How strong would Utah's economy be if Congress got out of the way?

SALT LAKE CITY — Just two centuries ago, almost anything a person purchased was very likely produced within a modest geographic reach. If you were in business during the early 19th century, everything you made had to be sold close by. There were exceptions, of course, but the world was a relatively large place and reaching much of it was difficult, if not impossible.

That's not the case anymore. It's not a paradigm breaking thought to say the world is more interconnected than ever before. That has its upside: you can eat California strawberries in Utah in January, for example. But it also means events across the globe resonate in the economy, right here in Utah.

And if you think that is only a theory, you need to think again.

"There's a lot of uncertainty on an international level," says Darin Mellott, sr. analyst at CBRE. "But the story in Utah is quite a contrast to that."

The Salt Lake Chamber, Utah's largest and longest-standing business association and CBRE, the world's largest commercial real estate services firm, released their semi- annual economic outlook for Salt Lake County last week. The outlook shows Utah is outperforming the nation and resilient in the face of international challenges, but both are keeping us from firing on all cylinders.

We live in a highly connected world--economically speaking--and that means issues like the European debt crisis and instability in the Middle East have an impact on the progress of our economy, right here along the Wasatch Front.

There's not much Utah businesses can do to influence world events, but U.S. politics have done little to address critical issues. Mellott points out politicians continue to kick the can down the road with important issues and consequently, "the risks pile up."

"The most serious impediment to Utah's economy is a national economy that can't seem to find its way," says Natalie Gochnour, the Salt Lake Chamber's chief economist. "The greatest challenge the U.S. economy faces is not market dynamics, but policy dynamics."

Specifically, Mellott and Gochnour list the Bush Tax Cuts, the payroll tax holiday, the emergency unemployment insurance tax cuts and the alternative minimum tax "patch"--all set to expire Dec. 31. They say the economy is not growing at a fast enough rate to absorb the shock of these increases hitting all at once. This adjustment is commonly referred to as the "fiscal cliff."

"If you look at the tax cuts that expire at the end of the year and spending cuts mandated by last year's budget compromise it is equivalent to $500 billion annually, that's about 3.5 percent GDP," says Mellott. "A slow growing economy can't handle that kind of sudden impact."

Closer to home, economists and analysts say the picture in Utah is better. The economy is adding jobs, there's more optimism among job seekers, sales tax revenue has been positive for the past five quarters, and commercial real estate developers are building--a sign they are optimistic that businesses will be ready, willing and able to occupy the new space when it comes on line.

"The local outlook is considerably brighter," said Gochnour. "We've had stellar economic leadership. We are more fiscally responsible in Utah than any other state. It is no accident Utah's economy is growing faster than almost other state economy."

But a state can only hold out for so long. The federal government must address the annual budget deficits and the mounting national debt. As importantly, we must find a way to do it while investing in the areas that will propel the American economy for decades to come.

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