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Jackson Hole has been largely insulated from many of the economic hiccups swirling in the outside world around it. The Tetons, though, also have served as a bellwether for assessing how ultra-wealthy communities relate to the landscape and neighboring towns, creating their own ripple effect. In this piece, ace economic commentator Jonathan Schechter looks into his crystal ball for the coming year and makes some predictions about what might lay ahead for his home valley. Will the bursting national real estate bubble have an impact on Jackson Hole and what might the popping portend for other similar outdoor-oriented economies in the Rockies? Realtors, take note. Something else: Jackson Hole's economy is going green.

Are Trends In Jackson Hole Applicable To Other Western Towns?

What might 2007 hold for the local Jackson Hole economy?

From a macroeconomic perspective, no dramatic changes seem to be in the offing for 2007: The Middle East will remain a mess, neither energy prices nor demand will vary much, manufacturing will continue to boom in Asian countries, and little of substance will change in Washington.

As a result, most of the macroeconomic forces affecting Jackson Hole will continue apace.

How will this affect particular segments of the local economy? With one big exception, it means more of the same.

Due to supply and demand, the Jackson Hole real estate market should continue to be hallmarked by 2006’s three basic qualities: higher prices, fewer sales and similar total dollar volume. Once again, by not having a real estate transfer tax, the community will leave a ton of money on the table; once again, huge sales prices will induce large numbers of Realtor-wannabes to enter into the trade; once again, as more Realtors pursue fewer sales, local agents and firms will be forced to market even more feverishly to distinguish themselves from one another.

The story in neighboring Star Valley and Teton Valley, Idaho—the bedroom communities supplying us with workers—will be a bit different. For a variety of macroeconomic and other reasons, demand to live in the greater Jackson Hole area will continue to be high. However, because of housing prices in Jackson Hole, surrounding counties will continue to see booms in both real estate and development.

What about the national slowdown in housing prices?

It isn’t clear whether that phenomenon has stabilized. If it hasn’t, we won’t be immune, just as we aren’t immune from any other macroeconomic trend. However, if a bust does come, it is far more likely to clobber sales (and therefore prices) in Star Valley and Teton Valley than it is Jackson Hole.

Why?

Three reasons: the relative desirability of living in Jackson Hole; the tremendous oversupply of lots (particularly in Teton Valley), and the number of properties in both counties that have been bought as investments.

Assuming no real estate collapse, construction should also stay frenzied. And as with real estate, while the majority of the area’s construction dollars will be spent in Jackson Hole, the majority of construction jobs will occur in the surrounding counties.

Here are a few thoughts on various sectors of our economy:

TOURISM

In 1993, Grand Teton and Yellowstone national parks changed the way they count visitation. Since then, both saw visitation peak around 1998; since 1998, both have seen total visitation drop around 10 percent (1.5 percent annually, compounded). There’s no reason to think this trend will reverse itself in 2007.

The point? While those who love the parks and those who make their living off of summer tourism may not want to acknowledge it, national park visitation is hurting nation-wide. As it declines, it’s slowly taking our summer tourism economy with it.

Similarly, there’s no reason to anticipate higher skier days at the Jackson Hole Mountain Resort. Last year, the resort did a magnificent job turning lemons into lemonade by aggressively marketing the tram’s demise. For the next two years, however, they will not be able to play that card. And the home team’s efforts to lure last-minute skiers this year certainly won’t be helped by the national media attention drawn to the recent back-to-back Denver International Airport closures: Travelers may say “yuck,” but skiers will swarm to Colorado.

RETAIL AND TAXABLE SALES

Taxable sales are driven by three sectors: retail, lodging and construction. During the past year, strong retail and construction sales more than offset lousy tourism numbers, driving taxable sales past the $1 billion mark for the first time in the county’s history. This pattern, too, should repeat itself, with particular success being enjoyed by those businesses, which cater to locals. In the foreseeable future, that’s where retail growth will come.

OTHER SECTORS

In the Sherlock Holmes story “The Silver Blaze,” the key to solving the entire crime was something that received no attention: the dog that didn’t bark. A similar situation exists with the local economy.

The key to our current economic prosperity is the fact that an increasing number and variety of high-income “big city” businesses – ranging from investments to consulting – are being conducted from Jackson Hole. The salaries paid by these businesses are being used to buy local real estate and local merchandise, and support local activities ranging from recreation to nonprofits. These businesses aren’t measured, don’t generate taxes, aren’t hyped (or even publicized), and certainly aren’t written about or analyzed. However, in an era of stagnating tourism, they are driving our remarkable growth. Unless and until we screw up our quality of life – something we are entirely capable of, but something that won’t happen in 2007 – this won’t change.

THE ONE BIG EXCEPTION

One big change will occur in the local economy in 2007: Mainstream Jackson Hole will finally decide it’s OK to be “green.”

Schechter’s maxim holds that the economy changes faster than perceptions, and perceptions change faster than politics. Well, with the Town of Jackson signing the U.S. Mayor’s Climate Protection Agreement, our politics have now gone green: Both the town and county governments are on record recognizing that human-influenced global warming poses a significant threat to the local economy and quality of life.

Building on this platform, in 2007 Jackson Hole will see so much climate change and resource use-related activity that, by the end of the year, there will be a clear critical mass of “green” local businesses. Sure, some of them will be doing little more than greenwashing. However, that matters far less than the fact that a year from now businesses that aren’t actively touting their environmental awareness will be viewed as outside the mainstream, and suffer financially for it.

This embrace of the environment will, of course, put Teton County even further at odds with the rest of the state: “Not only are they blue, but now they’re green!” But even that “freak” label won’t last long: By acknowledging the economic importance of environmentalism, Jackson Hole will be aligning itself with such powerhouses as Wal-Mart, Toyota, and the state of California. Because these are the entities with a proven track record of successfully anticipating the future, it’s far better for us to be aligned with them than, say, dinosaurs such as Big Oil or U.S. auto manufacturers or, alas, the state of Wyoming.

Bottom line? Whether we actively lead or simply follow in the paths of the “green giants,” 2007 will be the year in which our economy develops a decidedly greenish hue.

EDITOR’S NOTE: Mr. Schechter owns Summit Management Consulting and writes a biweekly column for the Jackson Hole News & Guide.

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9 comments

  1. welcome aboard Mr. Schechter

    I look forward to more.

    Would love to see you explain the necessity and benefits of inclusionary (required) affordable housing as it relates to areas where the median income is significantly less than the median home price.

    There are people around here that think you guys down in Jackson are a bunch of nut cases with your required affordable housing regulations and all. I mean, doesn’t that chase all the developers away? And businesses?

  2. I love it! Jackson Hole, one of the epicenters of obscene, profligate over-consumption in the Rockies is getting on the “green” bandwagon. So I guess it’s now considered environmentally sound to build 5,000 (or 10,000 or 15,000) square foot “cabins” as long as you use environmentally certified wood. And it’s okay to install “spa” shower systems with four or five heads as long as each of them is low-flow.
    I wonder how green Jackson Hole would look if the per capita ecological foot print were calculated? There is not a snowball’s chance in hell that global warming will be slowed down – much less reversed – as long as everyone aspires to the Jackson Hole standard of living, recycling and E-star appliances notwithstanding. Let’s get real here…

  3. I agree with Shannon. “Green” is the new black: the pretentious and the pious are both wearing it this year. But greater environmental consciousness is key as well as the money that Leo DeCaprio, George Clooney and the other “rich, famous and green” bring to the party. We must take advantage of this trend now and remember how ironically significant Bush is. After he leaves Washington, he won’t be around to help us. We need to continue courting and exposing the extravagant as well as the truly conservative if the movement is to progress.

  4. I think you’ll find an awful lot of “greens” live that way. I guess that is why they prefer the rest of us not have homes or vehicles, we’re wasting resources they need for their “good life”.

  5. Marion, on what do you base that comment? Most “greens” i know make real efforts to practice what they preach. Furthermore, even if what you say is true, that doesn’t absolve you of personal responsibility. This is what I find very frustrating about anti-enviros: we know some enviros who are hypocrites, therefore all enviros are hypocrites, therefore what they say can be disregarded. That is deeply dishonest (i’ve never heard *anyone* say they wanted to take away people’s cars and homes), and is itself a highly hypocritical stance.

    On the point Shannon raises, I think that is very valid. Jon, I’d be curious as to your thoughts about how lifestyle choices intersect with political choices, as it were. In other words, if residents of Jackson Hole were to take drastic measures to reduce their “ecological footprint,” what would that look like? And is it possible?

  6. How about a 90% reduction in their output of carbon? Would they be up for that down there in Jackson? I don’t think anybody in amercia would, but such a per capita yearly allowance probably wouldn’t allow you to heat the average home in Jackson for a year. You certainly wouldn’t be able to leave town, much.

    Jonathan, there are a lot of people for putting restrictions on the size of homes and taking people’s cars away, or at least making it impossible to own one because there’s no where to park one. I’m more than sure you’ve heard that happening. It’s a short step from “we should live in dense, walkable communities” to “we will require you to live in a dense community and not drive a car” when your ordinances and laws already enforce the former.

    When the Soviets came to power, the homes of the aristocrats were taken over and occupied. Isn’t that really the end result of outrage of home size ? Who needs a fifteen thousand square foot house with ten bathrooms, we could put five families in there and still have a good standard of living…3000 square feet per family is still pretty luxurious by any realistic standard.

    Now, getting to what I thought the points of the article were, I’d expect the main economic news will be a fall back of real estate speculation larger than what Mr Schecter predicts, some developers and builders and realtors who are speculating taking a hit and a resulting lowering of overall economic activity, and not the prediction he makes. In addition to a significant real estate slowdown, Montana will feel the effects of the Senate election, as Tester shows to be incapable and unwilling to provide the federal pork that helped local economies in that state.

  7. Johnathan, I wish I could agree with you that greens are willing to do the ahrd stuff too, but at least those in the public eye do an awful lot of “do as I say”, not “do as I do”.
    I think the whole idea of man caused global warming is so much male bovine fertilizer. I live in a small house, put in extra insulation, drive a “little tin can”, recycle everything I can. When I go camping in my camper, I bring home all of my trash and dispose of it at home, not in NFs or NPs. I have my own sewer dump to my septic tank and do not leave any waste behind in the parks. I do all of these things because I was born during the depression, and was raised by frugal parents, so it is my nature to be very saving, and I think it is the right thing to do.
    I feel flying around in private jets, having homes here to yonder, and beyond does not make one environmentally friendly, no matter how good they talk about the sky falling in.
    I think climate changes and has for eons of time, when one thinks of the entire universe, mankind on this one planet is pretty insignificant. I was raising a family during the 70s, and remember global freezing, and the world about to come to an end from that.

  8. The anti-science folks only use science when it comes to health issues. And then they run to the doctor. All other science is bunk! The ability to predict climatic change improves daily & is light years removed from what it was 30 years ago. With mathamatical certainity, climatic predictions are being fine tuned & the picture is not pretty.

    Maybe all of this ferment, anger and frustration is the path to a more rational world, but I doubt it. Most humans see what they want to see. As our culture is devoid of memory and rationality, and moderation & restraint is for sissies, we are doomed to repeat our mistakes. The remaining open spaces of the west will mutate into mirrow images of those lands left behind. Our devouring economy abhors the obstacle of land use planning, land ethics are speed bumps.

    Thomas Jefferson upon learning–after discussions with Merriwether Lewis– about the immense empty continent that lay to the west said: “It will take 100 American generations to populate it”. It took five. America is now the third most poulated country in the world, only China & India are larger. However, we are number one in consumption, consuming 25 percent of the earth’s resources with five percent of the population.

  9. I live in Aspen.

    We have the same problems, the same emotional high stakes reaction to change and the same furor over “green washing” and other issues.

    I believe the best thing you can do for the earth from a land use perspective is affordable housing. The long commutes are extremely impactive and adverse to the environment.

    I live in affordable housing and many of my neighbors walk the walk, recycling, not building big, minimizing their auto use and on and on.

    In my county we required ecess energy uses like heated driveways and swimming pools to pay a mitigation fee which is used to reduce carbon foot prints elesewhere.

    I also think that change is best effected by leading rather than complaining. Ask first what you can do for your planet …