Slowing job growth resulting from higher energy costs and the housing and credit crises will make the next few years "the most challenging in decades" for the Idaho economy, according to a new state economic forecast.

The Idaho Division of Financial Management is projecting that job losses in the stalled construction and high-tech industries will result in negative 0.2 percent job growth for calendar year 2008, compared with U.S. employment growth of 0.1 percent.

The weak job environment will continue until 2011, when there will be 17,500 fewer jobs in Idaho than the 708,400 the division previously forecast.

Idaho chief economist Mike Ferguson said job losses will be felt first by businesses dependent on a robust and expanding economy to survive. Restaurants and retailers, for example, will begin shedding employees as consumers eat out less and hold the line on unnecessary spending, he said.

"If you lose a job at a restaurant or retailer, you're going to have a hard time finding another one," Ferguson said.

The division's report is forecasting that the high-tech industry, dominated in Idaho by Micron Technology, will continue to shrink over the next three years because of global market conditions.

Micron, the state's largest employer, has laid off an estimated 1,500 workers since 2007. Its delay in construction of a new chip fabrication plant in Boise has raised speculation that Micron may begin cutting back on local production of 200-millimeter wafers, a development that could lead to more job cuts.

The Division of Financial Management is also forecasting that construction employment will decline from 44,204 in 2009 to 43,028 by 2011.

Wells Fargo economist Kelly Matthews said the loss of high-tech and construction jobs has made the Valley economy "as bad (as) if not worse" than the economies of Phoenix or Las Vegas.

Slowing job growth has already affected state revenues. For eight of the last nine months of the fiscal year that ended in June, sales tax receipts failed to meet projections. The state is preparing a new revenue forecast now, he said.

Trailing the national employment growth rate will be unusual for Idaho, which for decades has outperformed the U.S. rate, Ferguson said.

Even during the 2001 recession, Idaho employment grew at a rate of 1.7 percent, compared with flat growth nationally. By 2004, when U.S. employment growth finally climbed to 1.1 percent, Idaho was adding jobs at a rate of 2.7 percent a year, Ferguson said.

Idaho lawmakers said the decline in employment growth, and the resulting impact on tax revenues, will mean that the Legislature will have to keep an even tighter hold on spending when it reconvenes in January.

Sen. Dean Cameron, R-Rupert, co-chairman of the Legislature's budget committee, said the numbers vindicate the "cautious" fiscal approach taken by the Legislature last winter.

"We made the right decisions during the last session, so we're not facing a deficit," Cameron said. "But we are facing a very tight (fiscal 2010) budget."

Joe Estrella: 377-6465