Montana's Economic Outlook.

• Author: Polzin, Paul E.
• Position: Forecasts, United States - Statistical Data Included

In the past 30 years, there have been a number of economic fads or trends touted as fundamentally restructuring the Montana economy. Among them were the "original" energy shortage of the 1970s, the growth of service industries, and, most recently, the internationalization of the world economy.

It is not that these were unimportant events, or that they had no impact in Montana. It's just that we must keep straight what is changing, and what is not changing. Three important characteristics of Montana's economy include:

* Physical isolation from major markets. The bulk of the U.S. population continues to live east of the Mississippi. The fastest growing portion of the country is the Southwest. Both of these areas are far from Montana.

* A small and dispersed population.

* More dependance on natural resources than almost any other region in the country.

These characteristics do not change and must be taken into account when analyzing the impact of major events (such as the energy crisis) and new occurrences on the state's economy.

For example, one occurrence -- Internet technology (IT)--has penetrated even the most remote areas of Montana. While IT provides Montanans with the opportunity to conduct international business from anywhere in the state, it does not eliminate all the impacts of isolation. Montana is still a state that is isolated from major markets.

A second example is the oft-heard claim that Montana's economy is no longer dependent on natural resources. We will now look at two sets of data and see that there has been a dramatic change in how Montanans work, but not in what we produce.

GSP and Employment

There are many ways to measure Montana's economy. We will look at Gross State Product (GSP), which represents the value of production (both goods and services) in Montana, and employment, which shows how residents make a living.

No matter how it is measured, in terms of GSP or employment, the Montana economy is larger now than it was 18 years ago. In 1982, the GSP was about $14 billion and in 2000 it was roughly $20 billion. That calculates to a 2 percent growth rate, and it's one of the ways the 2 percent per year figure for the sustainable growth in Montana is assessed.

The major changes in the Montana economy, however, have been in terms of employment and not GSP. In other words, there has not been much change in what we produce, but there has been a big change in how we produce it.

Take, for example, the basic industries. The...