By SEABORN LARSON/Daily Inter Lake
According to economists and real estate experts, Montana and the Flathead Valley might be in for another positive year.
Joe Mahon, an economist and analyst for the Federal Reserve Bank of Minneapolis, on Wednesday headlined the 14th annual Flathead Valley Economic Forecast in Kalispell where several economic experts looked at what’s expected in 2016.
Mahon opened by asking who in the room was optimistic about the economic outlook for this year and nearly everyone raised their hands. That response was similar to surveys completed by the Federal Reserve in recent months, where most business owners in the Ninth District said they were also optimistic about 2016, but less so than in 2015.
The Ninth District covers Minnesota, North and South Dakota, Montana and portions of Wisconsin and Michigan.
“Things might be more positive here than in other parts of the state,” Mahon said after the presentation. “As for business owners here, it might be interesting for them to hear that elsewhere in the region, the outlook is a little more moderate.”
The Federal Reserve uses two tools in making economic forecasts: a computer-generated statistics model that bases the forecast on how certain industries have moved in the past, and surveying business owners and individuals about things such as wages, expansions and employment.
Since the last forecast was released by the Fed in July, the data showed that employment, home building and personal income should continue growing at a moderate rate in the Ninth District.
“In case you didn’t know, the recession has been over since mid-2009,” Mahon said. “The recovery has been slower than we like, but that’s been the story for the last few years.”
The statistics model used by the Fed expects Montana employment to grow by about 1.9 percent, although Mahon said surveys showed that Montana had the lowest outlook in the region in terms of expecting additional hiring in 2016.
The model expects Montana’s unemployment to dip to 3.5 percent in 2016, but Mahon said he’s not positive that will be true by the end of the year.
“I think that’s pretty optimistic,” he said. “That’s a historically low unemployment rate.”
While surveyed business owners have said they’re having trouble finding and retaining adequate workers, Mahon said few owners expect to substantially increase wages. Most of the business owners surveyed said they plan to raise pay 2 or 3 percent in the next year.
Five other presenters followed Mahon’s talk with a tighter focus on the Flathead Valley.
Brad Eldredge, vice president of Instruction and Student Services at Flathead Valley Community College, and Maya Tsidulko, institutional research analyst at FVCC, covered Flathead Valley employment trends over the last 10 years.
Several local industries took a harder hit than most of the country in 2009, Tsidulko said. According to data from the U.S. Bureau of Labor and Statistics, construction jobs were nearly cut in half in 2009. Those numbers have regained some strength since 2011, coming up almost 9 percent between 2014 and 2015.
Health care and social assistance, which account for about 15 percent of jobs in the Flathead, have been on the rise without losing step, growing at higher rates than in Montana and the United States.
“We do know that because of the increasing population of baby boomers retiring in recent years, the regional health-care center has been expanding, which is great,” Tsidulko said.
Eldredge said the Flathead Business Roundtable has been able to collect data that points to higher wages and an employment growth of around 2 to 3 percent this year.
“When we talk to business leaders in the Flathead, they usually have more timely information than the government,” he said. “It seems that the business community believes we’re going to have a pretty good year.”
Ellie Clark from Clark Real Estate Appraisal and Barbra Bennett, with Bennett Appraisal Services discussed the outlook for commercial and residential real estate.
“In recent years, pricing has increased as well as demand. That’s usually a sign of a good market,” Clark said.
New construction numbers have also climbed since 2009, but they’re not as high as they could be, Bennett said.
“There’s been consistent behavior in the last three years, but it’s still below the peak of 2006 and 2007,” she said.
Overall, Bennett and Clark said 2016 residential real estate should see decreases in demand and new construction in Whitefish while Columbia Falls should see an increase in both. Kalispell should see a sustained growth in demand over the coming year, while Clark and Bennett do not expect a significant change in new construction.
To close the seminar, Montana West Economic Development CEO Kellie Danielson presented a few economic factors concerning Canada. Alberta, currently in a mild recession, is expecting its economy to shrink 1.2 percent in 2016. At the same time, British Columbia, which relies less on oil production, is expected to grow.
The Canadian dollar, which is currently valued at 72 cents against the U.S. dollar, is expected to average around 78 cents through 2016. There are a few optimistic forecasts on the horizon, Danielson said, while Canadian economists expect the loonie to rise to an average 82 cents in 2017 and 2018.
After the seminar, Mahon said he walked away with as much input as those attending the event. Things he learned through the other presentations Wednesday morning will be brought back to the Federal Reserve to better understand this region’s economic status.
“I learned a little bit more about the real estate market which I’ll share with my colleagues,” Mahon said. “I think it’s also interesting to hear about how much this region is affected by interaction with Canada. That was one of the most interesting things to hear about.”
Reporter Seaborn Larson may be reached at 758-4441 or by email at [email protected].