Montana not in recession, economist says at Tuesday’s forum | New

August 2, 2022

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Montana is not in a recession and is still enjoying strong job growth and wage gains above inflation, but things are slowing down significantly, said Patrick Barkey, chief economist at the Bureau of Business and Economics. Research.

Giving a mid-year economic update to Billings on Tuesday, Barkey noted that several things worked in Montana’s favor. The office is part of the University of Montana. Farm prices are up significantly from a year ago, rising revenues have resulted in an unprecedented $1.8 billion revenue surplus for the state government and pandemic-hit businesses are nearly fully reopened.

The challenge is persistent inflation that outlasts the state’s economic gains.

“We’re driving along the road, like we all are, and if you look in the rearview mirror, things just look dandy,” Barkey said. “When we look to the future, there are concerns. We are at a point where the economy is changing.

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Strong job growth, which was previously expected to extend through 2023, is now expected to decline significantly over the next three years. Consumer spending, positive in the short term, has moderated and is expected to decline further as the US Federal Reserve, attempting to cool the economy, continues to raise the interest rate at which banks lend to each other. The influence of these increases in lending rates is reflected upwards in the costs of mortgages, business loans and credit cards.

Barkey said his feeling is that the Federal Reserve’s lending rate increases to date have kept inflation down. Before previous recessions, lending rate increases were in step with the pace of inflation, but this time lending rates have been close to zero for years and only increased to 2.4 % after being unadjusted during the first quarters of inflation, which exceeded The Federal Reserve is trying to slow it down by making borrowing more expensive and therefore spending more substantial.

Simply put, there is plenty of room for the Federal Reserve to raise bank lending rates, which will not be popular.






Patrick Barkey of the University of Montana speaks about Montana’s economic recovery during the 2022 Mid-Year Economic Update hosted by the Bureau of Business and Economic Research at the DoubleTree in Billings on Tuesday morning.


AMY LYNN NELSON Billings Gazette


“We’re about to see an extraordinary year for Federal Reserve policy, because people won’t be happy, financial markets won’t be happy. If the Federal Reserve is really doomed to tame this increasingly entrenched inflation, which robs us all of our purchasing power, day after day, it won’t like it. There will be strong pressure to reverse due to weaker growth, which will shock a lot of people because we haven’t seen that lately. We’ve had tremendous growth, but I think we’re going to do better, Montana. Migration helps. I think housing markets are going to be stressed as a normal part of our supply chain.

As regulators try to cool spending on everything from wages to home purchases, other issues in the economy need to work themselves out. Last week, Ukraine exported wheat for the first time is an example of a supply problem improving in a way that should make grain more available and push prices down. Oil prices fall as expectations of increased demand decline to reflect recessionary spending patterns.

Barkey said wage growth has already slowed from the pace that led to a 35% year-over-year increase in income tax collections in 2020 and 2021. Another factor in the slowdown in income gains is the decline in federal stimulus payments seen in 2020 and 2021.