Pine Bluffs Post - Serving all of Eastern Laramie County since 1908

When USA booms, does that mean Wyoming's economy goes down?

 


When old-timers talk about economic trends out here on our isolated island of Wyoming, a big one always looms its head.

Is Wyoming’s economy the opposite of the rest of the country’s?

It may be coincidental but it seems the last three boom-bust cycles in Wyoming and the USA were like two ends of a teeter-totter. The Cowboy State’s economy seems to be counter-intuitive to the economy of the rest of America.

In the late 1960s and early 1970s, the USA was booming. Wyoming was hurting. The late Gov. Stan Hathaway said when he took office in 1966 he discovered the state had just $80 in its general fund.

Then Wyoming’s economy took off in the mid-1970s and peaked in 1981. Then it tanked in the mid-1980s and early 1990s. During one of Gov. Mike Sullivan’s terms, he recalls how the state would have been flat broke except that some wealthy Jackson gal had died and $20 million in inheritance taxes came to the state.

Meanwhile in 1985 to 1995, the USA was doing very well, while we struggled to get back on our feet.

Since 2003, our statewide economy has pretty much been soaring. Again, at the same time the national economy has been slipping, especially with the gigantic recession of 2008-09.

Today, our national economy is the envy of the world. Europe, Japan and Russia are in terrible shape and China is even stumbling. But the USA is doing very well, despite $18 trillion in national debt being foisted on our grandchildren and great-grand children. But that is another story.

Here in Wyoming, many folks are nervous. We are coming off an unprecedented 12-year boom, which has left us with the lowest unemployment rate in the country and billions of dollars in the bank.

But the outlook is not so rosy.

Thus, the theory – as the USA economy goes up, does Wyoming’s economy go down?

If this is true, a very simplistic answer could be found with Wyoming’s focus on commodities as its economic drivers. With coal, oil, natural gas and ag products as the key components of our economy, well, when prices are high for these items our economy soars here, too.

When commodity prices are high across the country, perhaps it is a catalyst the causes plants to close, jobs to be lost and politicians to start using “it’s the economy, stupid” as their manta for getting elected.

Obviously, all things are more complicated than this. And fortunately, our number-two industry, tourism, is soaring and continues to boom.

With billions in the permanent mineral trust fund and over $2 billion in a rainy day fund, Wyoming is in an ideal position to ride out a short economic bump. But if the bust goes long term, then what?

Gov. Matt Mead has been warning the legislators, “Wyoming was built by builders, not by hoarders.” He thinks the rainy day fund might need to be tapped, especially with oil down to $46 a barrel from $110 a barrel just a few months ago. Wyoming’s severance tax income drops $35 million per year for every $5 drop in the price of oil by the barrel.

Some years ago, I quoted former Wyoming Business Council CEO Tucker Fagan: “Give credit to leadership and the legislature for investing the mineral tax receipts in people (Hathaway Scholarship Program, Community Colleges and Department of Workforce Services) and infrastructure. When we did not have business parks, available water, sewer, power, broadband, etc., we just were not in the game.”

Another of the ramifications of the Wyoming bust of the 1980s was a situation known as the state’s “lost generation.” Because so many middle class jobs vanished, a generation of workers disappeared.

Where did these people go? Would they come back now?

The impending dilemma of too many retirement-age workers in education and state government is also a reflection of this situation.

President Barack Obama bragged about high stock market prices, low employment, millions of new jobs and a bright future in his State of the Union address a week ago Tuesday. Much of what he said sounded good across the country.

Except here in Wyoming, perhaps.

Does our economy go down when the rest of the country goes up? This is going to be a very interesting year for Wyoming when it comes to our state’s financial condition.

It also make some interesting watching as our Legislature meets for just a few more weeks and tries to do what is necessary.

Check out Bill Sniffin’s columns at http://www.billsniffin.com. He is a longtime Wyoming journalist from Lander who has written five books.

 

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