Figures Confirm Idaho’s Solid Base Heading Into Slowdown State’s Rapid Growth Since 1987 Should Help It Weather Current Economic Slide

New figures have confirmed the belief that Idaho’s economic foundation was so solidified during the past seven-year expansion that it should easily weather the current slowdown.

The Division of Financial Management reported in its monthly financial update that the growth of Idaho’s gross state product in 1991-1992 hit 8.7 percent to lead the nation.

That increase, which is the most recent calculation available from the U.S. Commerce Department, also outstripped the annual average of about 8.5 percent expansion on gross state product between 1987 and 1992. None of the border states saw their 1991-1992 increase in gross state product exceed the five-year average.

And Idaho’s five-year growth was fourth highest nationally. Among the bordering states, only Nevada at nearly 11 percent average annual growth exceeded Idaho.

Much of Idaho’s growth was in the agriculture sector, still the state’s number one economic contributor. Farm profits more than doubled between 1987 and 1990, setting new records each of the last three years as it approached $900 million. And even though farm income dropped off in 1991 and 1992, the drop was not overly precipitous in what is typically a volatile economic category.

Amid speculation among experts about a national recession later this year or early next, the Batt administration has been warning for a month that the dramatic growth the state has experienced since its resurgence began in 1987 will not continue and a more cautious approach must be taken on policy issues in the future.

Analysts have already scaled back their forecast for growth in state revenue from 10.3 percent in January to 9.4 percent for the budget year that ends on Friday. Between $5 million and $10 million will be diverted from prison construction to keep the books in balance.

Gov. Phil Batt and his economists remained confident that Idaho’s economy will continue to expand but at a scaled down pace of between 7 percent and 8 percent.

Much of that outlook is based on the slow down in construction around the state, and other experts are beginning to agree.

The Western Blue Chip Economic Forecast has significantly revised its projection for home construction this year to more closely mirror the administration expected 18 percent decline. After forecasting only a modest 5 percent decline last winter - with three of the seven panel members actually predicting an increase in housing construction - the regional panel now says housing activity will drop over 15 percent.