The sky isn’t falling on Boulder’s economic outlook, but the clouds might be a little gray.

That’s at least according to city staff and two experts from the Leeds School of Business — Richard Wobbekind and Brian Lewandowski — who debriefed Boulder City Council on the city’s economic forecast as staffers develop the 2026 budget. Wobbekind is an associate dean for business and government relations at Leeds and Lewandowski is the executive director in the business research division.

The memo presented to the council stressed that city staffers are taking a conservative approach to molding the budget and that fiscal policies from President Donald Trump are clouding the forecast. That includes the federal budget and widespread federal cuts.

Specifically, staffers are keeping an eye on how capital infrastructure may be impacted by tariffs, federal funds that are supporting existing projects and programs and future federal grant awards to the Boulder area, and a potential removal of tax-exempt status for municipal debt. The 2026 budget is expected to be adopted in October.

“The President’s budget I think puts a lot of risk on places like Boulder with federal spending at the labs and universities,” Lewandowski said. “I think there’s more downside risk than upside.”

Lewandowski said he’s expecting an increase in lumber prices and, therefore, building costs. He also expressed the long-term impact of the cuts of research and development.

Research and development is in the crosshairs of the Trump Administration’s federal cuts. The industry, of course, hits close to home for Boulder. An April 30 brief from American University found that a 25% cut to public research and development spending would slash GDP to a level comparable to the Great Recession.

“That’s something that we’ve touted locally so much, the partnership between the federal labs, the university and the private sector in Boulder and we’re disrupting that,” he said.

“And you can sort of think about how that replicates across the U.S. when we’re not investing in (research and development).”

Lewandowski did say that the outlook could be sunnier if the stock market steadies and tariffs lessen.

“But I think in the short-run, there’s damage that’s already been done,” Lewandowski said. “There’s plenty of reports about factory production in China, about half-empty container ships coming over from China. There’s a lag effect, but that’s going to hit our warehouses, that’s going to hit our inventories, that’s going to hit our shelves.”

Councilmember Nicole Speer, who lost her job at a CU Boulder brain imaging lab as part of Trump’s sweeping cuts, asked Lewandowski and Wobbekind if the U.S. is in uncharted territory. Wobbekind did note that large cuts happened post-World War II.

“Generally speaking, this is not the norm. I don’t think we’ve seen it in the last 50 years, give or take, in terms of a pullback in federal funding,” Wobbekind said. “We can argue if it’s appropriate or not appropriate, but the impact is clearly still going to be there.”

City staffers are also taking a look at realigning some funds in the budget. But it’s unclear which areas will be affected as the budget takes shape.

“I believe the old Chinese proverb is ‘May you live in interesting times and it’s not meant as a compliment,” Councilmember Mark Wallach said.