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Montana's economic recovery "remains stuck at the starting gate," reported Patrick M. Barkey, Director of the Bureau of Business and Economic Research (BBER) at the University of Montana. The state's economy actually slowed down in 2011 after having grown in 2010.

In fact, midway through the year, BBER had to alter their rather optimistic projection of growth for Montana, from a 2.6 percent increase in nonfarm earnings. The year came in at a "disappointing" 0.7 percent rate of growth, according to Barkey, during the Montana Economic Outlook Seminar, in Billings.

During the seminar, Barkey projected a 2 to 2.5 percent rate of growth for the state in 2012, saying there are "positive signals in the Montana economy." The projection, considerably lower than pre-recession years, is the same for the next four years. The projection attempts to strike a balance, however, between the recent performance of the state economy, "which outside of housing has been reasonably good," and the uncertainties of national and world economies, which have made the future of Montana's economy rather "cloudy.

"In this environment, especially with housing and construction still ailing, the prospects of a swift return to faster growth are small," said Barkey.

At least three factors played into the surprising slow-down for Montana in 2011.

—Inflation increased faster than anticipated, creating spikes in food and energy prices. Without the increase in inflation the state's rate of growth would have been a full point higher, said Barkey.

—Several sectors of the state's economy performed more weakly than anticipated. Federal government workers had declines in earnings larger than anticipated, due to the end of the Census-taking activities and a less active fire season. And, the health care industry had a "sluggish" growth, as health care providers dealt with higher regulatory compliance costs and lower demand for elective procedures.

—Also, the US economy did not perform as well as projected. It was revised downward "sharply" for the first half of the year, with overall economic growth just fractionally above zero. Nonresident spending faltered, too, as consumer spending remained weak.

The good news for Montana has been agriculture and other natural resource development, especially, energy.

"Because of oil-related fabrication, repair, engineering and other development activity, rural eastern Montana's growth has been much stronger than elsewhere in the state. And, reasonably strong prices for wheat and calves have helped farmers and ranchers realize another good season for their gross receipts," said Barkey.

The main risk to the forecast, according to Barkey, would be a new global recession which would cause prices of energy and natural resource commodities to fall sharply, as occurred in 2008-09. It is possible, he said; "especially if political leaders in Europe allow problems there to snowball to produce an unmanageable situation."