For the armchair economists

Many stereotypes have some basis in truth - and in the case of economists, we can, and often do, change our minds about things. But we try not to do it on a daily basis. Yet the events in Europe, the gyrations on Wall Street and the fickle nature of reports on the economy have many of us doing just that.

That, as much as anything, should tell you that all is not well with the economy these days. It's not a second recession - not yet - but the situation is certainly disappointing given the expectations voiced a year ago.

Instead of gathering momentum, the U.S. economy practically stalled in the first half of 2011, registering growth of less than 1 percent for the first half of the year. That slowdown was evidenced in Montana as well, especially when inflation's impacts are taken into account.

Instead of accelerating as we originally forecast, we now estimate that growth in Montana's inflation-corrected nonfarm earnings was lower in 2011 than it was in the previous year.

That growth stall was not distributed evenly around the state, of course. Eastern counties are seeing surging growth related to Bakken-related oil activities. Billings enjoyed some of the fruits of those developments, as well as the one-time boost from the pipeline spill cleanup activities during the summer.

And Bozeman's favorable turn in its growth trajectory, thanks to growth in its high-tech sectors, seems firmly established. But even in the better-off parts of the state, growth in retail and commercial activity of all kinds has been sluggish at best, housing remains depressed, and even health care has been challenged.

The persistence of very slow growth and high unemployment rates has brought finger-pointers and armchair economists out of the woodwork in great numbers, arguing for everything from a return to the gold standard to imposing tariffs and import quotas as a way to fix the economy's ailments.

The continued vilification of bankers and Wall Street as the cause of our problems may satisfy some psychological need as we cope with the recession's aftermath, but in aiding our understanding of the situation and crafting effective solutions, it takes us in the opposite direction.

Bringing solid information to light and putting events in perspective has always been the aim of the University of Montana's Bureau of Business and Economic Research's annual economic outlook seminars. They are held at the beginning of each year in nine cities throughout the state, and this year's program is perhaps more timely than ever.

Business cycle economists can explain why the recovery from this recession has been so disappointingly slow. It's because this recession has been different. To be more precise, it was accompanied by a banking crisis that froze up credit markets and, for a short time, stopped ordinary credit transactions.

We haven't had one of those events since 1929. But they have occurred more recently in other countries, including Japan in 1992, Sweden in the 1980s and much of Southeast Asia in the late 1990s. And the evidence tells us the recovery from these kinds of recessions is measured in years, not months.

That's not a pleasant message to hear, but it does help calibrate expectations that continue to build up and deflate at different points of the year, leading to gyrations in equity markets and confidence indices that heighten anxiety levels for households and businesses alike. If it is any consolation, by the standards of post-banking crises recoveries, the slow rebound in the national economy is right on track.

And there are some very favorable trends unfolding in Montana that could help us outperform that low benchmark. Getting the most attention, of course, have been oil and other energy developments, especially in the Bakken. But efforts to exploit Montana's coal reserves show just as much promise. Should global prices for energy - and food, for that matter - continue to support new investment, there is a good chance that many businesses and households - and the state treasury in Helena - won't notice the slow pace of growth elsewhere.

Patrick Barkey is an economist and director the Bureau of Business and Economic Research at the University of Montana.