u.s. and montana economic outlook: stronger growth ahead
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Montana state and U.S. economic outlook. Presented by Dr. Patrick Barkey, director of the Bureau of Business and Economic Research at the University of Montana. Economic Outlook Seminars 2011.TRANSCRIPT
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U.S. and Montana Economic Outlook: Stronger Growth Ahead
Patrick M. Barkey, Director Bureau of Business & Economic Research
The University of Montana
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Short‐Term Optimism, Long‐Term Concerns
Short‐Term• Robust growth in
emerging economies• Corporate profits
strong, spending awakening
• More tax stimulus• Consumer debt
stabilizing
Long‐Term• Stimulus hangover• Tax increases ahead• Solvency of states• Financial regulation:
did we get it right?
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Divergent Growth, Divergent Policies
U.S.New tax stimulus, aggressive
Fed action
Europe
Emerging
Economies
Slow growth coming out of recession
Immediate and painful fiscal
contractions underway
On the brink of a second financial crisis due todefault risks of Greece and other countries
Higher interest rates andactive currency intervention
Fast growth, rising inflation, appreciating currencies
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Manufacturing Growth Since 2000 in Emerging Regions
Indices of Industrial Production, 2000 = 100
Source: CPB Netherlands Bureau for Economic Policy Analysis
AdvancedLatin America
Central and
Eastern E.U.
Non‐Japan Asia
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Growth is Reflected in Commodity Prices
Copper
Lead
Oil
Zinc
Source: International Monetary Fund
Index
(January 2003 = 100)
Wheat
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The U.S. Outlook for 2011
• Depreciating dollar, faster growth abroad will boost exports
• Temporary cut in payroll taxes, extension of depreciation incentives gives an extra push
• Inflation is a non‐problem• 3 percent growth will finally chip away at
unemployment• Risks to forecast are now more balanced• Optimism fades beyond 2013
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Nonfarm Wage and Salary Employment, Montana and U.S.
Index, Nov 2008=100
U.S.
Montana
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Montana Income Tax Withholding 12‐Month Totals
July 1, 2008$643.4 Million
February 1, 2011$670.3 Million
$ Millions
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Manufacturing
2009 2010
‐5.5%
84.2% of 2007 4th
Quarter Level
Percent Growth in Wage and Salary Disbursements by Industry
Construction
2009 2010
‐13.1%
75.7% of 2007 4th
Quarter Level
Total Nonfarm
2009 2010
‐0.2%
101.6%of 2007 4th
Quarter Level
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Percent Growth in Wage and Salary Disbursements by Industry
Public Administration
2009 2010
4.8%
120.4%of 2007 4th
Quarter Level
Health Care
2009 2010
‐3.3%
115.3%of 2007 4th
Quarter Level
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Labor Income and Basic Industries, Montana
Mining, 14%
Wood and Paper, 5%Ag. and Related, 10%
Travel, 12%
Other Manufacturing, 16%
Transportation, 12%
Fed. Military, 9%
Fed. Civilian, 22% Mild Declines
Risks Remain
Recovering
Strong Growth Potential
Recovering
Good ProspectsRemains Depressed
Strong Growth Potential
Prospects
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Actual ProjectedPercent
‘01‐’07
‘10‐’14
Actual and Projected Percent Change in Nonfarm Labor Income,
2008‐2014
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Montana’s Energy Industries?
Mining, 14%
Wood and Paper, 5%Ag. and Related, 10%
Travel, 12%
Selected Manufacturing, 16%
Transportation, 12%
Fed. Military, 9%
Fed. Civilian, 22%
Other
Oil and Coal Prod.
Refining
Pipelines
Utilities
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Coal Mining NAICS 21212009 Employment = 946Number of firms = 7
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Petroleum RefiningNAICS 324112009 Employment = 1,069Number of firms = 5
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Drilling Oil and Gas Wells
NAICS 213112009 Employment = 333Number of firms = 49
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Support Activities
for Oil and GasNAICS 2131122009 Employment = 1,256Number of firms = 159
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Colstrip SteamElectrical
Station2009 Employment = 578Number of firms = 1
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Employment (Number of People), 2001‐2009
Coal Mining
Petroleum Refining
Drilling Oil & Gas Wells
Support Activities
for Oil & Gas
Pipeline Transportation
Strong Job Growth in Most Sectors
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Montana’s Energy Industries
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Rim Rock Wind Farm, Sunburst MT
Construction – 2 Years300 Workers / Year$110,000 / Year
Operations22 Workers
$48,000 / Year
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Actual ProjectedPercent
‘01‐’07
‘10‐’14
Actual and Projected Percent Change in Nonfarm Labor Income,
2008‐2014
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Local Economic Outlook