Montana state and U.S. economic outlook. Presented by Dr. Patrick Barkey, director of the Bureau of Business and Economic Research at the University of Montana. Economic Outlook Seminars 2011.

1. U.S. and Montana
Economic Outlook:
Stronger Growth Ahead
Patrick M. Barkey, Director
Bureau of Business & Economic Research
The University of Montana

2. Short‐Term Optimism,
Long‐Term Concerns
Short‐Term Long‐Term
• Robust growth in • Stimulus hangover
emerging economies • Tax increases ahead
• Corporate profits • Solvency of states
strong, spending • Financial regulation:
awakening did we get it right?
• More tax stimulus
• Consumer debt
stabilizing

3. Divergent Growth,
Divergent Policies
Slow growth coming out of recession
New tax stimulus, aggressive U.S.
Fed action
On the brink of a second financial crisis due to
default risks of Greece and other countries
Europe Immediate and painful fiscal
contractions underway
Fast growth, rising inflation,
appreciating currencies Emerging
Higher interest rates and Economies
active currency intervention

4. Manufacturing Growth Since 2000
in Emerging Regions
Non‐Japan Asia
Central and
Eastern E.U.
Latin America
Advanced
Indices of Industrial Production, 2000 = 100
Source: CPB Netherlands Bureau for Economic Policy Analysis

5. Growth is Reflected
in Commodity Prices
Index
(January 2003 = 100)
Oil
Copper
Lead
Zinc
Wheat
Source: International Monetary Fund

6. The U.S. Outlook
for 2011
• Depreciating dollar, faster growth abroad will
boost exports
• Temporary cut in payroll taxes, extension of
depreciation incentives gives an extra push
• Inflation is a non‐problem
• 3 percent growth will finally chip away at
unemployment
• Risks to forecast are now more balanced
• Optimism fades beyond 2013

7. Nonfarm Wage and Salary
Employment, Montana and U.S.
Index, Nov 2008=100
U.S.
Montana

8. Montana Income Tax Withholding
12‐Month Totals
$ Millions
February 1, 2011
$670.3 Million
July 1, 2008
$643.4 Million

9. Percent Growth in Wage and Salary
Disbursements by Industry
Total Nonfarm Construction Manufacturing
‐0.2%
‐5.5%
‐13.1%
2009 2010 2009 2010 2009 2010
101.6% 75.7% 84.2%
of 2007 4th of 2007 4th of 2007 4th
Quarter Level Quarter Level Quarter Level

10. Percent Growth in Wage and Salary
Disbursements by Industry
Health Care Public Administration
‐3.3%
4.8%
2009 2010 2009 2010
115.3% 120.4%
of 2007 4th of 2007 4th
Quarter Level Quarter Level

11. Labor Income and Basic Industries,
Montana
Prospects
Mining, 14% Strong Growth Potential
Wood and Paper, 5% Remains Depressed
Ag. and Related, 10% Good Prospects
Travel, 12% Recovering
Other Strong Growth Potential
Manufacturing, 16%
Transportation, 12% Recovering
Fed. Military, 9% Risks Remain
Fed. Civilian, 22% Mild Declines

12. Actual and Projected Percent Change
in Nonfarm Labor Income,
2008‐2014
Percent Actual Projected
‘01‐’07
‘10‐’14

13. Montana’s Energy Industries?
Mining, 14% Oil and Coal Prod.
Wood and Paper, 5%
Ag. and Related, 10%
Travel, 12%
Selected Refining
Manufacturing, 16%
Transportation, 12% Pipelines
Fed. Military, 9%
Fed. Civilian, 22%
Other Utilities

14. Coal Mining
NAICS 2121
2009 Employment = 946
Number of firms = 7

15. Petroleum
Refining
NAICS 32411
2009 Employment = 1,069
Number of firms = 5

16. Drilling Oil
and Gas Wells
NAICS 21311
2009 Employment = 333
Number of firms = 49

17. Support
Activities
for Oil and Gas
NAICS 213112
2009 Employment = 1,256
Number of firms = 159

18. Colstrip Steam
Electrical
Station
2009 Employment = 578
Number of firms = 1

19. Strong Job Growth in Most Sectors
Employment (Number of People), 2001‐2009
Support Activities
for Oil & Gas
Petroleum Refining
Coal Mining
Drilling Oil & Gas Wells
Pipeline Transportation

20. Montana’s Energy Industries

21. Rim Rock Wind Farm, Sunburst MT
Construction – 2 Years Operations
300 Workers / Year 22 Workers
$110,000 / Year $48,000 / Year

22. Actual and Projected Percent Change
in Nonfarm Labor Income,
2008‐2014
Percent Actual Projected
‘01‐’07
‘10‐’14

23. Local Economic Outlook