Governor Otter's Victory Declaration for Project 60? 'It's Kind of a Gimmick' 

The $60B GDP was never adjusted for inflation

You can tell it's primary season when the political claims are popping up faster than the flowers, and Gov. C.L. "Butch" Otter offered voters a full bouquet with his May 1 proclamation that the goals of his so-called "Project 60" had been met. The initiative, launched in 2009, was intended to grow the state's gross domestic product from $51.5 billion a year to $60 billion (or more) during Otter's term of office.

According to a news release, the $60 billion mark was met in the fourth quarter of 2013, and Idaho's GDP is expected to hit $62 billion sometime this year.

"I'm thrilled that we've achieved that goal despite weathering some of the toughest economic times in memory," Otter stated in the release.

The governor's rosy assessment of Idaho's economic growth plays well for his re-election bid, in which he'll face Meridian Republican Sen. Russ Fulcher in the May 20 GOP primary, and was immediately followed by the announcement of a new initiative named "Accelerate Idaho."

Indeed, the day of the announcement, the Project 60 website was taken down and replaced with accelerate.idaho.gov, which promises to use education, support for industry and strengthened communities to make Idaho "a national and global leader for economic growth and prosperity."

Megan Ronk, spokeswoman at the Idaho Department of Commerce, said the new strategy builds on successes like the opening of the Chobani yogurt plant near Twin Falls.

"There are good things happening," she said. "We feel very confident that the economy is on the right track."

The news was good and the timing, for Otter's campaign at least, was perfect--the numbers, however, tell a slightly different story.

According to the most recent data from the U.S. Bureau of Economic Analysis, Idaho's GDP--which is a measure of the monetary value of all the goods and services in the economy--rose from $54.2 billion in 2009 to $58.2 billion in 2012.

But the BEA stat for 2013, the only number the Labor Department tracks, won't be released until June 11. in the meantime, Labor spokesman Bob Fick said, "I don't know what number they're using."

Ronk confirmed that official GDP numbers aren't available yet, but told Boise Weekly the governor's announcement was based on projections from Idaho Chief Economist Derek Santos, who calculated the fourth quarter 2013 GDP numbers through HIS Economics (formerly, HIS Global Insight).

What's more, even that $58.2 billion number isn't exactly what it appears to be, because it's "nominal"--meaning it hasn't been adjusted for inflation. Taking into account rising prices in the economy, Idaho's GDP looks abysmal. According to BEA, Idaho's inflation-adjusted (or "real" GDP) was $49.9 billion in 2009 and had only risen to $50.9 billion by 2012: a 0.4 percent rate of growth, ranked 45th in the nation. According to a recent report in the Wall Street Journal, an economy that's delivering 5 percent nominal GDP growth is considered to be "doing reasonably well for its population. The ideal breakdown is 2 percent inflation and 3 percent real growth."

Not so in Idaho. Put another way, the Gem State's economy may well be worth $60 billion, but it's only because prices have risen with inflation, not on the back of healthy business growth.

"It's kind of a gimmick," said Mike Ferguson, former chief economist to Otter and a 25-year veteran economist who left the Statehouse in 2011 to found the nonpartisan information clearinghouse Idaho Center for Fiscal Policy. "You're not really getting a heckuva lot of real useful information [with that number]. If you take inflation out ... it's kind of mediocre."

Ronk said Project 60 was always based on nominal GDP: "That was the foundation for what we were tracking the goal against. We've consistently used those numbers throughout."

But Ferguson and others say it goes beyond gimmick and into the realm of irrelevance.

"I think there are far better single measures than the one that was chosen," Ferguson said. "I would come back to what our per capita income is in relationship to the United States--basically that measures our total income for residents of the state divided by population. ... Since about 2006, we've seen our relative position plummet. If you look at that as a measure of wellbeing in Idaho and how well our economic development strategy is doing, it gives you a completely different perspective."

Jasper LiCalzi, chair of the Department of Political Economy at the College of Idaho--Otter's alma mater--put an even finer point on it.

"The original statement's meaningless. You say we want to hit $60 billion. Yeah, we'll do that in 30 years; we're going to do that if we're living in caves, just about. ... We have had growth, but it's basically been inflation. It's a stupid thing to say to begin with."

LiCalzi agreed that if Otter wants to talk about the strength of Idaho's economy, a better measure would be per capita personal income, and specifically disposable income.

"That's really what's in your pocket; what you're actually bringing home," he said.

And that, ultimately, is what's going to matter to voters, regardless of whatever number the state's GDP is pegged at.

"[Otter] can say, 'Look, this is what I promised to do and I did it.' The only thing that could hurt him is if they don't feel it in their pocket. Have people seen an improvement in their lives since 2009?" LiCalzi said. "And 2009 was horrible. What could be worse than that?"

Pin It
Favorite

Readers also liked…

Comments (3)

Showing 1-3 of 3

 

Comments are closed.

Latest in Unda' the Rotunda

© 2016 Boise Weekly

Website powered by Foundation