The outlook for Idaho’s economy in ‘26? What experts just told legislators
Idaho’s economy is faring better than the national average. But there are clouds on the horizon.
Economists say: Wage growth is steady. Unemployment remains low. Several industries are projected to add lots of new jobs. But consumers are wary, and strained households are cutting back spending and falling deeper into credit-card debt.
Here’s what three experts told the Legislature’s Economic Outlook and Revenue Assessment Committee on Wednesday.
1. Wage growth is strong and steady.
Wage growth continues to be strong in Idaho, according to Sam Wolkenhauer, an economist at the Idaho Department of Labor.
Wages aren’t growing as fast as they were when the country emerged from COVID-19 pandemic-caused lockdowns, when companies began hiring more aggressively, Wolkenhauer said. But they’re increasing at a rate that’s closer to normal, which “is good news.”
The state’s average wage for all occupations in 2024 was $28.10 per hour, which marks an increase of 5.1%, or $1.35 per hour, over 2023. The median wage, or the midpoint between the lowest and highest earners, was $22.34 per hour, up 5%, or $1.07.
“We want the labor market to be in a state of near equilibrium so that it can function effectively and efficiently,” he said. “And this is what we’re finally getting as we transition out of that superheated period, that peak in 2022. You see that wage growth continues to look very robust.”
But the state’s population is aging, and that means wages and salaries are making up a smaller portion of Idaho’s total income than it once did. Total income includes other income sources, such as retirement or investment income.
Total wages and salaries in the state increased from nearly $34 billion in the first quarter of 2020 to $52.6 billion in the second quarter of 2025. That figure is projected to reach $55.5 billion in the second quarter of 2027.
Nonetheless, wages account for a declining share of total income. In 2010, wages and salaries accounted for 61% of total income in the state. Now, it’s about 56%.
“We have more and more retirees, and so we expect retirement income streams to form a larger share of total income,” Wolkenhauer said.
2. Joblessness remains low.
Idaho’s labor force continues to grow faster than the national average. That’s because of high in-migration, according to Wolkenhauer. He said state’s population growth is showing no signs of stopping.
“We continue to be attractive to new residents, and we continue to rank at the top of the states for population growth,” Wolkenhauer said. “We certainly expect that to continue based on the population forecasts that we make, and that has benefits on the labor side as well.”
A decade ago, the all-time average unemployment rate for Idaho was 6.2%, he said. Since then, that all-time rate has dropped significantly to 3.5%.
“This is very, very low,” he said.
Wolkenhauer attributes that to the state having “this long period of a very hot labor market,” which drove unemployment down aggressively, even while accounting for a period early in the pandemic when unemployment in Idaho reached nearly 12%. Now, the state’s unemployment rate is 3.7%, which is lower than the national average. A year ago, it was 3.8%.
“Idaho’s labor market is not showing us signs of distress,” Wolkenhauer said. “It looks very, very healthy.”
3. Business growth will keep hiring strong.
Annual employment growth in Idaho is also projected to be stable, with the construction and health care industries projected to have the most growth through 2027. The transportation and warehousing industries are also expected to see significant growth.
Nationwide, health care is the largest and fastest-growing sector, accounting for about two-thirds of new jobs since 2024. Idaho’s job growth is more evenly distributed across industries, according to Wolkenhauer.
“We have a nice basket of growing industries,” he said.
4. Data centers aren’t driving up Idahoans’ electric bills.
Some states across the country have seen big increases in electricity prices, in large part of demand from artificial intelligence-driven data centers.
Idaho hasn’t seen such massive increases yet, according to Robert Spendlove, an economist at Zions Bank. But Idaho Power, the largest provider of electricity in the state, did get approval from the Idaho Public Utilities Commission in late December for a rate hike that took effect Jan. 1.
The company had agreed to a settlement that raises its annual revenue by $110 million, or 7.5%. It requested the rate increase in large part to fund infrastructure investments, according to documents filed in the case.
Jordan Prassinos, manager of economics and load forecasting at Idaho Power, told legislators in response to a question that he doesn’t expect residential customers to foot the bill for larger energy users, such as Micron, which is building a large memory-chip fabrication plant in Southeast Boise; or Meta, which is building a data center in Kuna.
“Idaho Power, and not only Idaho Power but the Idaho Public Utilities Commission, strongly supports the policies that Idaho Power has had in place for a very long time, and that’s the idea of growth pays for growth in terms of these large loads,” Prassinos said.
“Idaho Power does require large energy users to fund any infrastructure needed to interconnect their business to Idaho Power, as it should not cause a lot of undue harm to the existing customer base, and that is a policy that has been going on for a while.“
5. Consumer sentiment is weak.
Consumers are feeling more uneasy about economic conditions, according to Spendlove. Much of that uncertainty stems from tariffs, inflation and the government shutdown that ended in mid-November.
Many lower- and middle-income households have trimmed spending, he said. But for households with income over $100,000, spending has remained steady.
“It’s those lower-income workers that are getting more distressed,” Spendlove said. “We also see that the personal savings rate is lower than it was prepandemic. It’s been moving down in the last year. What this tells me is that people are spending down their savings and running up their credit card payments.”
Idaho’s economy, however, is faring better than the national average, he said.
“Even with a lot of this weakness around the country, our region continues to be relatively strong and resilient in the face of some of this economic uncertainty,” he said.
