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Things Have Changed Since 1976
12.5 MPG
24.1 MPG
Gas Mileage, U.S. Fleet
1976
2014
13.3 mBTU
6.2 mBTU
Energy per Dollar of GDP
1976
2014
155 ppb
29.4 ppb
SO2 Emissions, U.S.
1980
2014
The Revolution is Very Recent Vehicle-Miles Travelled: Growing Since World War II
Stagnant Since 2007 U.S. Crude Oil Production: Declining since 1970
Up by 92% since 2008
$186 mil.
$3.2 billion
2007 2014
$32,016
$73,057
2004 2013
North Dakota Resource Taxes Williston Wages Per Job
Patrick M. Barkey, Director Bureau of Business and Economic Research
University of Montana
The Global, National and State Economic Outlook
Oil Markets Deliver a Surprise
• Best six month performance of the U.S. economy since well before the recession
• Evidence of stronger, more bullish small business activity
• Global outlook dims • Declining oil prices reverberating around the
world
National and Global Developments
Economic Performance Finally Meeting Expectations Forecasts of U.S. Real GDP Growth, Percent
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2013 2014 2015 2016 2017
20132014
Percent
Source: IHS, Inc.
U.S. Labor Market is Getting Better
-2500
-2000
-1500
-1000
-500
0
500
1000
1500
06 07 08 09 10 11 12 13 14
3000400050006000700080009000
10000110001200013000
04
05
06
07
08
09
10
11
12
13
14
Thousands Thousands
Quarterly Job Growth, U.S. Working Part-Time for Economic Reasons, U.S.
10.5 million jobs
04 06 08 10 12 14
8.5% Russia
1.8%
United States
2.2%
Japan
2.0%
Canada 3.1%
Eurozone
6.1% Brazil
9.8% India
14.2% China
Taking a Tour of Global Growth, 2007
Real GDP Growth, Percent
-7.8% Russia
-2.8%
United States
-5.5%
Japan
-2.7%
Canada -4.5%
Eurozone
-0.3% Brazil
8.5% India
9.2% China
Taking a Tour of Global Growth, 2009
Real GDP Growth, Percent
0.5% Russia
2.2%
United States
0.4%
Japan
2.4%
Canada 0.8%
Eurozone
1.5% Brazil
5.5% India
7.6% China
Taking a Tour of Global Growth, 2014
Real GDP Growth, Percent
U.S. Outlook Summary
• Self-sustaining cycle of income growth and consumer spending
• Stronger dollar • No inflation • Higher interest rates • An island of growth in the global
economy for how long?
Montana’s Growth: More Balanced, but Slower
• Growth patterns starting to look more like ten years ago
• The commodity boom is over, will agriculture prices follow?
• Labor markets are quietly getting tighter • Tourist and visitor spending growth appears
healthy • Bakken price point has been reached
IMF Commodity Price Indices (2005 = 100)
125
150
175
200
225
2010 2011 2012 2013 2014Source: International Monetary Fund
Non-energy
Energy
All
Oilfield Investments Have Been a Big Driver of the U.S. Economy
10
15
20
25
30
35
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Oilfield Investment Share of Nonresidential Structures Investment, U.S.
Percent
Investment Response to Price Shock
-8.00
-7.00
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
1.00
2.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Percent
Mining and Oil
Excluding Mining and Oil
Total
Quarter
Richland 15.4%
Gallatin 6.4%
Madison 10.2%
Yellowstone -1.6%
Real Payroll Wages Growth Percent Change, 13Q2-14Q2
Montana’s Recent Growth Percent Change in Real Wages and Salaries
-2
-1
0
1
2
3
4
2008 2009 2010 2011 2012 2013 2014
Fiscal Year
-100 -50 0 50 100 150 200 250 300 350
TotalAgriculture and Fish
MiningUtilities
ConstructionManufacturing
Wholesale TradeRetail Trade
Transportation & WarehousingInformation
FinanceReal Estate
Professional Business ServicesManagement of Companies
Administrative SupportEducation
Health CareArts & Entertainment
Accommodations & FoodOther Services
Public Administration
Montana Growth in Real Wages, FY2013-FY2014, $ Millions
Where’s the Growth? Total Real Wage Growth, $ million
Difference between Inflation-adjusted Wages and Salaries, FY2014 vs. FY2013
-$20
$0
$20
$40
$60
$80
$100
$120
$ Millions
Decomposing Oil and Gas Growth
0
50
100
150
200
250
300
350
400
450
500
2005 2006 2007 2008 2009 2010 2011 2012 2013
Montana Oil and Gas Earnings by Year
Total
Extraction
Drilling
Support
$ Millions
Energy and Mining:
Significant declines in investment, beginning in mid-2015.
16%
7%
Composition of Earnings in Montana’s Basic Industries, 2012-14
Outlook for Key Industries
Agriculture and Related: Coming off a tremendous financial year.
15%
Composition of Earnings in Montana’s Basic Industries, 2011-13
Outlook for Key Industries
Bee Alert Technology Purity Systems, Inc. Sunburst Sensors Rivertop Renewables Visual Learning Systems Endobiologics AquilaVision TerraEchos Transynaptic Technologies GT NeuroPharma Sinapis Pharma Submittable
Oracle Microbion Siafu Technology Montana Molecular Ticket River Zoot Enterprises Elation Corp. Montana Photonics LMG Security
Tracking Montana’s High Tech Companies
3.2
2.7 2.7
3.6
2.1 2.1
2.8 2.6
2.4 2.5
0
0.5
1
1.5
2
2.5
3
3.5
4
'12 '13 '14 '15 '16 '17
Actual Projected
‘18
Change in Nonfarm Earnings, Montana, 2012-2018
Questions?