Governor, MDLI chief economist paint rosy economic picture for Montana
| July 31, 2022 12:00 AM
Montana’s economic future looks bright, according to Barb Wagner, chief economist with the Montana Department of Labor and Industry.
Wagner joined Gov. Greg Gianforte at the Montana Chamber of Commerce’s mid-year economic update luncheon in Kalispell to discuss the labor market on July 28. The two offered good news regarding the growth of the state’s economy.
“Last year, we had incredible growth,” Wagner said. “In 2021, Montana’s GDP grew by 6.7% making us 7th in the nation for GDP growth. In 2021, we added 19,600 jobs at 3.8%. That's three times faster than our normal growth rate. More Montana jobs were added in 2021 than any other year that we’ve started tracking growth in 1976.”
Among other achievements, Gianforte set a goal of creating 10,000 jobs with salaries over $50,000 per year.
“We beat the number by 30% and created 13,000 jobs,” he said.
In the first six months of 2021, 500 new apprenticeships were added along with 40 new registered apprentice employers.
“We more than doubled the amount of apprenticeships in 2021 than in 2019,” said Gianforte.
Electrician apprenticeship ratios were also amended from two journeymen to one apprentice to one journeyman to two apprentices, quadrupling the number of apprenticeship opportunities.
Gianforte said he is focused on modernizing infrastructure, expanding broadband, reforming the tax code, removing unnecessary occupational licensing hurdles, cutting taxes, and bolstering public education and university systems. To achieve this, he has set aside $275 million for expanding broadband and $444 million for critical water and sewage infrastructure.
“We’re working with legislators to reform, roll back and repeal unnecessary regulations that are a wet blanket for business and making responsible long term investments in infrastructure because it's important to building business and bridging the digital divide,” Gianforte said.
According to Gianforte, Montana is ranked the No. 1 state in which to create a new business.
“We have recovered 146% of the jobs lost from the start of the pandemic. But we have more work to do,” he said. “We’re going to keep working to make Montana a sanctuary for freedom and free enterprise so that Montanans can prosper.”
When the pandemic struck the nation, the U.S. GDP dropped by 3.4%. Montana’s, however, only dropped by 1.3% and though employment dropped 10% during this time due to business closures, Wagner said the state recovered quickly.
“Within 12 months we were back to what we were at before,” Wagner said.
Such quick growth however, caused some challenges, including worker shortages and inflation.
“It's hard for the labor market and supply chain when growth is so fast. Even though it's awesome, there are some negative things,” Wagner said.
In April, Montana’s unemployment rate hit a record low of 2.3% and remains at a historic low of 2.6%, according to Gianforte. This low of an unemployment rate, however, means that more jobs are available than people, explaining the labor shortage. Job openings were also created by workers who quit and moved into potentially higher paying positions, said Wagner.
“It’s not a bad thing,” she said. “It's just a tough adjustment to keep up with.”
In regards to wage gains, Wagner said, “Montana has the 10th fastest growth in the states in the last year … and is up 21% in the last two years.” Though rapid wage gain can turn into inflation as higher prices are potentially passed down to consumers, there are other factors to examine. Wagner pointed to federal efforts to mitigate the economic shocks of the pandemic as one potential factor.
For example, a study by the Federal Reserve Bank of San Francisco showed that stimulus packages issued during the pandemic led to a 3% increase in inflation rate.
“Our stimulus packages were significantly bigger than in other parts of the world. Right now, inflation is at 9% and we would be at 6% inflation had our stimulus packages been the same size as other countries,” said Wagner.
Wagner analyzed age and industry trends across the state of Montana, concluding that “every single industry has fully recovered and every age group has recovered their labor force participation rate.”
“We actually have a higher GDP than if we didn’t have a pandemic,” she said.
Slow continued growth is the ideal outcome for Montana’s economy and Wagner believes that a slowdown is coming.
“We have a very good cushion we’ve developed in the last year,” she said. “If our economy does slow, I’m not worried about it. Our economy is reaching a pace where we can grow at a good rate but not the neck breaking pace we were at prior to the year.”