Pocatello companies were hard hit by the nationwide recession, and the Gate City is taking longer than Idaho in reaching pre-recession employment levels, an Idaho State University economics professor told a large crowd attending Bannock Development Corporation’s 22nd annual economic symposium.
Dr. C. Scott Benson and Idaho Lt. Gov. Brad Little gave the economic and state keynote addresses, respectively, on Monday, Sept. 9, at the impressive ISU Stephens Performing Arts Center.
An ISU professor for more than 20 years, Benson has been preparing legislative economic forecasts about the state’s general fund revenue for nearly 30 years. He also has been preparing Idaho personal income forecasts for the Idaho Tax Commission for more than 10 years.
“I would like to come here and tell you that happy days are here again, but you know better than that,” Benson said, calling the economic recovery anemic. He concluded, however, that Idaho, Bannock County and Pocatello should continue to add jobs and see accelerating growth after several harsh years.
In July, Idaho’s seasonally adjusted unemployment rate rose two-tenths to 6.6 percent for the third consecutive monthly increase in the rate, which has risen half a percentage point since April. Total employment dropped for the second month in a row, falling 800 to just above 723,000 – the lowest total employment since October 2012.
The Pocatello Metropolitan Statistical Area’s unemployment rate stood at 6.8 percent in July, down from 7.0 in June and 7.3 percent in July 2012. The city’s personal income grew 2-3 percent in 2012 and is projected to grow 4.5-5.5 percent this year and in 2015, slightly faster than the state’s personal income growth rate.
Benson said Gov. C.L. “Butch” Otter’s goal of generating $60 billion in state personal income could be achieved “hopefully sooner rather than later” in Fiscal 2015.
“Idaho and the Pocatello MSA were harder hit than most states,” Benson said, noting Idaho’s unemployment rate tripled while rates in other states doubled. While the recession was severe, the recovery has been slow. “Manufacturing employment is not a pretty picture.”
Benson estimated 9,000 to 10,000 people are employed in Pocatello’s government sector or up to 25 percent of people working in the city, including those employed at ISU and the state women’s prison.
Education and health services picked up jobs during the recession, he said. Construction, natural resources and mining once represented up to 7 percent of total jobs, but that has declined to 4 percent, Benson said. Leisure and hospitality provide jobs, “but they don’t pay all that well.”
The area retail industry has encountered tough times, he said, estimating Bannock County generates up to $28 million a year in annual sales tax revenue for the state.
Meanwhile, Pocatello area housing prices doubled from 1994 to 2007, followed by a negative trend with declines of 20 percent in purchase costs. “There’s an upturn now as traction is being sustained,” Benson said.
Transportation and manufacturing were huge in Bannock County during the 1970s and 1980s with Bucyrus-Erie, Union Pacific Railroad and Garrett Freightlines going strong and wages were above the national average, he noted.
“Jobs in those sectors have disappeared,” Benson said, pointing out that major employers tied to solar and wind — referring to Hoku and Nordic Windpower — also have left the community. He noted there have been years when Pocatello added 3,000 jobs or lost up to 750 jobs.
“What is the identity of Pocatello? As soon as we know, the much easier it will be to brand and grow,” Benson said. “Pocatello has gone from a town with a university to a university town. That’s a very positive direction.”
Addressing national economic issues, Benson ventured it will be 2015 before interest rates start to rise as the Federal Reserve potentially reduces its monthly purchases of bonds from $45 billion to $30 billion. Its massive bond purchases or “quantitative easing” have stimulated the national economy. Interest rates could rise, however, if inflation exceeds 2 percent, he cautioned.
Despite predictions of doom, federal sequestration budget cuts did not cause the national economy to “go to hell on a sled,” Benson said, adding that states cannot expect federal spending to continue going up. “We’re not heading off some cliff.”
The Patient Protection and Affordable Care Act, or “Obamacare,” could cause health care costs to increase to 20 percent of Gross Domestic Product within 10 years, he said.
Little told those attending the symposium that the burgeoning health care costs and the federal government’s $17 trillion budget deficit are double challenges confronting Idaho. When U.S. House Speaker John Boehner recently visited Boise, he told Idaho Republicans that lawmakers can no longer stand idly by as the nation’s fiscal solvency deteriorates.
The lieutenant governor also stressed the importance of education for economic development. Only 35 percent of Idaho students get college degrees or certificates. The State Board of Education hopes to boost that percentage to 60 percent by 2020, Little said, commending ISU College of Technology’s high graduation and placement rates.
Another challenge for Idaho is the fact it is surrounded by states without sales and income taxes, plus Utah, Wyoming and Montana get significant tax revenue from oil, natural gas and coal developments, making it more difficult for Idaho to compete.
Idaho, however, has one of the best operated tax systems in the nation, which helps attract business and jobs to the state, Little said. It also ranks as one of the five top most solvent states in the union.Share on Facebook