The Wyoming Economy: An Industry Breakdown

by Wyoming Liberty Group Staff

Adjusted for inflation, the Wyoming economy was ten percent smaller in 2018 than it was in 2008, right when the Great Recession started. For every $100 of income, production and sales in our state in 2008, there is only $90 left now. Last year's minimal growth of 0.29 percent, which came on the heals of 0.48 percent in 2017, barely made any difference.

With a 2.5-percent decline in 2018, the minerals industry is of course a main culprit in our state's economic standstill. However, it is not the only one: government consumption and investment outlays declined by more than 2.7 percent. In theory, this is good news as it means that government is showing restraint in a bad budget situation, but in reality, it is the result of uncoordinated cuts that do not contribute toward more private-sector growth.

The reason is simple: while cutting spending, government maintains that it can keep the promises behind its spending programs. Instead of spending cuts that allow the private sector to step in an replace government, it makes the kinds of cuts that withdraw economic activity from the private sector.

We are, namely, paying the exact same taxes, and are restricted by the same regulations. Education is a case in point: any cuts to government spending that do not come with a school-choice system and Education Savings Accounts or vouchers, decreases output in the economy as a whole. If those cuts did come with a full-scale model for school choice, we would see growth in private-sector economic activity to compensate for the cuts in government spending.

With the right kind of reforms we would see significantly more growth across the private sector than we see today. Table 1 reports the industry-specific growth numbers for 2018, in inflation-adjusted dollars and in percent:

With only three industries exceeding three percent growth, and seven industries achieving less than two percent (including two with declining output), the Wyoming economy clearly has a long way to go to reach healthy growth rates. Table 2 illustrates how the strength and weakness of growth compare to the size of each industry:

• The numbers represent the share of each industry of total, inflation-adjusted GDP in Wyoming;
• The colors mark their growth record for 2018, with red representing output decline, orange marking industries with 0-2 percent growth, and green meaning 2+ percent growth (dark green exceeding four percent),

The growth that did happen in 2018 thus came primarily from smaller industries, each contributing less than five percent of GDP. With the five biggest industries either in decline or growing weakly, it comes as no surprise that our state is stuck in a state of economic stagnation.

To further emphasize this point, Table 3 shows the long-term growth records by industry, as dollars of output in 2018 per $1 of output in 2008 (again adjusted for inflation):

Six industries are doing better in 2018 than in 2008; two industries are stagnant and five industries are smaller.

This is not the growth record of a sound economy. It is the growth record of an economy where government pays no attention to the entire system, only to the parts that it cares about: minerals for revenue and government for spending.

It is time for our legislature to take a systemic approach to spending, taxes and economic regulations in our state. It is time for a policy strategy that adjusts government to the private sector, not the other way around.