In cities of Mountain West, a new model for growth

The lower cost of living and high quality of life attract residents.

At a time when many US cities are worried about a real estate bubble, John Eaton looks at Boise, and is reluctant even to use the word "boom."

Sure, home prices here are rising this year at double-digit rates. And home sales statewide could end 2005 at about twice the dollar volume of 2002. But to Mr. Eaton, of the Idaho Association of Realtors, the best word to describe all this is "sustainable."

After hitting a turn-of-the millennium bump, the Rocky Mountain West economy is picking up momentum again. And the driving forces - migration of people and jobs to the region - show no sign of letting up.

Indeed,this new phase of Mountain-state expansion is characterized by a phenomenon that transcends this region, but is arguably being perfected here: the coming-of-age of small and medium-size cities as the new engines of USeconomic growth.

It is Reno, Nev.; Boise; and Casper, Wyo., that suddenly sit atop Inc. Magazine's list of best places to do business, fueled by their relatively low costs of living and high quality of life.

"In the next 20 or 30 years, the mountain range and the Gulf Coast will be the two big growth areas" for America, says Joel Kotkin, an expert on urban economies at the New America Foundation. "You'll see more growth in the second- and third-tier cities."

The allure of mountains extends beyond the Rockies. By one estimate, 20 counties bordering the Sierras could see their population triple by 2040.

This doesn't mean the region faces no risks ahead, from battles over water and sprawl to rising interest rates that could curb construction.

But none of those issues appears likely to stem the population flow to mountain-rimmed cities like Boise. For Laurel Carignan, the choice was clear.

"My husband and I wanted to live where we liked to vacation," says Ms. Carignan, who moved here from Chicago five years ago.

They planned carefully, navigating two career transitions so they could raise their kids in an area with easy access to dry- powder skiing and no big-city commute. Her business - running an Edward Jones investment office - is built substantially on the arrival of more newcomers like herself.

"Every day I'm talking to people from California, Nevada, from the Midwest" who have moved here, she says.

Her experience is emblematic because of what she does as well as where she comes from. Increasingly, service-sector jobs provide the foundation for Idaho and the other mountain states - Utah, Colorado, Wyoming, and Montana. Where old industries work the land, these urban ones mine a rising population in fields such as healthcare, education, and architecture.

"Growth is itself a spur," says Mr. Kotkin. "If you're a dentist, there are more teeth to fill. If you're an accountant, there are more taxes to examine."

The reasons for the influx include the "pull" of outdoor scenery and lifestyles and "push" factors - things like high housing costs, or concerns about school quality, that prompt people to flee big cities like Chicago or San Francisco.

The Internet and Southwest Airlines have done their part, too, by collapsing physical barriers that once made dense cities the natural hubs of economic activity.

Workers "are gravitating toward places of their choosing," says Larry Swanson, an economist at the University of Montana's Center for the Rocky Mountain West. "Twenty years ago I'd say, 'I can't eat the scenery.' Today I can."

The result is that, for the past year, the Rocky Mountain states have been adding jobs at nearly twice the national average of 1.5 percent. Leading the pack is Idaho, with 4.1 percent more jobs this June than last.

The strong economy here has Boise as its epicenter, but not its limit. New housing developments are overtaking sagebrush foothills nearby and are cropping up amid sweet-scented cornfields in Nampa, some 20 miles away.

Producing services more than goods, the mountain economies are becoming less vulnerable to boom-bust cycles that have often characterized the region's mining, ranching, and agriculture.

"We've had both stronger growth and smaller declines" than the overall economy in the past 15 years, says Mike Ferguson, Idaho's state economist. That's a big contrast with the early 1980s, when the state's natural-resource economy withered amid high interest rates.

Still, economic swings can affect a new economy, too. The Denver area is still clawing its way back after losing about 14,000 telecommunications jobs since 2001. When Hewlett-Packard announced plans to lay off thousands of US workers, it sent a shudder through Boise, where HP has major operations.

"It's always scary," with the constant threat of foreign competition hanging over local high-tech employers, says Jo Cassin, who runs a kayak-gear store here. Such fears, however, haven't stopped her from expanding her business from one location to three since 2002.

Possibly the greatest challenge to the region will be managing the growth - including preserving its scenic beauty and sharing increasingly scarce water.

"If you come here in 15 years," says Mr. Swanson in Montana, "the places you'll want to go will be the places that managed it right. Some will and some won't."