Legislators received a series of measured economic forecasts during a Statehouse hearing Thursday.
Generally speaking, economists told legislators they expect Idaho’s economy to continue growing, but at a slower rate.
Although the 2020 session doesn’t begin until Monday, the Economic Outlook and Revenue Assessment Committee begins its work early so it can advise the rest of the Legislature regarding revenues that are expected to be available for budgeting.
Division of Financial Management chief economist Derek Santos said he doesn’t think there will be a recession in the next year or two. However, Santos noted pessimistic outlooks forecast about a 35 percent probability of a national recession over the next couple of years.
“First of all, we think both the Idaho and national economies will start to slow,” Santos said. “The thing to remember, though, is we also feel Idaho’s economy will outperform the national economy. We think we’ll have more strength over the next few years.”
The economic forecasts are important because they play a role in shaping the state budget. And because education is Idaho’s largest budget expense each year, any revenue changes may affect the pool of money available for public schools and higher education.
As for the good news, economists said Idaho housing starts are expected to continue to increase, population is predicted to continue growing and the unemployment rate is forecast to remain low.
Keith Bybee, a budget analyst and deputy division manager with the Legislative Services Office, pointed out that Idaho is still expected to end the current budget year with a positive balance of $80.9 million. But, as a word of caution, that projection is $92.9 million less than it was when the 2019 Legislature adjourned. The state will issue another updated revenue forecast Monday.
Looking ahead, Santos said businesses may struggle with a tight labor market. He added that Idaho’s personal income growth is predicted to slow after the current budget year.
“Does that mean we’re not going to grow?” Santos said. “Well, no.”
Economists repeatedly said Idaho’s economy has been strong since the end of the Great Recession.
“2019 marks the ninth consecutive year of growth in Idaho’s labor market, with population, labor force, employment, jobs and wages climbing to higher levels over the past year,” Idaho Department of Labor research supervisor Craig Shaul said. “Looking forward through to 2021, department analysts expect low unemployment and economic growth to continue for the state.”
Rep. Wendy Horman, the Idaho Falls Republican who serves as co-chair of the economic outlook committee, was happy with the forecasts.
“By and large, good news. Our economy’s been on fire over the last three years,” Horman said. “I didn’t hear anything today that is cause for panic.”
The committee meets again at 9 a.m. Friday and for a final time on Jan. 9. At the end of that meeting, the committee is expected to finalize its report and revenue projection for the Legislature.