Brice Wallace
Salt Lake Business Journal
Consumers and businesses are facing a long list of “moving parts,” making it difficult to navigate shifts in the economy, according to a prominent Utah economist.
Speaking at a recent conference in Midvale organized by the Utah Manufacturers Association, Robert Spendlove, senior economist at Zions Bank, said the list includes tariffs; trade policy; artificial intelligence; changing, sometimes counterintuitive or unreliable economic data; fears of inflation; immigration; taxes; debt and deregulation.
“Every day changes,” he told the audience.
In that churning sea of uncertainty, Utah remains a relative island of stability. Utah’s population and employment growth are still strong, and Utah’s unemployment rate “is in kind of that sweet spot” — neither the highest in the nation nor the lowest.
The top GDP among states leaves Utah with “a really strong economy,” and the state has the nation’s third-highest median income, now over $100,000. “That shows that the Utah consumer continues to be able to hold up the economy,” Spendlove said.
But a lingering trouble spot is housing affordability. The median home in Utah now costs $550,000, well above the national figure of $350,000. “We want to slow down that increase, but we don’t want to see it collapse,” he said.
“Utah is no longer affordable. We used to be known as an affordable state. We’ve always been kind of young and hardworking and affordable. We’re not as young as we used to be, we’re still pretty hard-working, but we’re not affordable, where housing in Utah is much higher than the national average,” Spendlove said.
Speaking of housing, the U.S. has seen mortgage rates on a downward slope over the past 40 years, but now there are concerns about a “new normal” of rates of about 6 percent.
“We all were used to buying a home and then refinancing at a lower rate. That’s been our entire life. That’s no longer true,” Spendlove said.
Rates likely won’t fall drastically “unless the economy severely collapses, like it did in 2020 and like it did in 2008,” he said. “We’re not going to see mortgage rates back down into the 3 percent level again. … We could cross below that 6 [percent] but I don’t think we’re going back to 3 again. By the way, that’s a really big deal. It’s having huge implications on our state, it’s having huge implications on your industries, and it’s really hard for society to adjust to this big of a shock.”
Also causing uncertainty is the Fed’s handling of interest rates. Markets expect more rate cuts by year-end, for the Fed “to get really aggressive,” Spendlove said. But a disconnect exists between the Fed’s actions and longer-term interest rates, he added.
Meanwhile, the labor market has shifted so that there is less than one job opening for every unemployed worker. “It shifted from an employee market to an employer market,” Spendlove said.
Tariffs remain a bugaboo, causing confusion as rates move up and down, sometimes affected by court decisions and a lingering concern they will prompt inflation.
“I hear from business owners all the time, ‘Just tell me what it’s going to be and I can adjust,’” he said.
Of fairly recent vintage is doubt raised by President Trump about economic numbers released by the federal government, especially monthly employment figures and revisions made to previously released numbers. The Bureau of Labor Statistics generates the data based on company surveys, but Spendlove said issues include not enough companies being surveyed, not enough responding and not enough responding in time, he said. Surveys also do not include the gig workforce or sole proprietorships. And the response rate that once was about 90 percent has slipped to about 60 percent.
Spendlove polled the audience. Only one person indicated their company had been surveyed. “To me, that’s problematic. … We don’t know if we can trust the data,” he said.
“The data is just getting really bad. It’s getting ugly,” Spendlove said. “And when I’m out meeting with people, they push back: ‘I don’t believe your data.’ And honestly, the data is not as believable as it used to be. But, what else do you do? How else do you get a good reading? That’s what we’re trying to figure out.”