Economists see ups, downs in Idaho's road ahead

Idaho is strong enough to power through the uncertainties of stubborn inflation, looming tariffs and other economic threats, said Sam Wolkenhauer, Idaho Department of Labor economist Tuesday. 

“When you have low unemployment and rising wages, you have a durability in the face of those other things,” he said to about 300 people at The Coeur d’Alene Regional Chamber’s breakfast. “That's definitely what we’re seeing here in Idaho is a durability that we’re getting from the strength of our labor market and our growth.” 

Wolkenhauer said there are “no signs of distress” in the state's labor market of about a million people and an unemployment rate of less than 4%.

“Idaho looks really, really well poised for '25,” he said. 

But he also issued a warning.

He said the growth Idaho has enjoyed from people moving to the state is slowing because inflation affects mortgage rates, which today are close to 7%, more than double what they were four years ago. 

“So we are seeing a stark decrease in the mobility of American households as a result of this mortgage rate differential," he said.

Wolkenhauer and Dr. John Mitchell, who taught economics at Boise State University, gave their annual economic outlook at The Coeur d’Alene Resort. 

Both shared what they see as strengths and weaknesses, locally and nationally, mixed with humorous anecdotes.

Wolkenhauer said Idaho will need to fill 110,000 jobs in the coming decade, which won’t be easy without new arrivals.

“Migration from other states is what we’re banking on to fill our labor demand,” he said.

Gen Zers, born between 1997 and 2012 who moved to Idaho in the past decade and started families, may be the solution. 

“This is a potential source of Idaho’s demographic strength. This is our ticket out of demographic decay,” Wolkenhauer said. 

Idaho remains popular with families, but more housing is necessary so they can move here and fill jobs.

“We need to be able to retain our young people,” Wolkenhauer said. “If we can do those things, Idaho has the demographic juice to be robust into the future."

Wolkenhauer said the “really remarkable thing about Idaho is that even with the pandemic, it has not deviated from growth projections.

He said the state's total payroll has climbed $10 billion in the past few years and was up 10% in 2024, while the nation's increased at half that rate.

But there is a threat.

Wolkenhauer said high housing costs and mortgage rates are slowing the state's economic engine powered by its desirability as a destination. 

“We're currently living in a monetary environment that is not conducive to that,” he said. 

Numbers support his claim.

He said in 2021, about 50,000 people moved to Idaho. Last year, it was about half of that. The state's organic growth, births over deaths, was “anemic,” at about 5,000, he said. That's a problem.

“The source of Idaho’s growth is people moving here from other states,” Wolkenhauer said.

Mitchell said with inflation likely to stay above the Federal Reserve goal of 2%, he doesn’t expect to see long-term interest rates come down.

He said 2025 “looks like another up year fueled by consumers and investments, but said the country’s fiscal problem — debt of about $37 trillion and last year’s deficit of nearly $2 trillion — has to be dealt with at some point.

He cited Social Security, defense, interest and medical as areas where the government spends a majority of its money.

“When we talk about cutting, you've got to look at the big stuff," he said.

He warned that “black swan” events, which have a low probability of happening but high impact, are a concern. 

Mitchell said if the U.S. gets in tariff wars with other countries, expect to see prices increase.

“I think one has to conclude that black swans are in the air. What they’re going to be, I don’t know. But I would be ready for them," he said.

Turbulence is in the air, Mitchell said.

"Best to remain seated with your belt fastened," he said.