BILLINGS - The economic forecasters who predicted a year ago that the United States was headed into recession got it wrong.
Inflation in the middle of 2022 was at a historic high of 9 percent. Today the inflation rate is about 3 percent.
And while certain consumer goods such as food and housing have remained high, other factors such as the employment rate and stabilizing fuel costs have kept the anticipated recession at bay.
"It's been a bad year for (economic) forecasters, but who cares because it's been a good year for the economy," Patrick Barkey, director of the Bureau of Business and Economic Research at the University of Montana, told an audience in Billings on Tuesday.
Barkey and Todd O'Hair, president of the Montana Chamber of Commerce, were the featured speakers at the Big Horn Resort for the presentation titled "2023 Midyear Economic Update." About 80 people attended the 90-minute presentation.
Barkey gave an in-depth review of the economic factors that have combined to keep local economies across Montana thriving and the statewide economy, that while has seen some geographic disparities, is in fairly good shape.
Still, Barkey described the recent economic period as a "riddle" marked by the absence of the predicted recession, falling inflation, and a high statewide employment rate.
One factor affecting the economy is the changing demographics of the workforce, Barkey said. The percentage of workers in the most productive ages of 16 to 54 has declined, while at the same time, the number of people who have chosen to enter retirement has increased. The pandemic, Barkey said, caused a "great retirement boom."
The riddle continues, however, as Montana added 17,590 jobs last year.
"Where did all the workers go?" Barkey asked the audience. "They're working."
Barkey also gave a presentation on a recent study conducted on the reliability of the state's electric supply.
O'Hair gave the audience a report detailing the chamber's accomplishments during the recent Legislature, noting it was an especially busy session with 4,643 draft bills requested, 1,698 bills introduced and 804 passed into law.
The chamber initiated 11 bills, supported 83, and opposed 32, O'Hair said.
Among the chamber's successes was the passing of a law that changed the exemption rate for the state business equipment tax from $100,000 to $1 million. O'Hair said the organization supports the eventual elimination of the tax, which he said throws a wide net across many types of state businesses.
O'Hair told the audience that the organization's work at the Legislature came at a cost. He said the chamber estimated it spent $425,000 in "direct costs" related to its work with lawmakers. He also provided the organization's goals for the next session, which include tax and tort reform.
When asked by an audience member about the future of a sales tax in Montana, O'Hair said there have been many factors that have weighed against it. In a 2019 poll, O'Hair said, the chamber found some interest from respondents in discussing a possible sales tax if it was partnered with property tax relief and increased teacher pay.
A statewide sales will continue to be a "hard, heavy lift" in Montana, O'Hair said.
