barkey, an economist with the University of Montana Bureau of Economic Research, said the national economy has entered a midyear malaise for a third straight year.

Low consumer spending has brought national growth back down to below 2 percent and combined with other factors led to lower national economic forecasts for 2013.

“Coming out of a recession, it doesn’t feel like much growth at all,” Barkey said.

But the United States is “growing at mach three” compared to Europe, a major market where many struggling countries are mired in recession and facing unsustainable borrowing costs.

“There’s a lot of concern about Europe and it’s pulling the whole global economy down,” Barkey said. “The situation in Europe is unwinding. I’m very pessimistic as to whether this union will carry on much further.”

Montana is a better story, Barkey said.

Housing prices are firming up and starting to recover. State tax withholding amounts have been increasing rapidly through the first half of 2012, showing strong income growth, a better job market and lower unemployment claims compared to a year ago.

That said, retail spending remains weak. So do other industries such as wood products and construction.

Concerns about a global economic slowdown are dragging down some commodity prices and widespread drought concerns are weighing on the outlooks for the agriculture industry in much of Montana.

“It’s a mixed story,” Barkey said. “It could be good for those lucky Montana farmers who have a crop.”

Energy investment is robust with a “tremendous amount” occurring, Barkey said, adding that just since the beginning of this year oil rigs are shifting over to the Montana side of the Bakken oil field.

Oil well permits also are up.

“Investments are under way to expand capacity more than any time in the last 20 years,” he said of the energy boom in Eastern Montana, adding that it is fueled largely by global energy demands.

Some Montana counties already have recovered from the last recession in terms of real wages corrected for inflation. That includes many of the counties in the eastern part of the state, while most metropolitan areas and Northwest Montana counties such as Flathead, Lake, Lincoln and Sanders are much slower coming out of a deep hole and recovering much slower than after past recessions.

Flathead County’s economy is projected to grow by about 2 percent this year and each of the next three years.

Paul Polzin, also with the University of Montana Bureau of Economic Research, agreed there are positive signs to be found in Montana’s economic outlook.

The big news is continued growth in the energy industry, which helps boost the transportation industry and funnels more revenues into state coffers and programs.

“The title I was going to use was ‘Searching for Recovery.’ Some parts of the state are growing, others are not growing as fast. Some industries are doing well, some aren’t,” Polzin said. “But if you’re searching, you can find some things that are growing.”

Reporter Tom Lotshaw may be reached at 758-4483 or by email at tlotshaw@dailyinterlake.com.