Economist Explains Montana Outlook, Drop in Commodity Prices

Economist Patrick Barkey from the Bureau of Business and Economic Research says that the predicted growth rate for the Montana economy isn’t as rosy as predicted a year and a half ago.

"Instead of saying we were going to grow really fast were simply going to grow fast, so its a matter of degree," Barkley said. "Some of the wind that has been propelling the Montana economy forward in high commodity prices for not just energies and metals but also agriculture. Those expectations are being taken back."

Commodities appear to be taking a hit almost across the board in everything from agriculture to metals. Barkey says that each industry faces particular economic forces, but there is something called a “super cycle” that is impacting them all.

"The reason for the bigger swing is something we call the commodities 'super cycle'," Barkey said. "There was an extraordinary run up of prices last decade that occurred as Asia was growing very fast and while that's way too simple of a story to tell for why they are coming down, that's part of the story is slower growth in countries like China which are in the news a lot lately."

For 2016 through 2018 economists had forecasted more than three percent growth, that forecast has been dialed back to about 2.5 percent. Still, Barkey described the expected growth as “more than positive” and “very good.”