Gallatin County has been the economic growth leader in Montana since the recovery began from the Great Recession. Yellowstone County has been in a solid second place. But this is hardly a new outcome, as an examination of historical growth rates for the state’s largest urban counties demonstrates.
Even though statewide growth rates experienced a big decline followed by a big rebound over the three decades from the 1970s to 1990s, the same six counties were ranked in the top six spots over the 30-year period. Only their rank order changed from one period to the next.
For example, Ravalli County ranked sixth in the 1970s, second in the 1980s and first in the 1990s. Yellowstone County was second in the 1970s, but then dropped to sixth in the next two decades. It turns out that the post-2000 period is the real exception.
Missoula and Ravalli counties, which were solidly in the upper echelon from 1970 to 2000, dropped to being the slowest growing after 2000. On the other hand, the Butte-Anaconda area, which was last during each of the three earliest decades, rose to number two after 2001.
It is always difficult to try and summarize a decade of economic events in one or two sentences. The most important reason for the downward shift in the Missoula and Ravalli economies were the declines in the wood products, log home and construction industries. In particular, the housing bust hit the log home and construction industries, and the closure of the Smurfit-Stone plant in Missoula eliminated 500 very well-paying jobs.
On the other hand, the improved ranking of the Butte-Anaconda economy may be due to the worldwide commodity boom which led to the reopening of the old Anaconda mine. The future of the mine may be uncertain in light of the recent reversal in global commodity prices.
Changing Migration Trends
Montanans may feel a blush of pride when a newcomer mentions our state’s way of life and how natural beauty draws out-of-staters. These attractions do influence potential migrants. But when we look at the data for net migration, we see that changes in net migration are influenced more by economic conditions rather than a region’s physical attractiveness.
Statewide net migration is highly correlated with economic growth. Net migration dipped to 635 persons per year during the 2001-02 recession. It also declined in the trough year of the 2007-09 recession, to a net of 2,754 new arrivals statewide in 2009. During the periods of economic growth in the years 2003-07 and 2011-14, net migration was in the range of 5,000 to 6,500 per year.
It is a bit surprising that the lowest net migration occurred during the relatively mild 2001-02 recession rather than the 2008-09 downturn, which has been called the worst in a generation. One contributing factor could be that the 2001-02 recession was concentrated in the high-tech sector, much of which was located in California. With more than 30 million people and located relatively nearby, California has traditionally been a major source of migration for Montana.
Mobility typically declines during poor economic times. The net migration trends for the state’s major urban areas are much more difficult to categorize. For example, the 2009 recession impacts were much greater than those in 2001-02 in Flathead, Gallatin and Ravalli counties. Missoula County, on the other hand, experienced a relatively stable number of annual net arrivals of new residents in both recession and recovery periods.
A New Role for the Federal Government
The federal government has long been an important component of the Montana economy. In addition to providing about 12,000 Montanans with well-paying jobs, the federal government acted as an economic buffer to more volatile sectors. During recessions or other periods when basic industries would decline, the federal sector could be counted on for stability or even modest growth.
Things may be changing.
Federal employment has declined every year since 2011. By 2014, there were almost 7 percent fewer federal workers than in 2011. Real earnings for the federal sector also declined, but by a smaller percentage.
Not only have the declines been persistent over the last half decade, they are occurring statewide. Federal government employment has decreased in every year since 2011 in every urban area except Lewis and Clark. The largest decrease was the 16.5 percent decline in the Butte-Anaconda area. The other decreases were 5 to 11 percent.
What is going on here? To be honest, we really do not know yet. Are the declines occurring in all agencies? Or are they concentrated in a few government activities? We hope to have answers for these and other questions in the future.