BOISE, Idaho — Idaho is setting the pace for the entire country in how much more people are spending every year. Overall, it's a good indicator for the economy in the Gem State. However, there is still one major problem.
Idahoans are spending more on stuff every year, according to a recent report from the U.S. Bureau of Economic Analysis. But it's not just more, it's a lot more. Personal consumption expenditures, or PCE, measures everything people buy. That percentage rose 11.8% from 2021 to 2022 in Idaho, which was the biggest spike in the entire country. Overall, Idahoans' annual spending is still relatively low compared to other states, at more than $43,000 a year. But again, that's on the rise.
Is our spending going up just because we have to spend more, since everything costs more? Steven Peterson, Associate Clinical Professor of Economics at the University of Idaho, says that is part of it. But he says it's more a case of the state's economy growing at one of the nation's fastest rates, and Idahoans can spend more.
"Most of this is very good news,” says Peterson. “We have a rapidly growing population. Our economy is doing very well. It's diversifying. We have low unemployment, right. I don't think inflation is any worse here than elsewhere."
Notice he said, "Most of this is very good news." That's because there's one cost that has gone up way too much, hurting families and keeping the economy from doing even better.
"If we didn't have the housing challenges that we do, this would be fantastic news," said Peterson.
Housing is still the problem. According to Redfin, the cost of homes in Idaho is plateauing, and ApartmentList.com says rent is dropping a little. Peterson says those trends should help. But right now, they're not helping enough. In the long run, housing costs are still way up. He says only a fraction of families can afford a median priced home, and that is holding back Idaho's economic growth, since people are not filling enough Idaho job openings.
"Frankly, those unfilled positions are costing Idaho jobs," said Peterson. “If your employees cannot find or afford rent and housing on your wage, they're not going to take your job."
Peterson says that economic stagnation can mean Idahoans may have to leave Idaho, "The problem is, if your housing prices are where they are, your children will not be able to afford to live here… Because it's often the newcomers coming into a community that can outbid the locals. So, I tend to focus on, 'What can we do to try to increase the stock of housing?’"
Peterson said new zoning codes can do a lot to increase housing stock. Which, we just saw pass in Boise. We'll see if he's right. That zoning code goes into effect next month.
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