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Recession not as bad in Montana as in rest of United States.

The recession has been less severe in Montana than in other parts of the nation and a University of Montana economist expects this pattern will continue.

Paul Polzin, director of UM's Bureau of Business and Economic Research made this forecast as part of the Economics Montana program, cosponsored by the bureau, the Office of the Governor, and the Montana State Legislature.

Since the recession began last summer, the U.S. economy has slowed noticeably, Polzin says. U.S. non-farm labor income was stable during 1990, while the corresponding figures for Montana showed growth of 0.7 percent, he says.

"In 1991, we expect Montana's economy to continue to grow modestly, while the U.S. non-farm labor income is expected to decline," Polzin says.

During most previous recessions, Polzin says, Montana has been impacted less than other states because of its dependence on industries such as agriculture, which has ups and downs

These forecasts are part of Economics Montana, a program cosponsored by the UM Bureau of Business and Economic Research, the Office of the Governor, and the Montana State Legislature. that do not usually correspond to the national business cycle.

Western Montana is being hit harder by the recession than other parts of the state because the forest products industry is concentrated there, Polzin says. Unlike agriculture, national business cycles do impact this industry, he says.

Last winter's six-week closures by the state's two largest Champion operations are examples of recession-related impacts, he says.

Polzin says that the recession may be nearing an end and that the nation is beginning to recover. This means that conditions in Montana should improve during the last half of 1991, he says.

"After the recession we will return to the more normal situation where economic growth in Montana will be less than the U.S. average," Polzin says. "In 1992, we forecast that Montana will increase 2.5 percent, as compared to a national average of 4.3 percent."

Personal income, one of the major determinants of retail sales, will increase slightly less than 2 percent per year in 1992 and 1993, Polzin says.

This growth will average about 1.5 percentage points less than the national average, he says.

Montana's job market will improve slightly after the recession ends, Polzin says. After little or no growth in the recession year 1991, Montana non-farm wage and salary jobs should increase by about 5,000 per year in 1992 and 1993, he says.
 Table 1
 Economic Trends for the U.S. Economy,
1987 - 1993
Actual and Projected as of May 1991
 ---------Actual------- ----Projected--
- 1987 1988 1989 1980 1991 1992 1993
Real GNP
 percent change 3.4 4.5 2.5 1.0 0.0 3.6 3.1
inflation (CPI - U)
 percent change 3.7 4.1 4.8 5.4 4.3 3.9 5.0
Interest ate, percent
 90-day T-Bill, 5.8 6.7 8.1 7.5 5.7 6.2 6.9
 Mortgage rate 9.3 9.3 10.1 10.0 9.6 10.0 10.3
Housing tarts,
 millions 1.6 1.5 1.4 1.2 1.0 1.4 1.4
Unemployment rate,
 percent 6.2 5.5 5.3 5.5 6.7 6.2 6.0

Source: Wharton Econometric Forecasting Associates (May 1991). Tabular Data Omitted
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Economics Montana
Publication:Montana Business Quarterly
Article Type:Column
Date:Sep 22, 1991
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