WBA Logo

2026 Economic Outlook: Key Insights from Our Sold-Out Event

On December 3rd, over 400 Whatcom County business leaders gathered at the Bellingham Golf & Country Club for the WBA's annual Economic Forecast Breakfast. The capacity crowd heard from Wells Fargo economist Jackie Benson on the national outlook, followed by WWU's Dr. Hart Hodges and James McCafferty on what it all means locally.

National Outlook: Navigating Volatility
Jackie Benson Jackie Benson
Vice President & Economist, Wells Fargo

The economy contracted 1% in Q1 2025, then boomed nearly 4% in Q2—driven largely by tariff-related inventory shifts, not underlying weakness.

"Through all of the chaos and the uncertainty, the data show us that demand held up in the first half of the year amid these tariffs."
— Jackie Benson
GDP Contributions Analysis

GDP volatility driven by inventory swings, not demand weakness

Tariffs Stabilizing: After spiking to 30% in April, effective rates settled to ~17% and may drop further pending Supreme Court rulings.
Fed Rate Cuts: Expect 75 more basis points through June 2026, bringing rates to 3.25%.
Labor Paradox: Unemployment stays low at 4.4% despite weak hiring—labor supply has stopped growing.
Labor Market Trends

Labor force growth has essentially stopped, keeping unemployment contained

The K-Shaped Consumer Reality

About 50% of consumer spending is driven by the top 10% of earners. Lower-income households face higher inflation and slower wage growth—business owners must think carefully about their target customers.

Inflation by Income Level

Lower-income households experiencing higher inflation rates

Whatcom County: "The Fog of Uncertainty"
Hart Hodges
Dr. Hart Hodges
Director, WWU CEBR
James McCafferty
James McCafferty
Director, WWU CEBR
"Whatcom County's forecast used to be incredibly boring. 2%. Didn't matter, 2%. We're below 2% now in terms of employment growth."
— Dr. Hart Hodges
Housing Affordability Comparison

Whatcom County housing affordability compared to regional neighbors

Housing Crisis: Home price-to-income ratio of 9.49—worst in the Puget Sound region, even worse than King County when adjusted for wages.
Cost of Living: 27% above peer college towns for housing, 19% higher for transportation—yet wages are average.
2026 Forecast: ~1% employment growth—positive but below the historical 2% trend.
Employment Growth by Sector

Only construction and professional services have recovered to pre-pandemic levels

Local Headwinds to Watch

  • Major Employer Pressures: Government (16.5%) and healthcare (14%) represent nearly one-third of local employment—both facing budget cuts.
  • Canadian Retail Slowdown: Q1 and Q2 2025 retail sales were "measurably lower" than expected.
  • Manufacturing Decline: The sector has lost 12% of jobs since 2020.
The Bottom Line for Your Business
Prepare for near-term bumps: Q4 2025 and Q1 2026 will see continued tariff effects. Build financial cushions.
Position for late-2026 acceleration: Tax cuts, lighter regulation, and AI-driven productivity should drive growth in the second half.
Address the labor reality: Tight labor markets won't ease. Consider wage adjustments and creative recruitment.
Know your customer: The K-shaped economy means value retailers face different dynamics than those serving affluent buyers.

Thank you to our sponsors:

Title Sponsor: Wells Fargo
Presenting Sponsor: AltaGas
Co-Sponsors: WRS, People's Bank, Larsen Gross, BP, Saturna Capital

Under the leadership of our board and the hard work of Barbara Chase and her team, WBA event attendance grew from 87,000 to 130,000 this year.

Sponsors
Facebook
Website
LinkedIn
Instagram
Copyright © 2025 Whatcom Business Alliance, All rights reserved.
You are receiving this message as a Whatcom Business Alliance member. We bring you information regarding the people, companies, ideas and trends shaping Whatcom County.

Our mailing address is:
Whatcom Business Alliance
2950 Newmarket St, Ste 101-173
Bellingham, WA 98226

Add us to your address book

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.