Economists optimistic about 2016

Manufacturing, nonresident spending and a swelling health-care market are expected to cultivate another strong economic year for Montana and the Flathead Valley, economists said at Friday’s 2016 Economic Outlook seminar.

“The real uncertainty in the Flathead is what’s going to happen with the Canadian dollar,” said Paul Polzin, director emeritus of the University of Montana Bureau of Business and Economic Research.

This isn’t a new concept to Flathead businesses, where nonresident travel accounts for 20 percent of the economic base. The strong point of the valley’s economy is health care, Polzin said, which accounts for 10 percent of the economic base.

“Flathead County began exporting health care three or four years ago and it’s still growing,” he said. “But because that’s related to the Canadians, we’ll see how that is affected.”

Norma Nickerson, director of the Institution for Tourism and Recreation Research, projected another big year for national park visitation and ski resorts.

She attributed the positive outlook for the parks to the National Park Service’s centennial and an increase in advertising.

Along with the commercial side, she said millennials have found ways to travel more often and at cheaper rates, using services like airbnb and Uber.

“This just shows that things are changing and we have to pay attention to that,” she said.

Todd Morgan from the Bureau of Business and Economic Research said Montana manufacturers are expecting a better year than 2015.

About 45 percent of surveyed manufacturers said they are planning an increase in employment, while 4 percent said they’re expecting to reduce staff.

Another positive indicator, according to Morgan: 36 percent of firms said filling a skilled labor force was the biggest issue of 2015. This year, only 25 percent of firms are worried about that issue.

“That raised some interesting questions,” Morgan said. “Did they resolve this issue? We’re not quite sure.”

Either way, it appears the manufacturing industry, which carries 120 firms in the Flathead Valley according to Morgan, can look forward to increased sales.

“It’s a positive story for manufacturing in the Kalispell region,” Morgan said. “It has a lot to do with fuel and managing costs being low, especially in the wood products industry.”

BUREAU DIRECTOR Patrick Barkey kicked off the seminar with some insight into what is propelling Montana’s economic growth.

“Consumers are driving growth,” Barkey said. “Investment, on the other hand, has throttled back and not contributed as much.”

Barkey presented a national outlook, highlighting weakening economies such as Canada and Mexico expected to hurt U.S. product export numbers.

The U.S. economy, which has become much stronger in recent years, is pushing up the cost of U.S. goods while continued job growth over the past five years has increased Americans’ spending power.

Montana has experienced the same effect with steady job growth and a slightly more rapid rise in wages. Every sector in Montana except mining increased wages in 2015.

“They all tell the same story,” Barkey said. “The growth has been pretty broad.”

Barkey said the Bureau expects growth to continue this way for at least three or four more years.