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'New Economy' present growth opportunities

by RAPHAEL BARTA / Contributing Writer
| April 25, 2024 1:00 AM

It has been two years since the Federal Reserve began its interest rate increase program as a way to combat runaway inflation.

Some sectors of the U.S. economy have weathered the interest rate storm, like Big Tech and the Artificial Intelligence emerging companies, but other areas – specifically housing – have withered. The economy may have glided into the unicorn “soft landing,” or we may be in a recession and just don’t know it. So much of the economic news we get is based on past data, which is subject to revision and adjustment, and downright manipulation.

The stock market hit a record high the last week of March when the Fed signaled three rate cuts coming in 2024. This interest rate optimism despite inflation remaining persistently strong. Using the Fed’s preferred metrics for calculating the rate of inflation, which exclude volatile food and energy prices, inflation is trending around 2.8%. It seems politically that the government policies are working, but what do most people spend money on? Food and gas and heating their home! No wonder despite the headlines the Fed is winning the war on inflation, people do not feel it on the street, in the grocery stores.

There are actually different levels of inflation depending on economic status. When a large percentage of household income is spent on basics like food, energy, and rent, those are the costs which are most inflationary and have a huge impact on that household’s real rate of inflation. There are also the unofficial mutants of inflation, which are every bit as real as the Fed’s statistics:

• Greedflation: opportunistic increases in the prices of goods and services, “because they can.” Push prices under the guise of supply chain disruption or labor challenges or some other cover excuse. It’s simple gouging.

• Shrinkflation: the practice of reducing the quantity or size of consumer goods while maintaining the sticker price. 

• Stagflation: the simultaneous appearance of slow growth, high unemployment, and rising prices in an economy. 

I do not consider the stock market as a true indicator of the overall economy; it is an important sector, but it does not tell the whole story. And I do not believe that inflation is done with us yet. I think it is more likely that higher prices are here to stay, and the economy will gradually adjust to this reality. 

Prior to the COVID pandemic, Idaho was one of the fastest-growing states in the West. The growth was not only centered on urban centers like Boise with plentiful job opportunities and affordable housing, but also occurred in the more rural areas. Post-COVID, the work-from-home movement and the demise of civilization in the big cities accelerated in-migration, and growth became explosive. This growth (like it or not) drives the North Idaho economy. As an example, look at the evolution of Schweitzer Mountain from a private family holding to a component asset in a large aggressive corporation (Altera owns about 20 other resorts). 

The laidback atmosphere is rapidly undergoing change across the board: more skier visits as the resort is exposed to a wider audience, more shops and restaurants, more real estate development. Growth created more jobs, more tax base, more opportunity. Where are the jobs and the new opportunities being created going forward? Resort activity is part of the New Economy. 

The Old Economy for North Idaho was based on resource extraction, primarily forestry and mining, but also including construction. The Old Economy produces stuff – the New Economy is service-oriented. Eighty percent of all economic activity in North Idaho is services generated, with the largest part of that being health care. 

North Idaho demographics already tilt heavily to older age segments: people over 60 years old consume four times the health services that younger people use. It’s a cruel fact of life that growing older and sicker is a growth industry. On a more positive note, though, The New Economy (services) also includes education and high-tech companies. 

The pillars of the Old Economy forestry and mining were a proud heritage, but the economic future of North Idaho lies in the services sector. Given that of the five counties comprising North Idaho, three are very rural (Boundary, Benewah, Shoshone) and the remaining two are somewhat rural (Bonner and Kootenai) this represents some challenge in connectivity and access to a deep pool of younger, educated workforce participants.

I do not believe that good ideas, that innovation, are limited by geography, but High Tech, software development, and advances in health care all flourish in more urban centers. The sweet spot for us here in North Idaho is to retain our laidback lifestyle with access to the incredible natural amenities of the lakes and forests, but still embrace the growth opportunities presented by the New Economy.