Montana’s Growth Falls Back After Pandemic-Era Boom
After a pandemic-era boom in which Montana had one of the fastest-growing economies in the United States, Montana has now experienced two years of declining growth in 2023 and 2024. In 2023, the state’s growth fell back to a level closer to the historical average (Figure 1).
However, 2024 has brought a more significant slowdown as population growth fell to its lowest level in decades and Montana’s traditional resource-based industries of agriculture, mining, and forest products all experienced downturns in 2024. Continued strength in service sectors and construction kept Montana’s economy growing in 2024, albeit at a much slower rate than in recent years.
Montana’s Growth Falls Behind the U.S.
Recently released data show that Montana’s population grew slower than the U.S. for the first time since 2012. In fact, Montana’s 0.5% population growth rate in 2024 is the lowest in two decades. This is driven by multiple factors. First, net migration into Montana from other states has declined substantially to 5,400 in 2024 from a peak of 20,500 in 2021. Second, Montana has not felt the surge in international in-migration that has powered recent population growth in other states. Montana ranks last in international migration and is the only state with fewer than a thousand international migrants in 2024. Finally, it is worth noting that births slightly exceeded deaths last year, the first natural population increase in several years.
Similar to inflation, where prices remain high even after inflation recedes, the impacts of rapid population growth are still being felt around the state even after a sharp drop in 2024. The most notable impacts are high housing costs that persist. Montana’s population growth will likely remain slow until housing prices and incomes become more balanced, and it may take years for housing supply to catch up with previous growth.
Performance of Montana’s Industries and Income
Total inflation-corrected (real) personal income growth slowed to 1.2% in Montana during 2024, about half of the 2.3% growth in 2023 and notably slower than the more than 6% growth experienced during 2020 and 2021. This was the first year since the Covid pandemic that Montana income grew slower than the U.S.
Comparing Montana’s earnings growth by industry shows mixed performance, with construction and service sectors outperforming historical resource-based industries over both one-year and five-year periods (Table 1). Construction is the one pandemic-boom sector that has maintained its rapid growth, leading all industries in real earnings growth in 2024 at $272 million, followed by health care and retail trade that both experienced over $100 million in earnings growth in 2024.
In Montana, three industries have experienced more than $1 billion in real earnings growth since 2019: professional, scientific and technical services; construction; and real estate. Professional, scientific and technical services includes many of the remote-work jobs that increased during the pandemic and much of the state’s emerging tech sector. Growth in this sector declined in 2024, perhaps mirroring the slowdown in domestic migration into Montana. Real estate earnings declined in 2024, most likely due to the decrease in sales transactions, a notable reversal after several years of leading earnings growth when the real estate market was booming. It is important to note that the real estate earnings decline is from an elevated state, and that 2024 industry earnings are still on pace to be $1.05 billion more than in 2019.
Montana’s resource-based industries have experienced a very difficult 2024. Farm earnings are notoriously volatile, and preliminary data show a very sharp decline in 2024 that is mirrored in other Northern Plains states. After a strong earnings year in 2022, farm earnings have declined for the past two years while experiencing weak prices and dry conditions. Mining earnings also declined by about $190 million in 2024, and the full effects of the Sibanye-Stillwater mine closure may not be fully captured in this data, so the industry may have further to drop. Forestry activities experienced a $19 million earnings’ decline in 2024, and wood products mill closures are a factor behind an $18 million decline in manufacturing earnings.
While income and population growth have fallen back below the U.S. average in Montana, job growth continues to outperform.
While income and population growth have fallen back below the U.S. average in Montana, job growth continues to outperform. Jobs are less affected by the declines in commodity prices and real estate sales that have pulled down incomes. Montana’s job growth was 1.5% in 2024, strong enough to rank in the top five states, but half the 3% job growth seen in 2023. Following income growth, jobs grew fastest in construction and services, with declines in mining, finance, and real estate.
In conclusion, Montana’s growth rate slowed significantly in 2024, and the economy continues to be more oriented around services in technical, health care, and tourism-related fields. Construction is the bright spot in goods-producing sectors, whereas resource-based industries experienced a difficult 2024. As the outlook for the U.S. and global economies is highly uncertain in 2025, Montana is likely to maintain slow to moderate growth in 2025. Because Montana is less dependent on international trade and immigration than other states, it should be somewhat less effected by growing global uncertainty and changes in federal policies expected in 2025.
Jeffrey Michael is director of the Bureau of Business and Economic Research at the University of Montana.
