Montana's Cities and Regions: Seeing Beyond the Pandemics Grip.

• Author: Barkey, Patrick M.
• Position: THE YEAR IN REVIEW

COVID-19's icy grip left no corner of the state's cities and regions untouched, yet it has unfolded in a way that bears little resemblance to previous economic downturns. A recession that has humbled once thought to be recession proof industries, like health care, while at the same time pumping up demand for housing and durable goods--which generally suffer when economic uncertainty spikes--throws a curve ball at historical patterns of economic vulnerability.

There have been two distinct phases of recent regional economic performance in Montana: pre- and post-COVID. The post-COVID regional pattern does not display the same degree of heterogeneity that was experienced in growth before the pandemic came on. The declines in payroll employment and in wages that occurred in the first two quarters of 2020 for the state's largest urban areas, shown in Figure 1, display only slight differences between areas in what was a very painful contraction.

All of the 2020 declines shown in the figure were historically large. The small differences between cities largely stem from the relative size of the accommodations and food services in their local economies, which bore the brunt of COVID-related business declines. Public administration, which generally fared better, is another factor explaining regional differences, with Helena performing slight better in this regard.

On the other hand, the pre-COVID patterns of growth between Montana's larger counties continue to exhibit considerable variability. The growth in inflation-corrected (real) nonfarm earnings in 2019 across the state's seven largest counties, shown in Figure 2, divides the urbanized counties into three groups.

The High-Flyer: Gallatin County

Gallatin County in southwestern Montana has been a high growth area for the better part of two decades, excepting the real estate collapse that toppled its growth during the Great Recession. Inflation-corrected nonfarm earnings, a good measure of local economic activity, has averaged annual growth of 6.3% since 2013. Only Madison County, immediately adjacent to Gallatin to the west, topped that growth mark over the same time period.

The Bozeman area's strength in recent years has received a boost from high-tech, professional services and manufacturing growth. This adds to its base as a university town and as gateway to the Big Sky Ski Resort and Yellowstone National Park. Its airport, which is the state's largest, has recovered 50% of the passenger volume...