Trump-Friendly Idaho Doesn't Put America First
President Donald Trump, whose White House website touts an "America First Foreign Policy," may be surprised to learn that Idaho, which he won by a two-to-one margin last November, relies heavily on international trade for its economic success. It's had the best combination over the 12 months that ended on March 31 of robust personal income, job growth, stock-market gains and home-price appreciation because its largest employers sell the bulk of their products overseas, count the world's biggest multinational companies among their customers and suppliers, and make most of their money from the technology driving globalization.
Idaho eclipsed No. 2 Washington by almost four percentage points as its economic health improved 9.7 percent, according to the Bloomberg Economic Evaluation of the States, an index measuring employment, personal income, home prices, mortgage delinquency, tax revenue and the stock market.
Personal income among Idahoans, which increased 4.89 percent to within two-tenths of a percentage point of No. 1 Utah and No. 2 Washington, is growing at the fastest rate in the nation since 1948, when the data was first compiled. The 2.65 percent expansion of the job market was more than 44 states, with Idaho's 3.1 percent unemployment rate dropping below Utah's for the first time since 2008 and remaining 1.2 percentage points less than the national average.
By contrast, the economy of Idaho's southeastern neighbor, Wyoming, is driven more by domestic industries like metals and mining, which provided 20 percent of its gross domestic product. It was the worst U.S. economy during the 12 months ended March 31, with the largest job and tax-revenue losses and second-worst stock market and mortgage delinquencies. Wyoming was the only state to suffer a decline in personal income, according to data compiled by Bloomberg.
Unlike Wyoming and West Virginia, which have lagged the rest of the country in population growth since 1990, Idaho surged more than 60 percent to 1.65 million people, climbing to No. 39 among most populous states from No. 42, according to data compiled by Bloomberg.
Idaho's transformation to manufacturing and services from commodities and agriculture is reflected in its increasingly dynamic companies. Almost 78 percent of the state's publicly traded equity consists of technology firms, up from 57 percent a decade ago.
Health-care and social-assistance industries account for a growing share of Idaho's GDP, increasing to a record 9 percent from 6 percent in 2007, according to data compiled by Bloomberg. Manufacturing GDP as a percentage of total GDP rose to 13 percent from 10 percent while corresponding ratios for mining and agriculture declined to less than 1 percent and 5 percent since 2012.
Global investors made Idaho a favorite: Its 16 companies tracked by Bloomberg gained 120 percent in the 12 months ending on March 31, dwarfing the total return (income plus appreciation) of 17 percent for the S&P 500 and 18 percent for the Russell 3000 index.
Micron Technology Inc., the Boise-based maker of memory chips and semiconductor components, returned 176 percent to shareholders, according to data compiled by Bloomberg. Micron, which has 31,400 employees, also is outperforming the 10 largest semiconductor companies with a 12-month return that is double the average, and revenue growth quadrupling the average. Analysts surveyed by Bloomberg say Micron sales will grow 62 percent this year, or three times the average forecast for the group. Micron is positioned where growth is greatest. Asia, which accounts for 73 percent of the company's property, plant and equipment, up from 59 percent three years ago, delivers 75 percent of Micron sales. Three years ago, that was 69 percent.
The Micron business chain is increasingly global. While 10 percent of company sales are derived from Apple Inc., 66 percent of Micron's customers are outside the U.S., compared with 49 percent five years ago. Some 63 percent of the company's suppliers are non-U.S. firms, up from 56 percent in 2012, according to data compiled by Bloomberg.
Idaho's traditional industries are finding a way to prosper through globalization. As recently as 2012, Hecla Mining Co., based in Coeur D'Alene, derived 45 percent of its sales from Canada. That percentage has grown to 67 percent, with 30 percent from Asia and only 3 percent from the U.S., Bloomberg data show.
Even the state's famous potatoes are modernizing. Earlier this month, in another sign of Idaho's embrace of science and technology to expand its markets, J.R. Simplot Co., the closely held supplier of french fries for McDonald's and 1,000 other food products, received permission from Canada to sell potatoes genetically engineered to resist the pathogen that caused the Irish famine in the 19th century.
Education, infrastructure and quality of life are necessary for Idaho's increasingly diverse economy, says 75-year-old Butch Otter, who was elected governor in 2007 just before the financial crisis and who this year became the nation's longest-serving incumbent state chief executive. He credits the state's Tax Reimbursement Incentive for expanding the mix of businesses by rewarding companies for their long-term commitments. "It's about promises made, performance established and promises kept,'' Otter said in an interview earlier this week, citing Chobani's 2012 completion of the world's largest yogurt plant in Twin Falls, the more recent Idaho College of Osteopathic Medicine — the first medical school in the state — and the expanding aerospace industry.
It was in the 1980s at Simplot, where Otter spent three decades, that he realized what would come to drive Idaho today. "We were advised to harvest the company'' amid waning demand for potatoes and beef, he recalled on Wednesday in his Boise office. Instead, he recalled: "We said, 'Find more mouths to feed.' That's when we went international.''
(With assistance from Shin Pei)
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Matthew A. Winkler is a Bloomberg View columnist. He is the editor-in-chief emeritus of Bloomberg News.
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