Montana's economy: the recession's shadow still lingers.

• Author: Barkey, Patrick M.

The Montana economy entered the new calendar year 11 months ago with plenty of promise. Sustained high prices for natural resource and energy commodities, supported by strong global demand, kept expansion plans on track for Montana producers. Healthy prices for most agricultural products kept farmers and ranchers happy. And the long-awaited return to normalcy in depressed housing markets across the state appeared to be just around the corner.

The economic performance of the state has largely delivered on that promise, based on the fragmentary data available at the time of this writing. But even as growth continues to spread and solidify across the state, important pieces of the economy remain far from healthy. And the national economy will turn in a more sluggish growth performance this year than it managed in 2012. This and other global economic developments make us a bit more measured as we re-examine Montana's growth prospects.

Recapping 2012's Economic Performance

With complete wage and salary data now available for 2012, a picture of growth across the state emerges very clearly. For a third consecutive year, growth in the eastern portion of the state, particularly in the rural counties contiguous with the North Dakota border, has outpaced the rest of the state. But a more dramatic telling of the primary event that has caused this growth--the oil and gas production boom in the Bakken--occurs when you examine growth across a wider geography.

As evidenced from the county-specific growth data depicted in Figure 1, a dense cluster of very fast growing counties straddles both sides of Montana's eastern border, with growth extending more deeply into North Dakota. While all of these counties saw growth exceeding 4.1 percent in inflation-corrected wages and salaries paid, some North Dakota counties in the oil patch saw growth exceeding 30 percent.

To say that the Bakken oil boom is the economic story of our generation would not be an understatement. North Dakota employers collectively paid $1.4 billion more in inflation-corrected wages and salaries in 2012 than they did the previous year. This increase far eclipsed the increases in larger states such as Utah ($600 million), Colorado ($600 million), and Montana ($400 million).

The big story for Montana's growth in 2012 was that for the first time since the recession, the more populous western counties have been pulling in the right direction. While growth remained slower in the west, the...