State's income growth continues to outpace nation's

Montana State Roundup

Published October 1, 1994  | October 1994 issue

Not only did Montana lead the nation in per capita income growth last year, nearly doubling the national average, but it did so while also doubling the national rate of population growth.

At 6.3 percent, Montana's per capita income growth led the country, which averaged 3.2 percent, according to the U.S. Commerce Department. In contrast, the Midwest states of North Dakota, Nebraska, Iowa and Minnesota all finished in the bottom 10—owing largely to declines in farm income from last year's floods.

But Montana's gains are no fluke of weather, according to state officials; the state also fared well in 1992 income growth. But those officials were also quick to temper the good news with the reminder that Montana has suffered through slow periods in recent years while much of the rest of the country was expanding. Montana is "first in, last out," when it comes to recessions, says David Owen, president of the Montana Chamber of Commerce. "When you're starting with not much of a base, a dollar increase here is a lot more significant than in other places."

While perusing his numbers to explain Montana's recent income growth, Paul Polzin, the director of economic research at the University of Montana, Missoula, at first theorized that part of the reason for the per capita gains was that Montana's population was probably not growing as strongly as the nation's. But Polzin's numbers told a different story: Montana's 1993 population is 839,000, up 2 percent from the previous year and twice the growth rate of the nation. By those measures, Polzin says Montana's per capita income growth reflects "a big increase in income."

The main reason for that income growth, according to Polzin and Owen, is likely the recent gains in the lumber industry, which benefited from the high prices fueled by a construction boom. That construction boom, notably in housing, has not only helped Montana's wood products industries, but also resuscitated its own housing industry, according to Owen. The timber products and housing boom has sustained Montana's economy for two years, Owen says, but recent increases in interest rates may slow growth. "In the next two or three years," he says, "we'll see if this economy is for real."

Polzin also credits small manufacturing growth for part of Montana's recent success, although only anecdotal evidence exists for those supposed gains. And part of that anecdotal evidence comes from the same source of much of Montana's population gains: in-migration, a phenomenon that has swept much of the Rocky Mountain region. "What's happening here is happening all over the inter-mountain West," Polzin says of Montana's economic and population gains.

David Fettig