National economic uncertainty should leave Idaho budget setters cautious even as the state keeps growing, a regional economist told a legislative panel.

“The broad theme is, we’ve had unprecedented uncertainty and we will continue to have high levels of uncertainty in our national economy,” Zions Bank senior economist Robert Spendlove told the legislature’s Economic Outlook and Revenue Assessment Committee Jan. 2. “And so I would be cautious in any kind of forecasts.”

The panel meets ahead of the regular legislative session, slated to start Jan. 6.

Idaho is “leading the nation in a number of different areas of economic strength, and it is continuing, this growth we are seeing,” the Utah-based Spendlove said.

While he is more optimistic about Idaho’s economy than that of the whole country, “it’s imperative to also build in a lot of caution because we aren’t sure,” he said.

A question over the past few years centers on how the U.S. economy can return to normal — and how “normal” should be defined, Spendlove said. For example, older workers who left the workforce amid the coronavirus pandemic aren’t likely to return or be fully replaced any time soon.

“‘Normal’ means we go through business cycles,” Spendlove said. The economy was heading into recession in 2019 before the Federal Reserve Board during the pandemic “essentially gave an adrenaline shot to the economy and forced it to grow,” helped by near-zero short-term interest rates.

The idea that a return to normal connotes a return to the cusp of a recession set to materialize sometime in the next couple of years is “why you keep hearing economists saying, ‘Maybe this year,’” he said. “It has to happen. We just don’t know when, and we don’t know exactly what it will look like.”

The Federal Reserve is expected to continue to cut short-term interest rates, but at a slower pace, Spendlove said. Inflation will continue to slow, but some price categories will remain “sticky,” or slower to see inflation rate decreases.

Also in 2025, he expects labor market growth to slow and the unemployment rate to increase. Consumers likely will remain resilient overall, but lower-income groups will be stressed. Trade, taxes, debt and deregulation could have more impact on the U.S. economy.

A spike in egg prices in recent months reflects not only bird flu outbreaks, but also increased sensitivity of the economy to shocks, Spendlove said in an interview.

“We consumers are very sensitive to price shock,” he said.

“The question is whether what we are seeing with egg prices is temporary or whether inflation is returning and is too strong,” Spendlove said.

Food prices increased at a slightly higher rate in November than in October and the previous three months, according to the U.S. Bureau of Labor Statistics.

Increasing food prices would be an early indication that inflation is accelerating, and “could be an early warning sign,” Spendlove said.

Food inflation is lower than overall inflation, though food prices remain above pre-pandemic levels, he said. Food prices likely will remain high “unless something bad happens” in the larger economy.

Current U.S. inflation of about 2.5% and wage growth of 4% compare to policymakers’ goals to have inflation of 2% and wage growth at 3%, Spendlove said.