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.
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