Slower Pace

The Idaho economy has continued to slow in recent months tied to softer residential construction activity, weakness in technology manufacturing, and the impact of the tightest labor market in the state’s history. This slower pace of economic vibrancy seems likely to continue well into 2008.

The Idaho economy added roughly 15,000 net new jobs during the most recent 12-month period, a 2.3% growth pace. Even as the annual growth pace has fallen by nearly half when compared to similar data of a year ago, Idaho still ranks among the 10 strongest job creation states in the nation.

Tight Labor
Extremely tight labor availability remains a key challenge for Idaho employers, both large and small. Idaho’s unemployment rate averaged 2.4% between May and August, the lowest average in the state’s history, and easily one of the lowest average rates in the nation. By comparison, Idaho’s jobless rate averaged 3.4% in 2006, 4.0% in 2005, and 5.1% during 2002 to 2004.

The state’s new single-family home construction market has downshifted in a major way, in line with weaker performance across the nation. Such significant slowing has led total construction-related employment to decline. Micron Technology job cuts have also impacted the state.

Home Values
The Office of Federal Housing Enterprise Oversight (OFHEO) ranked the average Idaho existing home sixth in the nation in the 12-month period ending June 30, 2007, with an 8.42% price increase. Utah led the nation with an average home price gain of 15.28%, while Wyoming ranked second with a 12.84% rise. The OFHEO data noted that the average U.S. home value rose 3.19% during the past year, with dozens of communities registering modest price declines.

The average U.S. home rose 50.76% during the five-year period ending on June 30, 2007. Idaho’s 64.43% average rise over five years suggests the state’s homes are fully valued. Arizona, California, Florida, and Nevada, states which saw home values jump on average more than 90% during the past five years, now struggle with weak prices, overbuilt markets, rising foreclosures, and serious subprime mortgage lending challenges. Idaho’s foreclosure rate ranked fifth lowest in the nation in 2007’s second quarter, according to the Mortgage Bankers Association.

The average Boise-Nampa home value rose 8.23% during the past year, with a 70.08% gain over five years. The average Coeur d’Alene home value rose 2.70%, with a pricey 89.72% five-year rise. Homes in Idaho Falls rose 10.85% in value during the 12-month period, with a 47.54% gain over five years. Lewiston average home values rose 13.92%, with a 71.17% five-year rise. Pocatello homes rose 10.40% on average, with a five-year rise of 42.20%.

Home price data from the National Association of Realtors measuring second quarter 2007 performance versus 12 months earlier showed greater U.S. home price weakness. The report noted that the median price for existing homes across the nation declined by 1.5% to $223,800. Prices rose in 97 metro areas, while declining in 50 communities.

Costs Of…
One reason new companies and workers have been drawn to Idaho over the years is the reasonable cost of doing business as well as a more affordable cost of living than found in many areas across the nation. The August 2007 Idaho “cost of doing business” estimate of Economy.com was 90% of the U.S. average. Similar costs for Boise were estimated at only 86% of the national average.

The “cost of living” estimate of Economy.com for Boise was 94% of the U.S. average. The most recent data from the ACCRA cost of living index (U.S. average = 100) registered 91.2 for Idaho Falls, with Twin Falls at 95.2.

The Great Outdoors
The state’s winter sports industry anticipates a solid year. Sun Valley Resort was recently ranked among the nation’s top 10 ski resorts by Ski magazine. Colorado and Utah resorts grabbed eight of the 10 spots, led by Utah’s Deer Valley at #1.

Idaho View
The state’s slower growth pace is likely to continue for some time as home construction and technology contribute less to employment gains. Idaho’s extremely limited labor availability will add to business stress. The state’s longer-term outlook remains very positive.

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