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SALT LAKE CITY — Utah’s economy is poised for growth if Congress avoids sending the national economy into a tailspin due to bureaucratic gridlock, local economists say.
Speaking before an audience of several hundred in the ballroom of the Grand America Hotel on Friday, a panel of local economic analysts offered insights on where the state economy is headed in 2014.
Though the overall forecast is positive, economists highlighted their shared concerns about policy paralysis in Washington, D.C.
“The greatest risk to the Utah economy right now is the constant bickering within the beltway about the nation’s fiscal condition,” said Natalie Gochnour, chief economist for the Salt Lake Chamber and member of the Utah Economic Council. “The gridlock creates serious uncertainty for businesses throughout the country, preventing them from investing and hiring like they want to do. As the nation’s economy struggles, it ultimately impacts Utah.”
Despite the concerns, job growth, increasing incomes and the unemployment rate are all expected to improve this year as the Beehive State continues to outperform national economic conditions, the panel explained.
“The outlook for 2014 is positive, especially in Utah,” said Darin Mellott, a senior analyst from commercial real estate services and investment firm CBRE and member of the Utah Economic Council. “We are still slightly below our potential, but it’s going to be a good year.”
Mellott said the national economy is finally starting to improve following a prolonged setback created by the Great Recession, and Utah should begin to see some residual benefit as the nationwide economic expansion progresses.
The greatest risk to the Utah economy right now is the constant bickering within the beltway about the nation's fiscal condition. The gridlock creates serious uncertainty for businesses throughout the country, preventing them from investing and hiring like they want to do. As the nation's economy struggles, it ultimately impacts Utah.
–Natalie Gochnour, chief economist for the Salt Lake Chamber
Utah typically grows more rapidly than the nation after a recession, and that pattern is continuing in the current recovery, according to the 2014 Utah Economic Outlook — a report released by the David Eccles School of Business and the Governor’s Office of Management and Budget under the guidance of the Utah Economic Council.
Nationally, employment grew 1.6 percent in 2013, compared with 3.3 percent for Utah, the report stated. While employment increased last year, Utah’s unemployment rate also improved to 4.8 percent, lower than the rate in 2012.
Though housing stabilized, with building permits at 12,500 in 2013, homebuilding did not lead the economy as it does during a typical recovery, explained panelist Jim Wood, director of the Bureau of Economic and Business Research at the University of Utah.
Wood said improvement in the commercial real estate sector and export growth should help drive the state and national economies in 2014, along with increased growth in vehicle sales.
“Auto sales are projected to hit an all-time high in Utah — about 120,000 units,” he said.
Carmakers are becoming more aggressive in their marketing and pricing, prompting more people to upgrade their aging vehicles, Wood said.
On the employment front, Utah’s job growth is expected to increase 3.1 percent, equal to its long-term average, while the nation increases to 1.7 percent, the report stated. With job growth near the long-term average, the unemployment rate is forecast to decrease to 4.2 percent.
According to Carrie Mayne, director and chief economist of Workforce Research and Analysis for the Utah Department of Workforce Services, job growth in 2014 should be similar to that of 2013.
“We expect about 3.1 percent growth most likely, but that could come in a little stronger if non-residential construction posts stronger numbers than it did in 2013,” Mayne said. “(Last year) saw a lot of job growth in the professional, scientific and technical services, driven by expansion of the tech companies in southern Salt Lake County and northern Utah County. We could experience a little leveling off in that sector as those companies complete their staffing ramp-ups.”
Given all the national pressure in 2013, Utah's economy preformed quite well, but our economic growth would have been stronger if not for all of the national uncertainty.
–Juliette Tennert
Mayne noted that average annual wages showed somewhat weak growth in 2013, about 1.5 percent, mainly due to the soft labor market. But wage growth should come back slightly stronger in 2014 to about 2.5 percent, she said.
In contrast to the early stages of the recovery, housing will provide noticeable support to the expansion, the report said. Construction employment is projected to grow 7 percent in 2014. The continuing housing recovery accounts for most of the strong showing in construction, the report said.
Overall, despite questionable leadership at the congressional level, the state is “well positioned for economic expansion” this year, said Juliette Tennert, panelist and chief economist in the Governor’s Office of Management and Budget.
“Given all the national pressure in 2013, Utah’s economy preformed quite well," Tennert said, "but our economic growth would have been stronger if not for all of the national uncertainty."
Congressional wrangling causing a federal shutdown, the debt ceiling debate and the resulting impact on consumer confidence all created an environment that impeded potential growth in the Utah economy, as well as other states, she said.
Tennert said the state economy has a potential to grow at a more robust 4 percent this year, which would mean more jobs and increased revenues for state and local coffers.
“We are very well-positioned for accelerating growth in the Utah economy in 2014,” she said. “As long as the national economy performs at a moderate pace, then Utah’s economy should perform quite well.
