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Will Idaho lead the nation's recession recovery?
A growing population and high-tech work force could put the state first in line to improve, says an economic research company.
BY BILL ROBERTS - BROBERTS@IDAHOSTATESMAN.COM
Copyright: © 2009 Idaho Statesman
Published: 06/03/09
Idaho could be one of five states to lead the country out of recession - not at a dead run, but more like a slow crawl.
But Idaho will likely see some tough times before things get better in 2010, said Addison Franz, an assistant economist for Moody's Economy.com, a company whose analysis predicts Idaho's leadership. The Pennsylvania company provides economic analysis, data, and forecasting and credit-risk services.
"The near-term outlook is relatively bleak this year," Franz told the Idaho Statesman.
Oregon, Washington, Colorado, Texas and Idaho will be the first states to turn the corner, Moody's forecasts.
The three Northwest states will cash in on population growth, which helped them boom in the early part of the decade. Those states and Colorado will also get a lift from a reviving high-tech industry, despite the loss of 6,000 jobs at Micron Technology in Boise in the past six years, Franz said.
Idaho's business-friendly climate - including low business costs - and state government's prudent handling of its recession-induced revenue declines will help contribute to the rebound, Franz said.
Moody's analysis makes sense, said John Church, a Boise economist.
"We've got a labor force ... trained in high-tech that might be a plus," he said. When the economy really starts to pick up at some point, Idaho is going to be one of the top five or 10 fastest-growing states in the country, he added.
Moody's logic also makes sense to Bob Lokken, chief executive officer of Whitecloud Analytics, a new software company in Boise. But he's skeptical in the wake of the battered economy.
"I don't know anybody who would try to make sense out of predicting anything after the last 24 months," Lokken said.
PEOPLE ARE THE KEY
Idaho boomed in the years leading up to the recession. But even as the economy soured, people kept moving here. In 2008, Idaho was the sixth fastest-growing state in the country, according to the U.S. Census. Forecasts call for the state to exceed the national percentage increases for growth over the next three years.
Idaho has a young, professional labor force, Franz said. "It continues to grow," she said. "That tends to bring business."
Before the recession, investors were poised to keep putting money in Idaho. She believes they will again, once the economy improves.
HIGH TECH'S UP CYCLE
As the recession eases, businesses across the country will begin to reinvest in their high-tech equipment, and that could mean good times for Idaho's tech sector.
The loss of manufacturing, including Micron's memory-chip production lines, won't stop the growth, which could come in high-tech research, Franz predicted. Each good-paying tech-research job can help create three additional local jobs, from grocery store clerks to florists.
As the tech sector revives, it will need other businesses, from graphic designers to law firms, to help. Those could be some of the first companies to see increases in business, Lokken said.
ROUGH SPOTS FIRST
Idaho hit the recession like a truck speeding down the highway whose driver suddenly pulls the emergency brake.
A Moody's report from April said Boise's economy was contracting at an "alarming" pace. The report noted, "Payroll cuts are being made at almost double the U.S. rate."
Statewide unemployment could hit a 7.6 percent annualized rate in 2009 and 8.36 percent in 2010, Franz said.
But by 2010, the economy should start to show signs of improvement, even while the jobless numbers continue to rise, Moody's said.
