Earlier this month, the Journal of Business hosted Avista Corp. chief economist Grant Forsyth for its most recent Elevating The Conversation podcast for the Mid-Year Economic Outlook.

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, which is just under 40 minutes long.

1. It's too early to tell whether the U.S. economy is in a recession. It's too early to tell, but I will say there's evidence the economy is slowing. It actually has been gradually slowing for some time.

The gross domestic product numbers in the first quarter were weak, and there was some kind of talk out of the Trump administration that this was a statistical aberration. But GDP is GDP, and GDP was weak. That's consistent with what we're seeing in employment numbers and other measures where you have a gradual slowing going on.

I suspect the tariffs have continued that slowing process. Some of this is the legacy effects of the central bank's rate increases, because they were pushing up rates, trying to get inflation under control. That's definitely involved in this. 

2. Tariffs are hurting the economy, but they can be absorbed. I definitely think the disruptions caused by these extraordinary tariffs have hurt economic growth overall.

The New York Fed published a survey of service firms and manufacturing firms on the East Coast. Pretty clearly, tariffs have had a depressing effect on their business activity. In response, they've actually lowered employment levels and increased prices. And so, the evidence suggests that it's really a drag on growth. 

I was recently in Vancouver, Washington, presenting at the spring meeting for the Association of Washington Business. I had a chance to talk to businesses all over Washington state. It was pretty clear from my conversations with them that the uncertainty with the changing tariffs was either impacting them or the clients that they serve. So, there's no doubt the uncertainty has caused a lot of businesses to freeze decisions until there's some clarity on these trade issues. 

My co-presenter was a regional economist for the Federal Reserve Bank of San Francisco. The question came up, can the economy overcome these tariffs? The response, combining my response with his response, is, yeah, as long as the tariffs aren't really high. If the tariffs remain maybe at the 10% level, and they don't change them, you're gonna increase the likelihood that businesses can adapt to them.

I still think it's going to increase prices, and it's still going take time to adapt to them, because even at 10%, that's much higher than what we've seen for decades and decades. But they can't be very much higher than, say, 10%, and they can't be shifted around constantly. That just generates too much uncertainty. 

3. Inflation has slowed, but not as quickly as some had hoped. There are two things. There's current inflation and expected inflation.

Right now, inflation has been a little bit more tame than people expected, given the tariffs that are in place.

In part, we've gotten a little bit of a break from energy prices, which still play an important role in what overall inflation looks like. We've seen a pretty big moderation in oil prices, and you can see what's happening at the pump. 

If you look at futures markets for unleaded gasoline, they are not signaling particularly high prices. And that's given some relief on the inflation side. The problem is, the expectation side doesn't look very good, again because of the tariffs. If you look at private-sector forecasters, surveys of private-sector forecasters, and market-based measures of inflation expectations, the thought is, in 2025, inflation will be in the range of 3% to 3.5% this year, with most of that effect coming in the second half of the year. And then in 2026, we're still gonna see inflation at 2.5% to 3%. That means you really don't get anywhere near the Fed's target of 2% from a forecasting point of view until 2027.

Keep in mind, for a long time, people thought this year was gonna be it. This is where we were gonna land back at the Fed's target at 2%. And the tariffs, I think, have disrupted that expectation.

4. The health of the jobs market is heavily dependent upon health care jobs. If you look at employment growth for the Spokane Metropolitan Statistical Area, it's almost entirely health care that's driving growth. And if you take health care jobs out of the numbers, growth for, I don't know, maybe the last six months, maybe longer, is closer to zero or slightly negative.

It's not just here. If you go to places like the Tri-Cities and places on the West Side, health care is the primary driver of growth, and if you pull health care out of it, the employment growth situation looks a lot more meager.

I would point out, this is true at the state level you know. Between Idaho, Washington, and Oregon, Oregon has had really one of the weakest recoveries of coming out of the pandemic. While they've had one of the weakest recoveries, the one area that continues to grow for them is health care. 

Even in Idaho, they have better looking employment growth than Washington and Oregon, but health care still has a material effect on the growth that you're seeing there.

5. Population growth is needed for business growth in the Inland Northwest. One of the things I'm mindful of is population growth and the in-migration rate. The reason I focus so much on that is because a lot of economic growth is driven by population growth.

What's happening is in-migration is starting to slow a bit, and that's important because in a lot of counties that make up the Inland Northwest, the natural growth rate—the net difference between births and deaths—is either zero or negative. If you don't have people moving in, your population growth will quickly go to zero or actually start to decline.

Nationally, the U.S. population is expected to grow over the next 50 to 80 years. But it will only grow starting in 2030 and going forward if there's immigration. If we have decided as a country, for whatever reason, that we're really going to push back on immigration in all its forms, then really what you have to accept the fact that starting in about 2030, you're gonna have essentially no growth in the country, no population growth in aggregate.

Back to the Inland Northwest, we had a big population surge come in during the pandemic period. There was a great reshuffling that occurred in the United States, and we benefited from that, in terms of people moving here. You're seeing that sort of coming back down again. 

What that means is, we're gonna start to see overall population growth start to slow as we get out of that pandemic reshuffling.

I think we quickly get used to a lot of that growth, because it drives demand for a lot of businesses in the region. And so you should expect population-driven growth begin to slow a bit.

This interview has been edited for length and clarity.