MISSOULA — The pandemic isn't over, but a new report from University of Montana researchers shows the state's economy with a strong recovery, thanks to consumer spending.
The 2022 report from Bureau of Business and Economic Research paints an interesting picture, reflecting back to the early days of the pandemic, a period the U-M researchers say was "as intense and frightening in Montana as any other state", but followed by an "equally amazing" recovery. They say Montana's economy has "vacillated between torrid and red hot", especially when it comes to wages and income fueling consumer spending.
"It has been a slog in some ways," BBER Director Patrick Barkey admits. "It's been a challenge. But it has not been anything like the prolonged below trend growth that we expected to see when the pandemic first hit."
I asked Barkey if the results had stemmed from the federal stimulus money or whether it's just a very dynamic market.
"Oh, there's no question," Barkey answered with hesitation. "I mean, the policymakers at the national level came into this downturn swinging in terms of fiscal response, which is what our term for spending by Congress, and also in terms of the Federal Reserve. So it was, you know, that we went in big. We went in early. In some ways we didn't go in very carefully, but that was actually also a plus, in my opinion."
As you would expect tourism is one of the bright spots, as is the boom in construction and housing. But with inflation in the Consumer Price Index hitting a number not seen since 1982, will we be able to afford things going forward.
But BBER researcher Robert "Tino" Sonara tells me there's more to the story than the CPI "basket" of products.
"And in many cases it's being driven by just a few things. Things that we might not necessarily buy every day," Sonora explained. "I think anybody who is trying to buy a car or a used car or a bicycle or whatever is having huge troubles over there. And inflation is very high in those sectors. But there's other sectors where inflation is actually not so high. And so it's easy to sort of glom onto one number. But in in some cases it it's being driven by a relatively small number of goods."
Sonora says the big question is whether the consumer spending, which fueled the recovery, could also have an impact in '22 and beyond.
"And now we're starting to see that savings is kind of falling off. And you know it could be that people, you know, are people ready to buy? Probably services, right? They're going to, they want to get out and buy restaurants, and they want to go to the movies and they want to go to Disneyland or whatever," Sonora said in an interview this week. "But I'm sort of seeing I'm thinking that, at least on the good side, that consumption might slow down. Particularly as some of the savings starts to to go away."
The Montana housing crisis will be the focus of the cross-state seminars which start January 25th in Great Fall and continue into mid-March. Signup and details are at the Economic Seminar website.