Brice Wallace
Recent descriptions of the U.S. economy by local experts have included a sprinkling of “strong” and “resilient.” A few have said it’s recession-prone.
But another characterization calls the national economy in 2023 as having “remarkable resiliency” but for 2024 to feature “unsettled normalcy.”
Speaking at the Utah Economic Outlook & Public Policy Summit, presented by the Salt Lake Chamber and Kem C. Gardner Policy Institute, Phil Dean predicted a return to more-typical economic conditions.
“We definitely see significant economic normalization occurring, but there’s still a lot of uncertainty out there that we’re dealing with,” said Dean, chief economist at the Gardner Institute and co-chair of the Utah Economic Council, which prepares an annual economic report to the governor under the direction of the University of Utah’s David Eccles School of Business and Governor’s Office of Management and Budget.
“Entering 2024 amid full employment, the economy sails into unsettled normalcy,” the report said. “While many economic relationships now follow a path to more normal operations, some still haven’t fully stabilized. Many key questions remain as economic policymakers chart a course to the storied soft landing on solid ground. Among these are whether inflation will continue downward, interest rate declines will follow suit, and labor markets remain tight. Wise leaders will invest time to understand the economy and adapt quickly to changing winds.”
Dean acknowledged that many economists were wrong about the national economy in 2023. Few were predicting continued growth but that’s what happened. Actual GDP in the first two quarters was above 2 percent. It was nearly 5 percent in the third quarter and was expected to be above 2 percent in the fourth quarter.
“That’s good, solid economic growth for the U.S. overall, which was not being predicted,” Dean said. That growth will continue this year, although perhaps slowed, he added.
The national economy was boosted by strong labor markets, with employers resistant to shed scarce employees; continued robust consumer spending; and carryover effects from massive pandemic-era economic stimulus.
Consumer sentiment is rising but people are still “grumpy,” in part because of continued inflation, he said.
“We probably don’t do a great job explaining this as economists, but when inflation comes down, that doesn’t mean that prices come down. And people are still not happy with high prices to pay for things,” Dean said.
Meanwhile, Utah’s strong economic performance continued in 2023, despite some year-end tapering. Helping out are the highest labor force participation rates since 2010, most industries showing healthy growth, and an unemployment rate near all-time lows.
“They’re definitely moderating,” Dean said the employment numbers. “Sometimes when we say ‘softening,’ people think we’re saying ‘decline.’ We’re still seeing expanding jobs out there, just not at the pace that we’ve seen. … Yeah, we’re kind of getting back to normal,” he said.
The Utah Economic Council is predicting for 2024 a national CPI inflation rate of 2.4 percent, a national unemployment rate of 4.1 percent, and a real GDP increase of 1.5 percent.
For Utah, the council is predicting total personal income to rise 5 percent, a population increasing 1.5 percent, an unemployment rate of 2.9 percent, total non-agricultural employment rising 1.8 percent, average annual pay growing 3.5 percent, total taxable sales growing 3.8 percent, and the average home price rising 0.8 percent.
Natalie Gochnour, a member of the UEC, described Utah as “absolutely a national success story,” but cautioned that Utahns of all types need to be “keepers of Utah’s flame.”
Among Utah’s seven characteristics that need to be protected, she said, are the state’s demographic cushion/growth, a young and well-educated workforce, a diverse economy, location (as a crossroads and place for outdoor recreation), fiscal responsibility, a reasonable tax and regulatory structure, and social capital and upward mobility.
“To me, the really profound point is that what ties them together is our actions,” said Gochnour, who also is associate dean in the David Eccles School of Business at the University of Utah, director of the Gardner Institute, and the chief economist for the Salt Lake Chamber.
Gochnour stressed that Utahns decide how the state grows, how they educate children, how they support the economy and diversify it, how they care for “our beautiful surroundings,” how they manage fiscal affairs, and how they tax and regulate.
“None of these are just given to us,” she said of Utah’s “Magnificent Seven.” “It’s not like we have this climate like California, it’s not like this big ocean port where this international trade comes in. All of these things, we have to work at it. It takes our actions.”
The proverbial Utah flame is always under attack, she said. “If we let the flame be doused, be extinguished, we become like everyone else,” Gochnour said. “That’s what we don’t want to do.”