Idaho Sign 01

One truism is that the economy expands — and then eventually shrinks.

The warning signs of some sort of economic slowdown are flashing:

  • U.S. manufacturing is deteriorating The Institute for Supply Management’s Purchasing Managers Index in September registered at 47.8 percent. This is the lowest reading since June 2009 and continues six straight months of softening in manufacturing.
  • Signs are that the U.S. service economy is near contraction.
  • Indications are that U.S. GDP is falling to a tepid 1.3% growth level.
  • Real net farm income has fallen to the lowest level since 2002 (except for the low reached in 2016).
  • The continuing trade spat is likely to dampen growth further with little sign of resolution.

The last recession hit Idaho hard. That is why some recent comments by Gov. Brad Little are interesting.

A week ago Denae Lenz for the Idaho State Journal covered Little’s keynote address for the Bannock Development Corp.’s 28th Annual Economic Symposium: “What’s really important is diversifying the economy and adding resilience.”  She noted: “Little said the situation is even more urgent considering that a national economic downturn is coming and Idaho needs to be ready.”

She quotes him as saying, “I fundamentally don’t believe in spending money that we don’t have (but I do believe in) saving money for a rainy day. We’re in a position where if this (economy) turns a little south (we have) close to half a billion (dollars) in our rainy day funds. That shock absorber will bode well for us.”

Last week Betsy Russell of the Idaho Press reported on Little’s comments to the Idaho Council on Indian Affairs. He again highlighted the hammering Idaho took in the least recession: “We know that things that are good in Idaho may slow down as we go forward, and so we want to be in the best possible condition that when we have another downturn, we don’t have what we had in 2009, ‘10 and ‘11, where the legislators had to, through the appropriation process, and the governor, had to cut spending by close to a third, that we had to cut education funding, which is my highest priority. We had 10 percent unemployment and way more than that in some parts of rural Idaho.”

Is Little too nervous? Absolutely not. Many countries have already turned down into recession and the U.S. could be close to joining the ranks.

Little has worked hard on economic development. I was particularly impressed by his inking of a $576 million wheat export deal with Taiwan.

But, with seems like a strong Idaho economy, the temptation is to fund new programs and new tax cuts.

Medicaid expansion is already creating some strain, particularly the push to have local governments fund a portion. But, removing the sales tax on food, another big tax cut, or a further substantial transportation boost, with likely boosts in education funding, could put Idaho in a tight squeeze if the economy turns the corner.

Idaho revenue growth is  already below projections (mostly because of recent tax changes). The  future importance of Idaho’s substantial rainy day fund cannot be understated. If tax funds start falling in a recession that fund can cushion some budget cuts and allow Idaho to “hold out “ longer, until the economy can recover.

Little has already asked agency heads to curb budget requests. His real challenge is likely to be when to say “no” to his fellow Republican legislators who are set to go into session in January.

Steve Taggart is an Idaho Falls attorney specializing in bankruptcy (www.MaynesTaggart.com).  He has an extensive background in politics and public policy. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..