Brice Wallace
Salt Lake Business Journal
Say what you will about the economy — good, bad or otherwise — it’s caught the interest of Americans. Among them are Utahns engaged in tariff drama, “on recession watch” and potentially at higher risk for trouble because of the state’s international trade ties.
“We’ve got a lot of drama going on in the economy,” Natalie Gochnour, director of the Kem C. Gardner Policy Institute and associate dean of the University of Utah’s David Eccles School of Business, told a crowd at the recent Women Tech Council Innovation Summit at the Zions Bancorporation Technology Center in Midvale.
“My message on the economy is, yeah, we’re at risk right now,” Gochnour said. “The current [presidential] administration is doing risky things with the hope of a long-term benefit. If it’s ham-fisted in its implementation, we will all pay a price. If they figure out how to make it happen, it could be a long-term benefit. I don’t know. This is very new times.”
Admittedly “really hard on tariffs,” like many economists, Gochnour said that “the overwhelming economic evidence would tell you that freedom of trade grows economies.”
The current tariff environment threatened by the Trump administration is a departure from relatively low tariff rates in place for decades, when the U.S. believed in globalization and free trade.
And Utah is in a position to be hurt by the tariffs because it “punches above its weight” in global trade, exporting about $18 billion in goods and services each year. Among states in the western U.S., it is No. 4 for export activity and No. 3 for imports. And Gochnour fears higher tariffs will make building materials, including wood and gypsum, more expensive. That would balloon Utah housing prices, currently the nation’s ninth-highest, with a $548,000 median sales price for a single-family home.
Already, the fear of tariffs is expected to shrink the number of shipping containers from China to the U.S., although Gochnour said many companies have already boosted imports to get ahead of the expected tariffs.
“Make no mistake about it: Tariffs are making things more expensive and the economy will react to that, so there’s less shipping coming in,” she said.
Meanwhile, expectations of a recession continue to grow. The Utah Economic Council gives it a 50 percent chance of occurring in the next 12 months. A batch of leading economic indicators are pointing that direction. They include the outlook for architecture, a high uncertainty index, waning consumer sentiment, an inverted yield curve, flat consumer spending and the ratio of the S&P 500 price to earnings.
Gochnour said she keeps an eye on unemployment because a rising rate is a top signal of a pending recession.
“The economy is holding strong. It is so resilient,” she said. “The labor market is hanging in there. All of the recession talk is not hard data, for the most part — it’s all the ‘indicator’ data, the ‘soft’ data, as we call it.”
Gochnour acknowledged her talk provided a gloomy outlook but noted that Utah remains a silver lining. Its real GDP growth is 4.5 percent, and it has the nation’s lowest poverty rate and top median household income.
“There’s no place that I’d rather be during this time than in the state of Utah,” she said. “And then if I’m in the state of Utah, there’s no place I’d rather be than in urban Utah. And then within urban Utah, there’s no better place to be than in the employment center, which is Salt Lake County.”