Whether the descriptions were “fine,” “strong,” “steady” or “great,” the outlook for Utah’s economy in 2016 is certainly positive, according to speakers at an economic powwow last week.
Whether the descriptions were “fine,” “strong,” “steady” or “great,” the outlook for Utah’s economy in 2016 is certainly positive, according to speakers at an economic powwow last week.
Gov. Gary Herbert and a panel of members from the Utah Economic Council said at the Utah Economic Review event that Utah is an economic leader in the U.S. — if not the leader — and can expect more of the same this year.
“I know it’s a challenging time for us in this country, but I’m very grateful and humble that we’re having such great success here in the state of Utah,” Herbert told the group of business and government leaders. “I know that you know that we’re doing actually very well. Certainly in comparison to the other parts of this country, we’re doing exceedingly well. There’s no reason not to be optimistic about the future of Utah and the direction we’re going.”
Responding to a question about when the next downturn will hit the Utah economy, panelists likewise remained optimistic.
“I don’t see the next downturn coming in 2016,” said Juliette Tennert, the council co-chair and director of economic and public policy research at the David Eccles School of Business at the University of Utah.
“I think that we’re even going to get through 2017 or towards the end of 2017 in an OK place. This business cycle is not dead. That downturn will come, but I think we need to work and be prepared for it, and also realize that it’s unlikely that it will be as severe as what we went through the last time.”
“Overall, yeah, there are some headwinds, there are some risks — there always are,” said Darin Mellott of CBRE. “We think this coming year is going to be a good year.”
“I agree that 2016 will be fine,” said Carrie Mayne, chief economist at the Utah Department of Workforce Services. “But I do think, however, that some of our [job] numbers are going to come out that will make viewers feel like we’re wrong. I think we are going to reach a point that we’re leveling off. … I think that before the leveling-off that we’re going to have a strong, steady 2016.”
Utah’s economy has been a star among states for several months, if not years. Nine of the past 12 months, it has led the nation in job creation. Unemployment is hovering around 3.5 percent, which is considered full employment. The state is second-lowest in the U.S. in the number of people on food stamps and has fewer people than any state on public assistance, Herbert said.
The governor attributed the success to the state’s people and their principles, values and work ethic; the state having a business-friendly environment; and the state having a diverse economy.
“I’m very pleased in the fact that we’ve diversified our economy,” he said. “We don’t have all our economic eggs in one basket. I think that’s healthy. I think that’s good for us. We see other states right now, particularly with oil prices, our friends in North Dakota, Oklahoma, even some in Texas, where they’ve been so reliant on energy that now they’re upside-down in their budgets, their revenues have slowed down, and it’s a challenging time for them.
“We have challenges in our Uintah Basin and some of our friends down in Carbon and Emery county because of that. But the good news is, because we’ve diversified so much, when one is down, the other can be up, and on balance we’re still doing quite well.”
The governor acknowledged that areas of Utah “are hurting” and “we know not everyone is enjoying” the benefits of the state’s strong economy. Utah’s poverty rate is 2 percent lower than a couple of years ago and is almost 5 percent lower than the national rate. Herbert said he and others are working to get people out of intergenerational poverty and homelessness, primarily by helping them get jobs.
“If you’re unemployed, we’re going to help you get employment,” he said. “If you’re underemployed, we’re going to help you get a better job and get better employment.”
The secret to Utah’s economic success is that the private sector is “healthy, expanding, growing and creating wealth and creating jobs,” Herbert said. He predicted 2016 will be “a great year,” as will 2017.
“Our goal is to make sure that whatever happens in the future, that like cream rising to the top, Utah continues to excel,” the governor said. “We can be, and are becoming, an island of tranquility in a sea of chaos.”
Among other highlights from the panel:
• Oil prices are good for consumers but hurts the economy in the Uintah Basin, Tennert said. Mayne said the oil industry is a relatively small part of Utah’s employment figures but the industry is concentrated in certain areas.
• Geopolitics is in a state of turmoil, but activities overseas likely will not affect Utah’s economy much, Mellott said. Phil Dean, Utah Economic Council co-chair and state budget director and chief economist at the Governor’s Office of Management & Budget, said Utah is not immune to international forces but has other factors working to its benefit.
• The 2016 presidential race also likely will have little impact on the Utah economy. Mellott said that whichever candidate wins, “the effects will be limited.”
• Utah’s air quality will continue to be an issue. Mayne said the state does not need a reputation as “a dirty state” when it is trying to recruit skilled workers from outside the state.
• The collision between strong job growth and shrinking unemployment is starting to occur, Mayne said. “We thought it would be happening last year. And when that collision happens, you see it through wages, and initially we just weren’t seeing it. Wages weren’t growing at the rate you would expect when job growth is that high and unemployment is that low,” she said. “But our last two quarters of data are showing that we’re now starting to approach that collision, so it will take place. We will have issues with labor supply.”
The Utah Economic Review was hosted by the Salt Lake Chamber, the Governor’s Office of Management & Budget, the David Eccles School of Business at the University of Utah, the Kem C. Gardner Policy Institute at the UofU, and the Economic Club of Utah. Attendees received a copy of the “2016 Economic Report to the Governor” and the first edition of Utah Informed, a book featuring visual depictions of the Utah economy, assembled by the institute in partnership with the chamber.