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Despite the fact that Billings and Yellowstone County seem poised for growth unique to the state and most areas of the nation, projections for 2012 from economists at the Bureau of Business and Economic Research (BBER) at the University of Montana are "restrained."

"Uncertainties that hang over almost every other Montana city cause our outlook for the Yellowstone economy in the coming years to be more restrained than the optimism over energy would suggest," said Professor Paul Polzin, former BBER director. The bureau projects a growth rate in nonfarm earnings in Yellowstone County of 2.2 percent in 2012, up from the 1.2 percent it experienced in 2011.

But, it is hard to restrain the enthusiasm for business opportunities that are coming from the oil patch – and also from agriculture, for that matter. Yellowstone County's economic base is charged greatly by both industries, both of which are surging, and look to continue to do so, through the next year, at the very least.

After all, the county saw a decline in its unemployment rate over the past year from 7.1 percent to 4.7 percent, pointed out Jeremy Vannatta, Director of Business Outreach and Recruitment at Big Sky Economic Development. And that job creation is expected to continue for Yellowstone County.

"Yellowstone County is strategically located to energy development," said Vannatta, who was another presenter at the Montana Economic Outlook seminar, where various speakers looked at the past and the future for Montana's economy.

"We are positioned extremely well in regard to coal, oil and gas, and wind development," he said. Companies want to locate in Billings to serve the Bakken and the Canadian oil sands, as well as, the Wyoming oil fields. And, continued Vannatta, "Montana has the most coal reserves of any state in the nation." And, also its "wind potential is the largest potential of any  state."

And, Billings sits in the middle of it all. "The area is perfect for business to expand," said Vannatta.

The development of these basic industries poses huge opportunities for other industries in the community, Vannatta explained. The increase demand for health care means increased opportunity for local health care providers, said Vannatta, noting that commentators on a recent NPR program said they were "amazed" at the level of health care that already exists in Billings.

Billings' transportation and hospitality industries are also being impacted. It is often hard to find a motel room in Billings, said Vannatta. Motel owners recently reported that, last year, they were at 100 percent occupancy more frequently than ever before.

Opportunity abounds for the transportation industry as well, as truck drivers are in demand at record levels and there is an increase need for more air transportation to the oil development communities.

"It's all about the Bakken," said Billings Commercial Realtor Al Koelzer, another presenter at the seminar. "If you and your company aren't doing something in relation to the Bakken, you are stupid," he exclaimed. "We are looking forward to next year," said Koelzer, "The Billings economy is going to be good in 2012."

According to Koelzer, retail, also, in Billings "is starting to be good," based upon demand for rental space, including the absorption of available wholesale and warehouse space.

Polzin also recognized the impact of the energy industry on the Billings economy, saying, "...Billings is uniquely situated, both geographically and economically, to benefit from the more than four-fold increase in oil drilling activity that has occurred on the North Dakota side of the Bakken formation, which straddles the state border with Montana. Even with Montana drilling dormant (to date) by comparison, the repair, engineering and other services in Yellowstone County have captured a considerable amount of Bakken related business. Speculation that drilling activity will move west has heated up commercial real estate activity in Billings, particularly for warehousing and industrial space."

But it isn't all about the Bakken. Polzin explained that Yellowstone County was helped through this recession, as it has been by all economic downturns, because it is so diversified. Yellowstone County's economy is the most diversified in the state. All of those industry sectors are pillars to the county's economic base; when one or two falter, others most often remain strong or accelerate, shoring up any loss.

The County is, consistently, a top producer in most basic industry segments including Agriculture, Tourism, Health Care, Mining, and Manufacturing. It seems the county is "strategically located" for more than just Energy development. Billings serves as a hub for all those market segments in the region, making it a top earnings producer even for something like mining. There are no mines in the county, but Billings provides services, supplies and equipment for mines in the region, and it is an ideal location for a company's headquarters.

"Basic" industries are "primary" industries, which means they must exist for other economic activity to occur. Basic industries generate new wealth by creating new products or exporting products or services, which bring new dollars into the community. They are essential to sustaining "secondary" economic activities, such as most services, retail and wholesale, and some portions of other market segments such as health care or government. Sometimes "secondary" industries function as primary industries if they sell their product or services to customers from outside the market area, bringing new wealth to the community, and that happens quite frequently in Billings, adding even more to its economic foundation.

For all its strength there are market segments in Yellowstone County for which the picture is not so rosy. According to Polzin, Billings has been impacted by the fact that "consumer spending remains extraordinarily weak – the retail trade sector has continued to shrink even as the rest of the economy grew in 2011 Office space remains abundant, housing prices are weak and construction activity is low."

What will become of Billings as a major trade center remains to be seen as rural areas in eastern Montana "transition with the energy development," said Polzin.

Relative to other parts of the state, "Yellowstone County's growth prospects look bright," continued Polzin, "Should the boom across the North Dakota boarder shift to the west, "then our forecast of growth for Yellowstone County in the coming years could prove to be too low. But despite energy's promise, the uncertain situation for commercial and residential real estate and signs of weakness in consumer spending make the forecast more restrained."

The recession impacted almost every part of Yellowstone County's economic base – to the tune of more than $80 million in (inflation corrected) wages and salaries, a 3.1 percent decline.

The wage decline was most severe for construction, followed by wholesale trade and transportation and warehousing. The overall decline would have been much more severe had it not been for a $35 million expansion in health care services earnings that occurred at the same time.

According to BBER data, the recession trough for Yellowstone County occurred during the last three months of 2009.

Industry declines, in the Billings area, that contributed the most to the overall decline have halted their "skid." In fact, growth in wholesale trade has come back enough to wipe out almost a third of the recession-induced decline, while transportation and warehousing has regained 70 percent of its lost earnings since 2009.

"Support activities for the oil and gas industry have grown enormously," since the trough of the recession – gaining back 47 percent.

Part of Vannatta's optimism comes from his close contact with the businesses which are growing and businesses his agency hopes to recruit.

He said that while they are trying to identify more closely what kind of companies are most ideally suited to Billings, they are looking at big companies – companies like Halliburton, Baker Hughes, Continental, and Frontier. But, "we have competition," said Vannatta. Communities like Bismarck and Casper, Calgary and Denver are also trying to woo the same companies.

"We can be a hub for large scale manufacturing," declared Vannatta, noting that one company has secured enough contracts in the oil fields to hire 200 more employees in the next year.

Vannatta noted that companies in Canada are having a hard time getting the employees they need, so they are coming to Billings.

Also, employees of companies doing business in the Bakken are often choosing to locate their families in Billings because of the opportunities and the quality of life.

As the economy grows and businesses expand, "We are going to run out of skilled workers," cautioned Vannatta, that means, "We need more training for workforce development."

But for many aspects of the Yellowstone County economy positives hover on the horizon.

The fortunes of coal are changing in Montana's favor, and coal is another industry for which Billings serves as hub. Wyoming dominated the market in the past, primarily, because the greatest demand for coal was coming from Midwest power utilities, and Wyoming was closest to those markets making transportation costs lower. But the market demand is shifting to Asian markets. Montana coal is in closer proximity to that market, and Montana has more coal reserves than any other state in the nation.

The building of the Keystone XL pipeline will have direct impacts on the Yellowstone County economy, as well. Prospects for building the pipeline are good, according to Tom Kaiserski, a panel speaker who represented the Governor's Office of Economic Development. He said he is most certain the Keystone Pipeline will be built because he knows that TransCanada has already purchased the pipe. The company will go through the additional hoops being imposed, by President Obama, and reapply for a permit, he predicted. Under heavy pressure from environmental groups, President Obama refused to permit the pipeline, after it passed a three-year environmental study. Environmental groups, opposed to advancing the market for Canadian oil sands, cited several reasons for halting it, including concern about a Nebraskan aquifer, and that it didn't create enough jobs.

It is speculated the company will change its routing and proceed with plans.

The importance of the Keystone Pipeline to Montana is more than just the $8.5 million in property taxes that the state would collect, and the millions of dollars in spinoff benefits associated with building it. Perhaps most important to Montana is the on-ramp at Baker, Montana, it would provide, which would add sorely needed capacity to get Bakken oil to market.

Manufacturing in Yellowstone County is also looking good for 2012. Almost half of the county's manufacturers responding to a survey said that they expect business to be better in 2012 than it was in 2011. Total labor income for Yellowstone County from manufacturing, which includes the refineries is $290 million, and it employs 3,567 people.

Nonresident travel generated $369 million in Yellowstone County, in 2011, with about 21 percent spent in restaurants and bars, 30 percent on retail shopping, 21 percent on gas, and 15 percent on hotel rooms.