In a recent episode of the Elevating The Conversation podcast, Vange Hochheimer, a professor of economics and finance at Whitworth University and head of Grand Fir Analytics, shared key insights into the current state of the U.S. economy. The discussion highlighted several critical trends shaping economic conditions heading into 2026.
First, while the nation has not officially entered a recession, economic activity is showing clear signs of cooling. Consumer confidence has dipped to one of its lowest levels in years, with households—particularly those in lower- to middle-income brackets—reducing discretionary spending. Increased reliance on food banks, partly due to delays in SNAP benefits and federal government shutdowns, reflects growing financial strain. Since consumer expenditures account for roughly 70% of GDP, any sustained pullback in spending could slow overall economic growth. Rising unemployment and persistent inflation could push the economy into a mild downturn, though current data remains inconclusive.
Second, economic well-being varies significantly across income groups. For many in the lower and middle classes, the current environment feels like a recession due to inflationary pressures and job insecurity. In contrast, the top 10% of earners—often holding diversified investment portfolios and possessing greater savings—have experienced relative stability. This divergence underscores a dual reality in the national economy, where financial health depends heavily on one’s position in the income spectrum. Some states, including Washington, are already exhibiting recession-like conditions based on revenue shortfalls and budget deficits.
Third, the full consequences of recent tariff policies remain uncertain. Initial impacts were muted, possibly because businesses stockpiled goods in anticipation of higher costs. However, delayed effects are now emerging. The administration has taken steps to ease inflation by reducing tariffs on certain goods, such as coffee and beef, while also exploring broader measures to stabilize food prices. Retaliatory actions from trading partners like China have affected U.S. agricultural exports, which in turn influences regional revenues.
Fourth, the proposed One Big Beautiful Bill Act presents a mix of potential benefits and drawbacks. While it includes favorable provisions such as tax incentives for corporate research and development, it also proposes reductions in Medicaid funding and nutrition assistance programs. These cuts could strain healthcare providers and increase the number of uninsured patients, posing challenges for public health infrastructure. The net outcome will depend on how these elements are implemented and balanced over time.
Finally, the outlook for 2026 can best be described as cautiously optimistic. Businesses may face lower revenues due to reduced consumer spending, and labor markets are undergoing transformation due to artificial intelligence and corporate restructuring. These factors contribute to weak consumer sentiment. GDP is expected to grow, but at a slower rate, potentially leading to reduced output and job losses. Still, the U.S. economy has historically demonstrated resilience, adapting quickly to shocks such as the pandemic. With proactive adjustments by firms and workers—including retraining and technological integration—the current phase may prove to be a brief transitional period rather than a prolonged downturn.
— news from Spokane Journal of Business
— News Original —
Five Takeaways: Economic Outlook
For its Economic Outlook episode of Elevating The Conversation, the Journal sat down with Vange Hochheimer, economics and finance professor at Whitworth University and CEO and chief economist at Grand Fir Analytics.
The Elevating The Conversation podcast is available on Apple Podcasts, Amazon Music, Spotify, and elsewhere. Search for it on any of those platforms or the Journal’s website to hear the entire conversation, but for now, here are five takeaways — edited for space and clarity — from the episode.
1. We aren’t in a recession, but the economy is cooling.
We are definitely seeing signs of slowing down. The economy is definitely cooling. We see that consumer confidence is the lowest it has been in a very long time.
We also see consumers cutting back on spending. Especially lower- to middle-income individuals are under a lot of stress. You see a lot more use of food pantries with the government shutdown and the delay in SNAP benefits. That impacted a lot of people. There are a lot of federal workers that are even utilizing some of these food pantries.
There is a lot of stress on charities and services, and that’s a sign that people are struggling. Obviously, with that comes the cut in spending. And one of the largest contributors to GDP is consumer spending. About 70% of GDP comes from consumer expenditures, and so if that starts to decrease, we will definitely see an economic slowdown.
If unemployment continues to increase, if inflation continues to squeeze people, that definitely could lead to a mild recession.
I would say there’s a risk of a mild recession at this point because of those indicators, but so far we just don’t know enough. Data is still coming in and so in terms of a definite recession, I wouldn’t call it yet.
2. How healthy the economy is depends on who you ask.
Recently, I talked about the tale of two economies. It depends on who you are. If you’re low income, middle class, you are going to be feeling squeezed in terms of inflation and unemployment and all of those negative impacts to the economy. However, if you talk to the top 10% of the income earners, they are actually doing great.
They most likely have assets invested in the stock market. They have some capital gains. They have some savings, and so those folks, they may not be facing unemployment. It’s a whole different category of individuals. They are doing fine. So it depends on who you ask. It depends on where you fall in that income distribution.
And so definitely, the lower- to middle-income earners, they will tell you we are in a recession. And I think I’ve seen some data out there that has identified states that are currently sort of in a recession. Based on deficits, based on a lot of the revenue shortfalls, they’re considered to be in a state of recession.
I know Washington is one of them in that map.
3. It’s too early to know the true impact of the tariffs.
That’s an issue that we’ve been waiting on more data to see what the impact of that is. So far, we have been pretty surprised that the impact hasn’t been greater.
One theory out there is that a lot of these companies stockpiled inventory in preparation of higher tariffs, and so we haven’t been able to trace a lot of that in the prices. However, we’re starting to see a lot of that impact now.
In fact, I think that the United States president recently — I don’t know if this was something that was passed or was talked about — reduced the tariffs on some of these products like coffee, beef, and some of these things to try to help with inflation. And I know that the White House has been looking at ways in which they can improve the inflation, particularly for food items.
That is something that has impacted the agricultural sector, our exports. Because, as you know, China and some of these countries retaliated, and so that impacts our exports. When that happens, it’ll impact our revenues here in the state.
4. The One Big Beautiful Bill Act will likely have both positive and negative impacts.
There’s some policies in (the One Big Beautiful Bill Act) that will impact individuals in a negative way. They’re projecting some cuts in Medicaid that will impact hospitals in a negative way.
There are cuts to SNAP, cuts to these social programs, which will impact particularly the low-income individuals and disabled individuals and so forth.
But there are some positive things in that bill. There are some corporate cuts that are positive for companies. Some corporate cuts in the sense of research and development.
Not everything about the bill is bad, but if those policies are implemented, there will be some significant negative impacts that translate into negative impacts for our region because so many individuals are dependent on these social welfare benefits. That can impact the rest of the state; the healthcare system, for example. We’ll see a lot of folks that are gonna show up uninsured and that’s definitely a cause for concern, particularly for the health care industry.
In terms of that Big Beautiful Bill, there are positives and negatives. We don’t know the net effect of that bill yet, so to say this is gonna be a bad thing, we need to look at how it all sort of plays out.
5. “Cautious optimism” is the theme looking ahead to 2026.
I think that many folks are cutting back on spending, and so that will impact businesses negatively in the sense that those revenues may be lower than expected.
The job market is doing all kinds of crazy things, given (artificial intelligence), given all of the things that are happening right now, companies rightsizing and so forth, and so there’s a reason why consumer sentiment is so low right now. We’re seeing companies cut jobs. People are facing inflation. If they don’t have a positive outlook on the economy, that will impact how they behave, in terms of spending.
That is definitely gonna slow down GDP. The expectation is that GDP will continue to grow, but at a slower pace. That’s definitely less revenue, less production, and potentially more job losses.
But overall, in terms of a recession, maybe a soft landing like we’ve been talking about forever now. But perhaps a mild slowdown is expected.
The U.S. economy is resilient. We’ve proven that over and over through the pandemic and how quickly we recover from recessions.
We adapt relatively quickly to different changes, and so, I would expect that businesses and individuals will adapt and try to manage or weather the storm.
We’re also going through this whole AI and technological change. Whenever you have changes in technology, there is a little bit of disruption in the labor market as people are retraining and upskilling and learning new ways of doing things. That’s the same thing for companies. They’re trying to see how they can cut costs and how they can adapt to the new technology.
I look at this as a transition and that if we are forward looking and can adapt in a positive way to the changes that are happening, that this could be a very short-lived transition.