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U.S. Economic Expansion Longest on Record: Can the "New Economy" Take the Credit?

The U.S. economy is in its ninth year of continuous growth, the longest expansion on record, surpassing that of the Kennedy/Johnson expansion years in the 1960s. The leading economic indicators are still positive, but the Federal Reserve has raised interest rates. Will high growth and low inflation deteriorate into stagnation and recession? Or could conditions even get better?

At this time last year, the nation was worried about the Asian financial crisis and whether it would bring a U.S. recession. This year, things are different; there are few signs of an impending recession.

One way to measure the short-run ebbs and flows in the U.S. economy is with the Recession Barometer; a national forecasting firm, the WEFA Group, developed this index. The Recession Barometer is a composite of many economic indicators, and it measures the likelihood of a recession in the next 12 months. The lower the number on the barometer, the more likely a recession.

Figure 1 shows the Recession Barometer from 1992 through 1999. During that period, the U.S. economy had two close calls with a recession. One was in 1995, and another occurred approximately a year ago.

At present, the barometer is at or near a two-year high, and the chance of a recession is small. In the next 12 months, there is only a 15 percent chance of a recession; last year at this time, there was a 35 percent chance of a recession.

Why is the U.S. Economy Stronger?

Since last year, a number of factors have caused the improved outlook. They are:

* Consumer spending is stronger than anticipated.

* The "Asian Flu" is over. Southeast Asia recovered from the economic crisis faster than expected, which means growth for U.S. exports.

* The Federal Reserve lowered interest rates early last year.

* State and local governments have been spending more than predicted.

The result of this stronger economy is that the Federal Reserve is no longer worried about a recession. They now think inflation is the danger, and they began raising interest rates late last year in an attempt to cool an overheated economy.

The U.S. Economy

The U.S. outlook calls for slightly slower Gross Domestic Product (GDP) growth and a slight inflation increase (Table 1). In 2000, the GDP will increase about 3.2 percent, which is down from 4.0 percent in 1999. Prices will increase by about 2.5 percent per year compared to 2.1 percent in 1999.

Even though a recession in the next 12 months is unlikely, there are some risks for the U.S. economy.

* International risks. Although the Asian Flu is over, some areas such as Brazil, Korea, and China are still experiencing economic problems. If these areas go into recession, it will affect U.S. exports.

* Commodity inflation. Increased worldwide growth resulting from the end of the Asian Flu may lead to increased commodity prices. In contrast, commodity (including energy) prices have been stable or declining in the past few years.

* Stock market crash. This is the one event that is probably big enough to stop the juggernaut U.S. economy. A major stock market crash would have two effects. First, it would kill consumer confidence and greatly affect consumer wealth and purchases. Secondly, a stock market crash would quickly end the tax revenue growth due to capital gains and put a damper on growth of state and local government spending.

Is There a New Economy?

Some say forecasts of 3.2 percent GDP growth and 2.5 percent inflation are too pessimistic. They believe the nation is experiencing a new phenomenon--a "new economy" that will be much more productive.

New economy advocates say the U.S. economy is more productive than ever, and that the nation will have even faster growth with less inflation. Others believe temporary factors and special circumstances are responsible for the improved economy. Following is a look at both sides.

Between 1996 and 1999, the U.S. economy grew faster than 3 percent, and three of those years were in excess of 4 percent. Economists used to think that the long-term potential growth rate was somewhere around 2.5 percent, and that this many years of faster-than-sustainable growth combined with tighter and tighter labor markets should lead to inflation. But according to the numbers, inflation had actually been declining most of this period.

What reconciles these trends of fast growth and no inflation? The answer is increases in labor productivity. During most of the past few decades, labor productivity has been growing by about 1 percent annually. In more recent years, the annual increases have been about 2 percent.

Why has labor productivity increased? The new economy boosters point out that U.S. businesses were on an investment binge during much of the 1990s. A large portion of the investment was in computers and information technology, and these investments are now paying off in increased labor productivity.

The new economy proponents expect faster growth, low inflation, continued growth in business profits, and no crash in the stock market.

While these are convincing arguments, detractors also have credible arguments. They agree that there has been fast growth, low inflation, and increased measured labor productivity. But they believe that these factors don't necessarily make for a new economy. They argue that recent trends have occurred for several reasons, including:

* Measured labor productivity typically increases late in the business cycle, and we are certainly late in the current cycle.

* Inflation is low because energy and commodity prices fell during much of the 1996 to 1999 period but are now starting to rise.

* Health care costs have been contained by HMOs, but we don't know how much longer the HMOs can keep the lid on health care inflation,

In addition, these skeptics point out that the measured productivity increases are not where we expect. The biggest labor productivity increases have been occurring in manufacturing, and we would expect them to occur throughout the computer-using sectors of the economy.

Both of these arguments have merit. Whether these conditions are due to a new and more productive economy or to good luck and some fortuitous circumstances remains to be seen. At any rate, the U. S. economy is strong and a recession in the near future is unlikely.

Montana's Economy

New Data Provide New Perspectives

Montana and most of its communities have grown during the 1990s, with the state's traditional basic industries contributing to these trends. A look at Gross State Product (GSP) data provide new perspectives into the role of these industries.

GSP, which measures the value of production in Montana, is easier to conceptualize on the national level. Gross Domestic Product (GDP) is the most used method of measuring an economy. GDP is the value of goods and services produced in the United States, which are evaluated at market prices.

The value measure of production is more difficult to conceptualize at the state level because only part of most goods' production occurs in a single state. For example, only part of the new house sold in Seattle was produced with a Montana product, only part of the steak dinner bought in Los Angeles was produced with Montana beef. But GSP does measure the production that occurs in Montana regardless of where the final good or service is consumed.

In addition, GSP provides a common unit of measurement. It is directly comparable to GDP for the United States, which is now the most widely-used unit to compare economies around the world.

In the past, we have used employment and labor income data to describe the Montana economy in terms of how we are employed and where we earn our income. Gross State Product allows us to go a step further and describe the Montana economy in terms of what is produced.

What difference does this make? In general, capital-intensive industries such as agriculture and mining appear larger when they are measured using value of production measures such as GSP. On the other hand, labor-intensive industries like nonresident travel generally decrease using this measure.

Montana's basic industries provide a good example. These are the industries that generally produce products that are sold outside the state and are responsible for injecting new funds into the state's economy. The GSP produced in each basic industry is measured in terms of the new price index denoted as chained 1992 dollars.

To be specific, last year when we used labor income, agriculture represented about 11 percent of the economic base. Using GSP, this number rises to 18 percent. Mining shows the biggest difference. Using labor income, it represented about 10 percent of the state's economic base. Using Gross State Product, this figure rises to 21 percent. In contrast, nonresident travel decreased, accounting for about 16 percent of the state's economic base using labor income but only 9 percent using GSP.

A New Economy for Montana?

The GSP data help shed some light on labor productivity in Montana, and there is some evidence that we may be experiencing aspects of the new economy in Montana.

There has been a dramatic change in labor productivity for three of the industries that benefit most from information technology and computerization--wholesale trade, retail trade, and services (Figure 1). Each of these industries has experienced a noticeable acceleration in labor productivity.

For example, labor productivity in wholesale trade grew 5.6 percent per year in 1995-1997 period, up from 3 percent per year during the 1982-1995 period.

Retail trade experienced an annual increase in labor productivity of 4.1 percent per year from 1995-1997, up from -0.9 percent from 1982-1997.

Labor productivity in the services industry declined in both time periods, but there was a significant improvement during the most recent. Between 1982 and 1995, the decline was 1.8 percent per year. That improved to -.03 percent per year during the 1995 to 1997 period.

The trend is obvious. In each of these major sectors, which together account for almost 55 percent of the jobs, we see a marked improvement in labor productivity growth.

Nonfarm labor income is also used to measure growth in the Montana economy (Figure 3). Unlike Gross State Product, which is available only with a long lag, nonfarm labor income is estimated several times a year and provides an up-to-date measure of economic performance. The rates of growth in GSP and nonfarm labor income are almost identical in the long run.

Montana's Population

Population continues to be an important measure of Montana's economic performance. With the 2000 census underway, population becomes an important political issue for Montanans. For example, will Montana regain its second congressional seat?

Montana has experienced significant population growth since 1990, but almost all of it occurred before 1996 (Table 1). Since 1997, the state's population has been stable at about 880,000. Two years ago, we projected that Montana's population would be about 920,000 in the year 2000. But the forecast for 2000 has been trimmed down to about 885,000.

Montana's population forecast for 2010 has also been scaled back. The most recent projection is for 970,000 people. Two years ago, the forecast was for slightly more than one million people in the year 2010. The slowdown may reflect the renewed prosperity in Southern California, which has resulted in fewer Californians migrating to Montana.

When Montana's population was growing rapidly early in the 1990s, it was a safe bet that we would regain our second congressional seat. But the currently stable population combined with continued growth elsewhere in the nation means that Montanans will have to wait and see how the arithmetic turns out in order to determine whether or not we get our second seat back.

Montana Outlook

Since 1992, Montana's annual growth rate has been greater than 2 percent. We used to think that 2 percent per year was the long-run potential rate for the Montana economy. How long will the "above average" growth continue? New economy advocates might say it will continue indefinitely. But the Bureau's forecast calls for continued 3.5 percent growth in 2000, with the growth rate slipping back to between 2 percent and 2.5 percent in later years.

Forecast Risks

This forecast calls for greater than 2 percent growth and may seem relatively optimistic to some people. But as always, risks plague forecasts.

The major risk is still the possibility of a U.S. recession caused by a sizable and sustained stock market crash. Another risk is the possibility of one of the state's large plants closing. Some of them are old, and several of them have new owners. And since agriculture is the state's dominant industry, Montanans always have to worry about the weather, world markets, and insects. Also, specific industries have a number of individual risks. For example, timber supply issues continue to be a concern for the state's wood products industry.
 Economic Trends for the U.S Economy, 1996-2004
 Actual and Projected as of January 2000
 Actual Projected
 1996 1997 1998 1999 2000 2001
Real GDP (chained $), percent change 3.7 4.5 4.3 4.0 3.2 3.4
Inflation (CPI-U), percent change 2.9 2.3 1.6 2.1 2.5 2.5
Interest rates
 90-day T-bills, percent 5.0 5.1 4.8 4.6 5.5 5.6
 Mortgage rates, percent 7.7 7.7 7.1 7.5 7.7 7.8
Housing starts, millions 1.5 1.5 1.6 1.7 1.5 1.4
Unemployment rate, percent 5.4 4.9 4.5 4.2 4.4 4.3
 2002 2003 2004
Real GDP (chained $), percent change 3.3 3.1 3.1
Inflation (CPI-U), percent change 2.3 2.5 2.5
Interest rates
 90-day T-bills, percent 5.6 5.6 5.6
 Mortgage rates, percent 7.6 7.5 7.5
Housing starts, millions 1.4 1.4 1.4
Unemployment rate, percent 4.6 4.6 4.7
Source: The WEFA Group (January 2000).
 Montana GSP Per Worker
 Chained 1992 Dollars
 1982-1995 1995-1997
Wholesale Trade 3.0 5.6
Retail Trade -0.9 4.1
Services -1.8 -0.3
Source: U.S. Bureau of Economic Analysis.
 Gross State Product and Basic Industry
 Gross Product Montana, 1982-1999
 1999 Gross Product
 (Chained 1992 dollars)
 Total gross state product $ 18,479
Total basic gross product $5,099 100%
Agriculture $924 18%
Wood & paper products $412 8%
Railroad $487 10%
Nonresident travel $449 9%
Mining $1,048 21%
Selected manufacturing $881 17%
Military $239 5%
Federal government $658 13%
Sources: Bureau of Economic Analysis, U.S. Department
of Commerce; Bureau of Business and Economic Research,
The University of Montana-Missoula; and Research and
Analysis Bureau, Montana Department of Labor and Industry.
 Population, Montana and BEA
 Regions 1990-2010
 Thousands of Persons
 Actual Projected
 1990 1999 2000 2010
Montana 799 883 885 970
 West 334 390 394 444
 Missoula 79 89 92 105
 Flathead 59 72 74 88
 Butte-Anaconda 44 45 43 40
 Lewis & Clark 47 54 55 62
 Ravalli 25 35 37 43
 Rest of West 79 95 93 106
 North Central 156 153 152 155
 Cascade 78 79 80 81
 Hill 18 17 17 17
 Valley 8 8 8 8
 Restof North Central 52 49 47 49
 Southeast 309 340 339 371
 Yellowstone 113 126 129 144
 Gallatin 50 63 66 74
 Rest of Southeast 146 151 144 153
 Average Annual
 Percent Change
 1990-1999 2000-2010
Montana 1.1% 0.9%
 West 1.7% 1.2%
 Missoula 1.3% 1.3%
 Flathead 2.2% 1.7%
 Butte-Anaconda 0.2% -0.7%
 Lewis & Clark 1.6% 1.2%
 Ravalli 3.8% 1.5%
 Rest of West 2.0% 1.3%
 North Central -0.2% 0.2%
 Cascade 0.1% 0.1%
 Hill -0.6% 0.0%
 Valley 0.0% 0.0%
 Restof North Central -0.7% 0.4%
 Southeast 1.1% 0.9%
 Yellowstone 1.2% 1.1%
 Gallatin 2.6% 1.1%
 Rest of Southeast 0.2% 0.6%
Source: Bureau of the Census, U.S. Department of Commerce;
Bureau of Business and Economic Research, The University
of Montana-Missoula.
 Actual and Projected Percent Change in
 Nonfarm Labor Income, Montana 1992-2004
 Percent
92 4.7
93 4.1
94 3.2
95 2.3
96 3.1
97 2.4
98 6.2
99 2.2
00 3.5
01 2.7
02 1.9
03 2.2
04 2.3
Sources: Bureau of Economic Analysis, U.S.
Department of Commerce; Bureau of Business
and Economic Research, The University of
Montana-Missoula; and Research and Analysis
Bureau, Montana Department of Labor and Industry.


MISSOULA COUNTY

Outlook for Missoula County

Missoula continues as the state's second largest trade and service center, next to Billings. The Gross County Product numbers remind us that the traditional economic mainstays of wood and paper products and transportation (both rail and trucking) continue to be major contributors to Missoula's economy. The latest data show Missoula's traditionally high unemployment rate at less than 3.5 percent, a figure not seen for decades.
 Percent of Population Age 65 and Older
County Rank Percent age 65 and older
Missoula 51 10.6
Ravalli 35 14.6
Lake 36 14.4
Sanders 31 15.6
Mineral 41 13.4
 Actual and Projected Percent Change in Nonfarm
 Labor Income, Missoula County
 1992-2004 (In Constant 1998 Dollars)
 Percent
92 8.3
93 5.5
94 2.1
95 3.7
96 4.5
97 2.6
98 6.9
99 4.3
00 4.7
01 3.8
02 3.0
03 3.2
04 3.3
 Gross County Product and Basic Industry Gross
 Product Missoula County, 1982-1999
 1999 Gross Product (Chained 1992 dollars)
 Total gross county product $2,210
Total basic gross product $711 100%
Trade center activity $217 31%
Wood and paper products $114 16%
Transportation $181 25%
Nonresident travel $26 4%
Other basic $22 3%
University of Montana $67 9%
Federal government $84 12%
Sources: Bureau of Economic Analysis, U.S. Department of
Commerce; Bureau of Business and Economic Research, The
University of Montana-Missoula; and Research and Analysis
Bureau, Montana Department of Labor and Industry.


FLATHEAD COUNTY

Outlook for Flathead County

Flathead County was among the fastest growing counties in Montana during the 1990s. But the growth was volatile, ranging from about 8 percent in 1992 and 1993, to roughly 1 percent in 1997. The sharp increase in 1998 and the decline in 1999 reflect the Columbia Falls Aluminum Company wage settlement. The county has a diversified manufacturing sector, including hightech, primary metals refining, and wood products. Unemployment has historically been high, following a distinct seasonal pattern with almost no downward trend.
 Percent of Population Age 65 and Older
County Rank Percent age 65 and older
Flathead 44 12.8
Lincoln 37 14.5
Glacier 53 9.4
Lake 36 14.4
 Actual and Projected Percent Change in
 Nonfarm Labor Income, Flathead County
 1992-2004 (In Constant 1998 Dollars)
 Percent
92 7.5
93 7.6
94 3.4
95 2.3
96 5.3
97 1.3
98 13.6
99 -1.7
00 4.2
01 3.2
02 2.5
03 2.7
04 2.9
 Gross County Product and Basic Industry
 Gross Product Flathead County, 1982-1999
 1999 Gross Product
 (Chained 1992 dollars)
 Total gross county product $1,470
Total basic gross product $483 100%
Selected manufacturing $61 13%
Wood products $103 21%
Primary metals $54 11%
Trade center activity $47 10%
Nonresident travel $52 11%
Agriculture & other $39 8%
Transportation $78 16%
Federal government $49 10%
Sources: Bureau of Economic Analysis, U.S.
Department of Commerce; Bureau of Business
and Economic Research, The University of
Montana-Missoula; and Research and Analysis
Bureau, Montana Department of Labor and Industry.


Outlook for Butte-Silver Bow and Anaconda-Deer Lodge Counties

BUTTE AND ANACONDA COUNTIES

The construction impacts of the Advanced Silicon plant in Butte turned out to be much larger than anticipated, accounting for the sizable labor income increases in 1997 and 1998. The production workforce is smaller than the construction workforce, leading to the 1999 decline. The large Gross County Product figures for the Montana Power Company are due to high average labor productivity for the utility industry. These numbers may change as the company's recent reorganization becomes incorporated into the data. The recently announced plan to sell Montana Power Company assets may affect the Butte-Anaconda economy. But there are not yet enough details to accurately estimate the impacts.
 Percent of Population Age 65 and Older
County Rank Percent age 65 and older
Silver Bow 30 15.9
Deer Lodge 10 18.6
Beaverhead 45 12.7
Granite 26 16.2
 Actual and Projected Percent Change in Nonfarm
 Labor Income, Butte-Silver Bow and Anaconda-Deer
 Lodge Counties, 1992-2004 [In Constant 1998
 Dollars)
 Percent
92 4.1
93 1.8
94 0.5
95 3.4
96 -3.3
97 12.3
98 13.8
99 -2.9
00 2.2
01 2.3
02 1.6
03 1.9
04 2.1
 Gross County Product and Basic Industry Gross Product
 Butte-Silver Bow and Anaconda-Deer Lodge Counties, 1982-1999
 1999 Gross Product
 (chained 1992 dollars)
 Total grass county product $878
Total basic gross product $410 100%
Mining $108 26%
Selected manufacturing $24 6%
Utility HQ and related $208 51%
Other $2 [less than]1%
Nonresident travel $17 4%
Education and institutions $25 6%
Federal government $26 6%
Sources: Bureau of Economic Analysis, U.S. Department of Commerce;
Bureau of Business and Economic Research, The University of
Montana-Missoula; and Research and Analysis Bureau, Montana
Department of Labor and Industry.


CASCADE COUNTY

Outlook for Cascade County

Malmstrom Air Force Base and trade center activities account for more than one-half of Cascade County's economic base. Great Falls serves as a trade and service center for Northeast Montana, the region most dependent on agriculture. Productivity increases on farms and ranches have stabilized or possibly reduced employment. The rapid, nonfarm labor income growth in 1998 can be attributed to construction.
 Percent of Population Age 65 and Older
County Rank Percent age 65 and older
Cascade 40 13.4
Chouteau 9 18.9
Teton 27 16
Fergus 8 18.9
 Actual and Projected Percent Change in
 Nonfarm Labor Income, Cascade County
 1992-2004 (In Constant 1998 Dollars)
 Percent
92 3.7
93 0.8
94 1.4
95 2.2
96 3.5
97 0.3
98 5.0
99 3.6
00 2.9
01 2.2
02 1.3
03 1.6
04 1.8
 Gross County Product and Basic Industry
 Gross Product Cascade County, 1982-1999
 1999 Gross Product (Chained 1992 dollars)
 Total gross county product $1,675
Total basic gross product $564 100%
Nonresident travel $24 4%
Agriculture $63 11%
Malmstrom AFB $195 35%
Selected manufacturing $47 8%
Trade center activity $111 20%
Education & other $44 8%
Transportation $52 9%
Federal government $29 5%
Sources: Bureau of Economic Analysis, U.S.
Department of Commerce; Bureau of Business
and Economic Research, The University of
Montana-Missolua; and Research and Anaysis
Bureau, Montana Department of Labor and
Industry.


LEWIS & CLARK COUNTY

Outlook for Lewis & Clark County

The precipitous drop in employment during 1999 must be interpreted with a grain of salt. Last year, there were also decreases in the latest employment data, but later revisions moderated the trend. Helena depends on state and federal government and neither is likely to be a growth engine in the near future. However, recent construction activity associated with the military has boosted the economy and is likely to continue to do so for at least another year.
 Percent of Population Age 65 and Older
County Rank Percent age 65 and older
Lewis & Clark 47 11.9
Jefferson 52 9.7
Broadwater 25 16.2
Meagher 12 18.2
Powell 39 13.6
 Actual and Projected Percent Change in Nonfarm
 Labor Income, Lewis & Clark County
 1992-2004 (In Constant 1998 Dollars)
 Percent
92 6.4
93 3.6
94 5.3
95 3.9
96 3.5
97 0.5
98 4.7
99 2.5
00 2.3
01 2.2
02 1.6
03 1.8
04 2.0
 Gross County Product and Basic Industry Gross Product
 Lewis & Clark County, 1982-1999
 1999 Gross Product
 (Chained 1992 dollars)
 Total gross county product $1,310
Total basic gross product $537 100%
Federal government $88 16%
Trade center activity $75 14%
Transportation and utilities $79 15%
State government $187 35%
Agriculture and other $22 4%
Selected manufacturing $46 9%
Education $40 7%
Sources: Bureau of Economic Analysis,
U.S. Department of Commerce; Bureau
of Business and Economic Research,
The University of Montana-Missoula;
and Research and Analysis Bureau,
Montana Department of Labor and
Industry.


Outlook for Yellowstone County

Labor income growth has slowed slightly since the early 1990s. The spike in 1998 was caused by construction activity. In Yellowstone County, Billings continues as Montana's major trade and service center. Wholesale trade is one of the largest components of trade center activity in Billings, and there is still some worrisome softness in the latest data for this industry.
 Percent of Population
 Age 65 and Older
County Rank Percent age 65
 and older
Yellowstone 42 13.1
Park 33 14.9
Madison 28 16
Sweet Grass 16 17.8
Custer 21 17.1
 Actual and Projected Percent
 Change in Nonfarm Labor Income,
 Yellowstone County
 1992-2004 (In Constant 1998 Dollars)
 Percent
92 4.3
93 3.9
94 3.3
95 1.9
96 2.2
97 2.3
98 6.3
99 2.8
00 3.2
01 2.4
02 1.6
03 1.9
04 2.1
 Gross County Product and
 Basic Industry Gross Product
 Yellowstone County, 1982-1999
 1999 Gross Product
 (Chained 1992 dollars)
 Total gross county product $3,030
Total basic gross product $1,115 100%
Agriculture and mining $68 6%
Oil and refining $238 21%
Trade center activity S376 34%
Nonresident travel $49 4%
Higher education $22 2%
Transportation $150 14%
Selected manufacturing $95 9%
Federal government $117 10%
Sources: Bureau of Economic Analysis, U.S. Department of Commerce; Bureau
of Business and Economic Research, The University of Montana-Missoula;
and Research and Analysis Bureau, Montana Department of Labor and
Industry.


GALLATIN COUNTY

Outlook for Gallatin County

Gallatin County has consistently posted some of the fastest income growth during the 1990s. The Bozeman area has been a center for high-tech manufacturing, and the recent improvement in international markets has led to growing sales for many of these firms. Unemployment rates in Gallatin County have been among the lowest in Montana's major cities. Much of the nonresident travel industry is located outside Bozeman, in Big Sky, and West Yellowstone.
 Percent of Population Age 65 and Older
County Rank Percent age 65 and older
Gallatin 54 8.8
Park 33 14.9
Madison 28 16
Stillwater 38 14
 Actual and Projected Percent Change in Nonfarm
 Labor Income, Gallatin county
 1992-2004 (In Constant 1998 Dollars)
 Percent
92 7.6
93 6.9
94 7.8
95 6.0
96 6.3
97 4.9
98 7.8
99 4.8
00 4.9
01 4.0
02 3.1
03 3.4
04 3.5
 Gross County Product and Basic Industry Gross Product
 Gallatin County, 1982-1999
 1999 Gross Product
 (Chained 1992 dollars)
 Total gross county product $1,400
Total basic gross product $505 100%
Agriculture $51 10%
Trade center activity $85 17%
Nonresident travel $90 18%
Selected manufacturing $113 22%
Mining, rail, & other $11 2%
Montana State University $120 24%
Federal government $35 7%
Sources: Bureau of Economic Analysis, U.S. Department of Commerce;
Bureau of Business and Economic Research, The University of
Montana-Missoula; and Research and Analysis Bureau,
Montana Department of Labor and Industry.


Outlook for Ravalli County

Gross County Product data does not, unfortunately, take into account the commuters who live in Ravalli County but work in Missoula. We have presented commuter earnings as an addendum to the Gross County Product graph. Much of the recent population growth was in northern Ravalli County and represents an expansion of the Missoula area economy. Population growth will continue, but at slower rates. Wood products is the major basic industry as measured by Gross County Product.
 Percent of Population
 Age 65 and Older
County Rank Percent age 65 and older
Ravalli 35 14.6
Missoula 51 10.6
Sanders 31 15.6
Mineral 41 13.4
Granite 26 16.2
 Actual and Projected Percent
 Change in Nonfarm
 Labor Income, Ravalli County
 1992-2004 (In Constant 1998 Dollars)
 Percent
92 11.3
93 8.7
94 10.1
95 4.0
96 5.7
97 4.1
98 9.3
99 2.9
00 3.6
01 3.8
02 3.0
03 3.2
04 2.8
 Gross County Product and
 Basic Industry Gross Product
 Ravalli County, 1982-1999
 1999 Gross Product
 (Chained 1992 dollars)
 Total gross county product $415
Total basic gross product $112 100%
Nonresident travel $6 5%
Agriculture and mining $7 6%
Wood products $30 27%
Trucking $13 12%
Medical research $16 14%
Other manufacturing $16 14%
Federal government $24 21%
Sources: Bureau of Economic Analysis, U.S. Department of
Commerce; Bureau of Business and Economic Research,
The University of Montana-Missoula; and
Research and Analysis Bureau, Montana Department of
Labor of Industry.


HILL & VALLEY COUNTIES

Hill and Valley County

Railroads and agriculture dominate the economic base in both Hill and Valley counties. In Hill County, the recent increase in mining is primarily due to the oil and gas industry. Hill County trade center activity is mostly associated with health care. In Valley County many Glasgow merchants serve residents of nearby rural areas, but the outflow of shoppers and others is larger to Havre and even to Great Falls and Billings.
 HILL & VALLEY COUNTIES
 Gross County Product and Basic Industry
 Gross Product, Hill County, 1982-1999
 1999 Gross Product
 (Chained 1992 dollars)
 Total gross county product $388
Total basic gross product $191 100%
Agriculture $55 29%
Railroad $89 47%
Trade Center Activity $6 3%
Communication $3 2%
Nonresident travel $1 [less than] 1%
Mining $20 10%
Higher Education $7 4%
Manufacturing $2 1%
Federal government $8 4%
 Percent Change in Nonfarm Labor Income,
 Hill County, 1992-2004 (In Constant $1999)
 Percent
92 -1.0
93 1.0
94 1.0
95 2.0
96 4.6
97 0.9
98 1.8
99 2.3
00 1.8
01 1.7
02 1.8
03 1.5
04 1.6
 Gross County Product and Basic Industry
 Gross Product, Valley County, 1982-1999
 1999 Gross Product
 (Chained 1992 dollars)
 Total gross county product $157
Total basic gross product $64 100%
Agriculture $21 33%
Railroad $27 42%
Mining $6 9%
Nonresident travel $3 5%
Federal government $7 11%
 Percent Change in Nonfarm Labor Income,
 Valley County, 1992-2004 (In Constant $1999)
 Percent
92 2.0
93 1.4
94 -0.7
95 0.3
96 3.1
97 1.7
98 1.5
99 1.7
00 1.4
01 1.3
02 1.7
03 1.3
04 1.5


Paul E. Polzin is director of The University of Montana-Missoula Bureau of Business and Economic Research.
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Author:Polzin, Paul E.
Publication:Montana Business Quarterly
Geographic Code:1USA
Date:Mar 22, 2000
Words:5159
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