Awash in a sea of charts and numbers, a pair of prominent economists recently provided some context and advice for businesspeople at a series of economic outlook events.
Speaking in Kaysville, Michael Jeanfreau, a senior economist at the Utah Department of Workforce Services, gave audiences reasons to feel good about Utah’s economic situation. Meanwhile, Tim Mahedy, founder and chief economist at Access/Macro, gave small-business owners guidance on how to handle a volatile economic landscape.
Their remarks came during annual Bank of Utah Economic Forecast Events, which took place over a few days in Kaysville, Logan, Lehi, Ogden and Salt Lake City.
“It’s not all doom and gloom, I promise,” Jeanfreau said about the economic future of the state. “There are positive points to this, and again Utah will continue to outperform the rest of the United States.”
Utah, he said, has several strengths, including a diverse economy, a young population and a generally positive attitude.
“Why does this matter?” he asked when discussing economic diversity. “When a huge shock comes along, like COVID, it can heavily impact tourist areas, right? But as a state, as a whole, we’re diverse enough that no single one really should put us on our butt. We should be able to survive these really well.”
Meanwhile, Utah’s population is the nation’s youngest. The median age in Utah is 32.4, far below the national median of 39.1.
“That younger generation is a huge driver of job creation,” Jeanfreau said. “We’re still situated in a good position — other than other states may try and take our youth from us and steal the young because they can pay more, right?”
Another Utah positive is that its consumer sentiment and outlook sentiment are higher than elsewhere in the U.S., which can be a hedge against uncertainty. The local and national economies have suffered huge spikes in uncertainty in recent years — thanks to COVID and tariffs — leading to people cutting their costs and spending. But that has not happened as much in Utah.
“We’re pretty rosy about the future and that plays into, again, if you’re uncertain, you pull back spending. If you’re confident, you spend. And we’re more confident here than we are in other places,” he said.
“In the United States, in the last few years … a lot of uncertainty. People are unsure of the future. And yet, Utah, we feel like things are going to get better, and, in a really weird way, that generally means that it will, right? We’ll continue to spend, we’ll continue to consume goods, the economy will continue to grow.”
While emphasizing that a business owner should focus on certain economic numbers, Mahedy suggested that they instead concentrate more of their efforts on shaping and telling their company’s story. Part of the reason is that numbers are ubiquitous, and many are now unreliable.
“Macro models are broken. All financial models are broken,” Mahedy said. “The pandemic did that, thank you. Nothing you can do about it, right? They’re all based on history, [and] history changed. You just can’t make them better. Over time, they will improve, but that’s the world.”
But in the current world, “people undersell the importance of a story, especially in the world of AI,” he said.
“‘This number said this and I can show a number and it says 4.8’ and blah blah blah.’ … When you give a presentation or you’re talking about modeling or you’re talking to a board or whatever, you need to be telling a story. That story needs to make sense and be consistent, grounded in data, but it needs to be a cogent story that holds together. That’s enormously important.”
Companies also should focus on the “right” statistics, he stressed.
“What in your business are the stats you should focus on and not focus on? There are numbers everywhere,” Mahedy said. “Paralysis by analysis is way more likely than not knowing enough information. So, focus. Your job as an analyst is to know which numbers matter.”
Business owners should constantly assess how changes “go against your story” and also should nurture a growth mindset, always being on the lookout for new possibilities. “Just because the economy changes, just because everything structurally changes, doesn’t mean there’s not opportunity,” he said.
Mahedy said even Hall of Fame baseball players get hits only three times out of 10 at-bats, so not every decision will be the right one. But finding the right data, thinking about their ramifications on a particular industry, will improve the chances of making better choices, he said.
“You will get to a place,” he said, “where your models, even if they’re not right, they’re directionally correct, and, more importantly, it gives the humans in your organization — not the AI — an opportunity to make better decisions.”