The recent Economic Outlook & Public Policy Summit in Salt Lake City featured as much looking back as looking forward, and both were rosy.
Speakers during the event, presented by the Salt Lake Chamber, said 2020 should look at lot like 2019, the next decade should mirror the past 10 years, and even the next 20 years could sustain Utah’s economic strength.
Asked to provide a one-word description of Utah’s economy in 2020, panelists at one session replied with “strong,” “healthy,” “prosperous” and “promising.”
“Even though our forecast does predict uncertainty and moderation, all of those advantages that have fueled our economy to date should lead to another year of healthy growth for Utah’s economy in 2020 — that is, as long as major risks to the national expansion are not realized, and as long as internal risks within Utah don’t intensify,” said Juliette Tennert, co-chair of the Utah Economic Council and director of economic and public policy research at the Kem C. Gardner Policy Institute at the University of Utah.
The nation and state have experienced 10 years of economic expansion — the longest on record — and Utah has favorable demographics, a supportive business climate and economic diversity among factors working in its favor to continue its run, she said. There are challenges, including a tight labor market, increasing costs, housing affordability, declining fertility rates and poor air quality. External risks include geopolitical instability that could create uncertainty, plus the potential for a lurking economic downturn.
“Of course, a U.S. recession would change our outlook for the Utah economy,” she said, noting that the probability of a recession in 2020 is “relatively low” and that the latest Wall Street Journal economist panel believes the start of an economic decline is at least a year away.
Utah’s 2.4 percent unemployment rate is the lowest that it has been in at least three decades, but Tennert said that labor force participation is lower now than during the last economic expansion. All four panelists at the event expect the Utah unemployment rate to shrink even further. “We still think there’s actually still some room in the labor market,” she said. “It’s definitely something we’re going to keep an eye on.”
While Utah housing demand remains high, home price escalation could moderate in 2020 because of record-high residential home construction activity in 2019. The median price of a Salt Lake City home in the 2019 third quarter was $361,000, up 12 percent in a year and 65 percent the past 10 years.
“If the pace of growth in these home prices actually accelerates, it can impede businesses’ ability to hire workers for whom the cost of living just doesn’t pencil out, and that can create a drag on the economy,” she said.
Speaking at his final summit as governor, Gary Herbert said the past decade has been “pretty remarkable” for Utah’s economy.
“We’re in a healthy place right now,” Herbert said. “Well, we believe in our administration that we’ve had a great 10 years and we can have another great 10 years. There’s no reason why we cannot continue to grow and expand. We’ll have the ups and downs — you know, the flow that happens in the business cycle — but we can continue to have positive growth if we, in fact, keep faith with the fundamental aspects of what’s made Utah become the best-performing state economically.”
Those aspects include having state government that “lives within its means as a state” and that operates efficiently, he said. Utah is the “epicenter for small business,” which he said is important because large businesses start out as small businesses and small businesses are “part of the secrets of the success of Utah.”
“There’s no reason for us to not be very optimistic and hopeful about the future of Utah, economically, socially, all the things that make life worth living and makes us the gold standard for the country today,” the governor told the crowd. “So, thank you all for your contributions to make Utah the leader in this nation, and with your help, we’ll continue — I say, continue — to be the best place for business, the best place for families and to raise children, that there is in America.”
A former governor, Mike Leavitt, founder of Leavitt Partners, gave the event’s keynote presentation, during which he reflected upon the economic growth Utah has experienced during past 20 years and looked forward to the next 20.
“I believe when you look at the outcomes,” Leavitt said, “it’s hard to dispute the fact that we’re headed in the right direction.”
Phil Dean, co-chair of the Utah Economic Council and state budget director and chief economist at the Governor’s Office of Management and Budget, took a broader view of the economy.
“I think sometimes we get caught up in the negative, in the downside, in the hype and social media, all these things going on, and sometimes we miss the big picture,” Dean said. “If you look, especially from a global standpoint, this is the best time ever in the history of the entire world. As you look at extreme poverty rates across the world, this is the best that it has ever been in the history of the world.
“Do we have challenges? Yes, absolutely, we have challenges, both internationally and nationally, here in Utah. At the same time, there are a lot of very good things going on in a lot of different ways.”
The summit also included the presentation to Herbert of the “Economic Report to the Governor,” prepared by the Utah Economic Council and a collaborative endeavor of the University of Utah’s David Eccles School of Business and Governor’s Office of Management and Budget, and “Utah Informed: Visual Intellection for 2020,” published by the Gardner Institute in partnership with the Salt Lake Chamber. Both contain tables, charts and information about the Utah economy. Both are available online.