Economists highlight resiliency of Flathead Valley

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The economic forecast for Montana’s major cities through 2022 is for moderate growth, with a slight deceleration of today’s economic engines.

Paul Polzin, director emeritus of the Bureau of Business and Economic Research at the University of Montana, offered this prediction during the Montana Economic Outlook Seminar. The statewide tour, with a focus this year on affordable housing, stopped in Kalispell on Feb. 12.

Polzin said the threat of a recession doesn’t necessarily have to frighten Montanans. He said of the three major recessions that have hit the United States economy since 1990, only one had a real impact on the state.

“We all think about the previous recession, and Flathead County was impacted during the Great Recession, but hardly at all during the previous ones,” he said, referring to the years following the 2007 financial crisis. “Don’t automatically think the next recession will be like the Great Recession.”

Polzin said the Flathead Valley’s growing role as a regional trade and service center contributed substantially to its improved economic health from 2015-17 and should cushion blows from future nationwide slowdowns.

A bigger population and a diverse economy will also help — Kalispell is the second fastest-growing city in Montana, behind Bozeman. Polzin said Missoula and Billings make up an intermediate tier of cities as defined by growth. Great Falls, Helena and Butte comprise a third group of cities that are certainly not failing, but aren’t thriving quite as much as some others, Polzin said. “All of our cities in the state are growing,” he said. “That wasn’t the case 10 years ago.”

The latest statistics available put net migration for Flathead County at 1,570 in 2016, second only to Gallatin County, which saw net migration of 2,500. In 2010, Flathead County net migration was at -472.

Joe Unterreiner, president of the Kalispell Chamber of Commerce, pointed out another major contrast in the Flathead Valley from the recession years. Unemployment was higher than 10 percent at times from 2008-11, while in recent months county unemployment has been around 5.5 percent.

The Flathead Valley’s economic health has been boosted by the strength of health care as its biggest industry. Health care added $105,000,000, or 35 percent of overall output, to the valley’s income from 2015-17.

Health-care earnings growth in Kalispell and Billings were the strongest in the state in 2017, with the Flathead at more than $40 million in growth and Billings at $50 million.

Tourism also makes a major contribution in Northwest Montana, with Flathead County again second only to Gallatin County. Nonresident spending in 2017 was more than $659 million in Gallatin County in 2017 and just over $530 million in Flathead.

Visitation to the state as a whole increased by 25 percent since 2008, when the state saw fewer than 9 million visitors overall. The year 2015 was the recent high point, with 16 million visitors.

The housing market is also a key indicator of growth in the Flathead Valley. Lakeside home values lead the real estate boom, with home prices up by more than 39 percent since 2012. Whitefish follows, with prices up around 36 percent in the same period. The median sale price in the Flathead County market in 2012 was just below $190,000, a figure that has risen steadily to $310,000 in 2018.

Brandon Bridge, director of forecasting for the bureau, said the strong, positive income migration into Flathead County is one reason for the rise in housing prices.

“It’s the starkest on average since 1993,” he said. “We see that a person moving into this county claims $5,000 more in income than the average person leaving. With the average family of four moving into the county making $20,000 more than a family leaving, that sheds a lot of light on housing prices.”

Business reporter Heidi Gaiser may be reached at 758-4438 or

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