March 2008 Newsletter - by Jack Spears

MONTANA 2008 ECONOMIC OUTLOOK

Investment and education are the keys to Montana's bright future. Sixth in the nation in wage growth rate, eighth in GDP with only 3.6% unemployment, Montana's economy is red hot.... Tourism, Mining, Manufacturing, Agriculture, Government and Health Care are the six major engines driving this economy. Fortunately, each is running smooth and strong, with no downturns in sight. Wheat is selling at eight to nine dollars per bushel, a historical high, and beef (cattle) is stable. China and other Asian countries are driving both mining (oil, lead, copper, zinc, nickel) and manufacturing (wood and paper products). Meanwhile tourism, Montana's single most reliable engine, continues to grow at a very steady two percent or more per year....

Nearly eleven million tourists visit Montana each year. In 2007, Yellowstone National Park realized its' largest tourism year ever, at over 3,000,000 visitors. Glacier National Park saw over 2,000,000, bringing the total to about 5,500,000.... With affordability, increased retiree numbers every year ("baby boomers"), two national parks and the most naturally beautiful geography anywhere in these United States, Montana will continue to attract more and more tourists and new residents.

Montana's last two major economic booms were in the late 1940s into the early 1950s and in the 1970s. Our current boom shows slightly lower overall growth, but is steadier and lasting much longer. Construction is down, but only slightly compared to the United States as a whole.

Our popular and highly ranked university system graduates more Bachelor Degrees per one hundred students than any other state. High school seniors taking the SAT for college entry scores rank among the top ten states overall in the nation.

And .... Montana is affordable, with median home prices ranging from $100,000 to $250,000 ($165,700 median price). The national lending affordability index, which measures a family's monthly income against their housing expenses, is showing many states and area at six to nine times, against a base line (safe multiplier) of 3.5 to 4… Montana easily fits into that safe multiplier range.

While Florida, California and Nevada have seen home prices drop by twenty to thirty percent since the 2005 pinnacle, and the national average is over ten percent per year, Montana single family home prices are stable. Middle upper class families with two or three homes in different locations, have also had a positive impact on Montana's real estate economy. In 2004, 2005 and 2006, second and third homes represented over twenty percent of total new home construction.

Most economists are projecting Montana's real growth at four percent or more this year, and into the foreseeable future.