The Economic Outlook for the U.S. and Montana Patrick M. Barkey, Director Bureau of Business and Economic Research University of Montana

The U.S. Economic Expansion: Nine Ten Years and Counting  U.S. growth surge is a global outlier Taxes and spending: higher growth, bigger deficits Inflation nowhere in sight Trade and housing are laggards, consumer and business spending carrying the load The services economy is in charge, manufacturing growth is stalling Interest rates on the way up down   

There Was an Acceleration in U. S There Was an Acceleration in U.S. Growth Last Year Real Gross Domestic Product (GDP) Growth, Percent, Actual and Forecast Forecast 2016 2017 2018 2019 2020 Source: U.S. Bureau of Economic Analysis and IHS Markit

Advanced Economies Expected to Decelerate as Global Growth Levels Off Percent Advanced Economies Percent Change in Real Gross Domestic Product, Actual and Forecast Source: International Monetary Fund

Global Growth Has Been Good, But Challenges Emerge Number of Advanced Economies in Recession, by Year, 1991-2016 107 Recessions 19 Predicted Recessions Source: International Monetary Fund

Materials & Foodstuffs Mixed Story for Most Important Commodities Select Commodity Prices June 2019 vs. 5-Year High and Low 370.69 [Current] Materials & Foodstuffs (as of June 2019) Low High 297 564 ($ per Thousand BF) Framing Lumber 359 current Low High 2.03 3.23 ($ per pound) Copper 2.67 Metals & Energy (as of June 2019) 1.59 2.72 ($ per Pound) Beef 2.03 4.89 3.34 6.49 ($ per bushel) Wheat, SRW 4.62 1.81 2.87 Barley 2.73 502.52 1530.71 ($ per troy oz.) Palladium 1443.85 0.69 1.60 ($ per pound) Zinc 1.18 30.34 102.99 ($ per Barrel) Oil 54.67 4.75 Source: World Bank, USDA, Random Lengths Source: International Monetary Fund

Is Montana Invited to the National Economic Party? Growth since 2016 has continued Labor market continues to tighten State revenue growth has been good Global economic environment has worsened Dark clouds looming for Powder River basin coal Recovery for Montana’s agriculture and energy producers has not been smooth Tech is an under-reported good news story

State Economic Earnings Slowed in 2018 Percent Growth, Inflation-Corrected Nonfarm Earnings, Montana Source: U.S. Bureau of Economic Analysis

Recent Growth is Broad Based Change in Inflation-Corrected Wages by Industry, Montana, Through 2019Q1 $Millions Source: Quarterly Census of Employment and Wages

Billings and Non-Urban Counties Performing Better Change in Inflation-Corrected Wages by County, Montana, Through 2019Q1 $ Millions Source: U.S. Quarterly Census of Employment and Wages

Montana Labor Market Still Tightening Unemployment Insurance Claims, 2017-19 2019 2018 Source: Montana Department of Labor and Industry

Growth in Population of Prime Age Workers Has Stagnated Montana Population by Age-Category, Selected Years Source: UM Bureau of Business and Economic Research

Montana Growth is Low by Western Standards Percent Growth in Real Nonfarm Earnings, 2017 5.6% 2.7% -0.9% 4.7% 4.3% -0.4% -0.1% 4.5% 3.8% 4.9% 3.9% More than 4.3% 2.2% - 4.3% 0.7% - 2.2% Less than 0.7% Source: U.S. Bureau of Economic Analysis

Montana Growth is Low by Western Standards Percent Growth in Real Nonfarm Earnings, 2018 5.7% 1.5% -1.9% 2.8% 3.9% -1.6% -2.0% 3.8% 4.6% 3.5% 2.9% More than 4.3% 2.2% - 4.3% 0.7% - 2.2% Less than 0.7% Source: U.S. Bureau of Economic Analysis

Personal Income Growth Compares Better Here Percent Growth in Real Personal Income, 2018 4.7% 2.9% 2.5% 2.8% 3.3% -2.1% 2.4% 3.6% 4.2% 3.6% 2.6% More than 3.3% 2.4% - 3.3% 2.0% - 2.4% Less than 2.0% Source: U.S. Bureau of Economic Analysis

Income is Much More Than Earnings Montana Real Personal Income, 2017 and 2018 Transfers Property Earnings

Transfer Income Punches Above Its Weight Growth in Montana Real Personal Income, 2018 Earnings Property Transfers

Outlook for Montana’s Key Industries Tech related businesses and construction remain healthy, especially in western Montana Farm bill passage helps farmers Uncertainties for energy and natural resource producers Real estate and financial institutions set for another good year Transportation industries slowly improving Tariff and trade challenges ahead?

Growth in Nonfarm Earnings, Montana, 2016-22 Percent Actual Projected Source: BBER and U.S. Bureau of Economic Analysis Source: BBER and U.S. Bureau of Economic Analysis

Demographic Challenges and Opportunities for Montana Patrick M. Barkey, Director Bureau of Business and Economic Research University of Montana

Montana Population Tree 46 Year: 2001 Males Females

Montana Population Tree 56 Year: 2011 Males Females

Montana Population Tree 66 Year: 2021 Males Females

Montana is the Oldest Western State Median Age, 2017 37.6 39.8 35.1 39.2 35.9 36.8 37.0 37.7 30.5 36.5 36.1 More than 37.9 36.9 – 37.9 36.3 – 36.9 Less than 36.3 Source: U.S. Bureau of Economic Analysis

Median Age, 2017

$49 mil $128 mil $57 mil -$20 mil Source: Internal Revenue Service

$254 mil $352 mil Source: Internal Revenue Service

-$32 mil $4 mil Source: Internal Revenue Service

$30 mil $62 mil Source: Internal Revenue Service

-$42 mil -$116 mil Source: Internal Revenue Service

$63 mil Source: Internal Revenue Service $113 mil

$97 mil Source: Internal Revenue Service $105 mil

$244 mil $288 mil Source: Internal Revenue Service

$4.9 mil -$7.8 mil Source: Internal Revenue Service

-$9.4 mil Source: Internal Revenue Service -$6.5 mil

People are Leaving Largest U. S. Cities Net Domestic Migration, U. S People are Leaving Largest U.S. Cities Net Domestic Migration, U.S., by County Size, 2011-18

Demographic Challenges and Opportunities Ahead Migration trends can change population projections Labor force challenges likely to persist or worsen in coming years Some solutions to labor shortages are better than others Time for thinking outside the box?