Experts offer predictions on Spokane’s economic forecast for 2026

Spokane is stuck in an economic malaise.

People are working and spending, but most businesses aren’t hiring – or firing.

Housing prices and mortgage rates are stubbornly set at levels that remain too high for many young people looking for a starter home or families looking for a modest move up.

And plenty of businesses outside of big tech are reluctant to invest amid worries for such things as tariffs to the possibility of an AI bubble burst.

It’s true at the national level, the state level and the Inland Northwest, according to a trio of economists who gave their predictions to hundreds of people at the GSI’s 2026 Economic Forecast on Wednesday morning.

And they agreed on the unsettling narrative that could knock the economy from staid to sinking: healthcare is driving much of what little job growth there is, and cuts to Medicaid could hurt hospitals and thus stall hiring.

“If these cuts happen, then things are going to get worse,” warned Grant Forsyth, Avista Corp.’s chief economist, after the meeting, noting that right now job growth in the Spokane area is 0% to 0.5%.

Medicaid is an issue at the center of the political impasse that has shut down the federal government.

Vange Ocasio Hochheimer, an economics professor at Whitworth University, agreed that trimming Medicaid enrollment could affect hiring. And she added that the cuts possibly coming to recipients of the federal Supplemental Nutrition Assistance Program, also referred to as food stamps, could affect more than 800,000 people in Washington, especially single moms and single dads: “literally the working poor trying to raise children.”

She noted SNAP was among the things helping many Americans stay properly fed and out of poverty.

Yet Ocasio Hochheimer told the audience she retains overall optimism for those living in Washington state. She said the state remains resilient with its commitment to research, exports and clean energy development even amid policy challenges coming from the other Washington.

And the state is actively engaged with trying to preserve programs that face cuts.

Steve Scranton, the chief economist for Washington Trust Bank, said that although there’s plenty of reason to worry, the national economy should continue to grow with income growth of about 2.3% and spending increasing by about 2.7%.

“I think we’ll continue to see positive economic growth,” he said.

But a lot of that buying is coming from the upper crust. Scranton said 10% of Americans account for 50% of spending. That means the lower income earners are struggling with what he called a “shadow pay cut” and don’t make enough money to spend freely.

Scranton likened the national economic mood to an emotional recession. He said people might be dogged by a drumbeat of negativity force-fed to them on their news apps, and yet there’s still a trend of economic growth that lifts their worries enough to enjoy, for instance, pizza and beer for dinner.

Of concern to many in Spokane are home prices, Forsyth said.

There has been a shift in 2025 away from new apartment complex permits to more single-family units.

But he said the region is stuck when it comes to housing affordability.

Even as new homes are built, they remain too expensive for many homeseekers. Older people are not selling their long-hold homes because of the high cost and low availability of appealing retirement setups. And when they do reluctantly agree to sell, the price is beyond the means of many would-be buyers.

In an article for GSI, Forsyth wrote: For the region to regain housing affordability, it needs to see some combination of a large increase in new residential units and a significant decline in existing home prices and rents.