Under Pressure
The Idaho economy has remained under severe downward pressure in recent months, in line with similar economic pain among many of the state’s neighbors. Idaho’s recession is expected to continue during the next 9-12 months before a modest upturn during 2010’s second half.

Idaho’s recessionary performance since early last year is matched by the majority of states, including every Western state but Alaska. Roughly 47 of 50 states have experienced anywhere from slight to severe declines in total employment during the most recent 12-month period.

Many residents of the Gem State had perhaps developed a mindset that the state’s economy was largely immune from what happens across the nation or around the globe. Such views were dashed during the past 18 months as Idaho slipped into its most serious economic decline in a generation.

Western Weakness
Idaho’s unemployment rate has more than doubled, averaging 7.3% in recent months, versus the state’s 3.0% annual average during 2006-2007. The state’s estimated 7.8% jobless rate for May was the highest in 22 years.

By comparison, Wyoming’s jobless rate in April was 4.5%, while Utah’s rate during April was 5.2%. Montana’s jobless rate in April was 6.0%. Washington’s jobless rate was 9.1%, while Nevada’s rate was a painful 10.6%, with Oregon at 12.0%. Idaho’s jobless rate is expected to rise.

Ups and Downs
The Idaho economy has lost roughly 32,000 net jobs during the past 12 months, a painful 4.9% decline. Total goods-producing employment has fallen by roughly 15,000 jobs (down 13.2%) during the past year. The state’s high technology sector has been reducing job totals in a major way, tied to weak global demand. Total manufacturing employment within Idaho is now at its lowest overall level in 17 years.

Service-providing sectors lost nearly 17,000 jobs (down 3.2%), with trade, transportation & utilities; professional & business services; and leisure & hospitality recording the greatest numerical declines. Government, information, and education & health services added 6,500 jobs collectively.

Declining Values
New home construction within Idaho and among its neighbors remains extremely weak, with prices for existing homes continuing to decline. Foreclosed properties remain a drag on existing home values in all markets.

However, Idaho home price declines appear relatively modest when viewed against much greater declines in Arizona, California, and Nevada, where prices in major cities within those states have fallen an average of 47% versus their highs in 2006 or 2007, according to the S&P/Case-Shiller 20-city index.

Not Immune
A widely held view was that the winter sports industry was largely immune from economic weakness—that people would still ski despite recessionary periods. That view was shattered during the past year, with a sharp decline in winter sports spending across the West, especially for destination resorts. Visitation to Sun Valley and other Idaho ski areas was down sharply.

Outside Forces
The economies of Idaho and its neighbors have been damaged by national and global issues of recession, constrained financial flows, declining home values, and highly volatile stock prices. One could also add to the mix high anxiety about massive levels of government spending and associated record budget deficits, as well as low levels of consumer and corporate confidence.

However, the sharp rise in American stock prices of the past three months—by some measures the strongest three-month rally in 75 years—reflects an investor view that the worst is behind us. Numerous other signs of economic and financial stabilization are also emerging frequently.

Idaho Outlook
The most severe economic and financial turbulence since the Great Depression has hammered the Idaho economy, like that of nearly all 50 states. Weak global demand for high tech products produced in Idaho has led to thousands of job cuts.

However, with widely held expectations that the U.S. economy can move toward modest growth by the end of the year, Idaho’s outlook improves. A return to modest global growth by mid-2010 is also currently expected. Idaho’s economy will benefit from the expected stronger outside performance, with a likely return to positive growth in 2010’s second half, and more traditional solid performance in following years.

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