2026 Montana economy outlook? It’s complicated.
Darrell Ehrlick
(Daily Montanan) Montana’s economy is likely to follow a path similar to 2025, though the chance of a recession is more unlikely in 2026 than previously anticipated, the Bureau of Business and Economic Research said at a seminar this week.
Director Jeffrey Michael told a group gathered in Billings on Tuesday that Montana has made significant headway on raising wages, rising from No. 49 to No. 41 nationally in just a little more than a decade — a key focus of Gov. Greg Gianforte’s administration. The bureau is the University of Montana’s economic research arm.
Moreover, gross domestic product and the unemployment rate in the Treasure State have continued to outpace the national average.
Since Gianforte took office in 2021, wage growth has acclerated from 46th to 41st — beating the U.S. average for four years. The U.S. wage growth since then was at 3.4% while Montana’s was significantly higher at 5.4%.
However, inflation costs have eaten up some of those gains, and a stubbornly high housing market means Montana may not feel much different than last year. While the state continues to add jobs, most of those are centered on one specific industry — healthcare — as other job sectors lose employees.
“We would say that this is a deceleration. It’s not a recession,” Michael said. “It’s kind of a no-hire, no-fire economy.”
He said employers across a broad spectrum of fields are hesitant, and that’s leading an increasingly sluggish job hiring market that flatlined toward the end of 2025. Michael said while the economy is slowing, he predicts around a 2.6% growth rate, and called a recession — something many economists worried about during the Trump administration’s talks of tariffs — unlikely.
“Inflation should stay near 3% in 2026, about a percentage point higher than it would be without tariffs,” he said.
On the positive side, Michael said much of the hope for the future centers on artificial intelligence and data centers, something that Montana has pursued. But, a number of economists, investors and industry experts have raised questions about AI’s sustainability, the environmental impacts the centers will have, the amount of power that is needed to run them, and the number of jobs it may create.
“AI is driving productivity growth. What we want to discover is: Does this technology allow people to do better and do it faster so that people have higher and better output?” he said.
However, inflation is currently pegged to about 2.7%, which is still higher than what economists would like to see, driven in part by tariffs and market uncertainty. For example, Michael said that many of the effects of tariffs, for example in the automotive industry, have been absorbed by the manufacturers. He said that’s not likely to last forever, and the question remains: How long will the tariffs last and what effect will it have on consumers when those costs trickle down?
While some economists had been worried about the impacts of the Trump administration’s tariffs, he said an overall estimate that they would drive prices as high as 16% more has moderated to somewhere in the neighborhood of 10%.
He also said that while President Donald Trump continues to pressure the Federal Reserve Bank to lower interest rates, most economic models predict that interest rates will remain fairly flat through 2026, meaning that housing interest rates will likely remain flat.
Michael said that many Montanans will likely see larger-than-expected tax cuts through the “One Big Beautiful Bill” and that could help bolster the state’s economy.
“In 2026, tax cut effects will help allow consumers to keep spending,” he said.
Troubles ahead
While the job market and inflation will remain stable, Michael said other economic headwinds could factor in the overall 2026 economy performance — including tariff uncertainty, high housing prices and consumer sentiment.
Michael also said immigration could also produce downstream effects in the economy as fewer workers may be available in some production which could result in higher priced groceries.
Most hiring is taking place in the healthcare or tech fields, and affordable housing still remains at the top of many communities’ concerns.
“Affordable housing is still problematic,” he said.
Different economic data suggest that housing prices in Montana are cooling, but only slightly. One metric pegged the height of home prices during late 2024, while the other measured the high-price point in February 2025. The Freddie Mac index said since then home prices in Montana have fallen 3.4%, while FHFA says home prices have declined, but only slightly at 0.4%
In Montana, the state’s GDP and unemployment has outpaced the national average, but sectors experiencing significant losses have been masked by a growth in healthcare, which grew by 5.4%. Information and technology jobs grew by 28%.
On the downside, manufacturing lost 2.8% in Montana during 2025, and mining fell nearly 13%, driven in large part by closures at Sibanye-Stillwater mine because of Russian palladium and platinum market manipulation.
“There has not been a lot of hiring in Montana,” Michael said. “We have not seen a lot of hiring since late 2024.”
In 2025, only four of the “urban” counties saw job growth: Flathead (+1.8%); Gallatin (+1.5%); Yellowstone (+0.8%); and Silver Bow (+0.7%). The rest of the state had a 1.5% job loss, according to the Bureau of Labor Statistics.