Whatever economic troubles Utah faces in the coming months and years, the state has something in its proverbial back pocket to help it through. And only one other U.S. city can claim it.
The Olympics.
At a recent economic summit in Lehi, keynote speaker Dejan Eskic stressed that while Utah always weathers economic afflictions better than any other state, the 2034 Winter Games will shield the state even further during the next decade. The only other U.S. city with Olympics on the way is Los Angeles.
“That’s almost going to be a great buffer for whatever storm, however this trade stuff works out, we have sort of this artificial, infused buffer that otherwise we would not have,” said Eskic, a senior research fellow at the Kem C. Gardner Policy Institute at the University of Utah. His remarks came at a summit presented by Bank of Utah, in partnership with the Utah Valley Chamber of Commerce.
“Because the Olympics are coming, there’s going to be a lot of productivity, a lot of building happening, so we’ll be able to absorb it better.”
History is an indicator of that truth. During the Great Financial Crisis, the redevelopment of Interstate 15 in anticipation of the 2002 Olympics “was a huge, huge safety net for our state. We still took a punch but we came out of it really strong.” Utah also benefited from the City Creek mall construction, being the only retail project under construction in the U.S. at that time, he said.
“So, we’ll have some of these bigger projects as a result of the Olympics to keep the economy going if things get really bad,” Eskic said.
And things getting really bad is a possibility if not a probability. The watchword for the economy now is “uncertainty.”
“It’s an uncertain time right now,” he told the crowd. “It’s hard to talk about the economy and not sound political. …. It’s data and we can all interpret it, but some of it is sticky and some of it leads us to go in certain directions.”
Tariffs, for example, are on and then off, leaving companies in the lurch regarding their planning. Federal government actions are upsetting markets. Public trust in government is at an historic low. Consumer sentiment is sliding.
“The economic outlook right now is about as good as anybody’s guess, because there is so much uncertainty,” Eskic said.
Instability permeates the economy, with tariffs, trade deals and negotiations leading the way.
“Until this shakes out and we have sort of a foundation and everybody’s playing off the same metrics, I think you’re going to see ‘this week it’s quiet; a week and a half ago it was chaos.’ I think there’s going to be a lot more of this,” he said.
That could lead to a recession, with current predictions based on certain metrics that prompted previous recessions. “Right now, the recession outlook is growing day by day,” Eskic said. “More people are saying we’re likely to be going into a recession. If the U.S. has a mild recession, Utah might not have a recession, so there’s a little bit of disparity. If the U.S. has a big recession, Utah might have a mild recession.”
That could be especially rough on small businesses, who, unlike Apple and other large companies, might have difficulty pivoting to a new reality because they lack the capital and debt capacity of those bigger businesses. “There’s a fluctuation between the sizes of businesses that will be able to absorb this uncertainty and those that won’t,” he said.
Utah’s ability to absorb it is aided by its low unemployment rate, he said. If the state can keep its rate below 4 percent, things will be good. If it’s 2 percent or less, “that’s bad for the market,” Eskic said. “You can’t grow the economy when you don’t have a labor force [available].”
Whatever uncertainty exists in the national and state economies, one thing is sure about Utah, he said. It will grow — projections call for its population to reach 4 million by 2033 — and face the associated economic realities.
“I don’t know of a community in the U.S. that’s not dealing with housing issues,” Eskic acknowledged. “Maybe West Virginia.”
Utah already has a housing shortage, leading to higher home prices, and must ramp up construction just to keep up with current demand, he said. Those higher prices could slow the economy as companies will need to pay their employees more to meet the growing cost of living.
“Our growth is spreading, and we’ll fill in,” Eskic said. “In a couple of decades, we’ll be bickering ‘who’s going to buy that plot in Millard County?’ We’ll get there.
“No matter what comes, Utah always grows. Until our culture changes, which I don’t think is happening anytime soon. We’re not going to stop having kids, we’re not going to stop growing, and people are not going to stop moving here for the foreseeable future.”
But lurking in that foreseeable future is a level of uncertainty last seen during the very beginning of the COVID pandemic, and Eskic urged the crowd to be prepared for anything.
“Have options, you know,” he said. “Things could turn overnight, one way or the other. Be prepared to succeed and to absorb right now.”