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SALT LAKE CITY — Local business leaders are bullish on the current Utah economy but wary of what lies ahead, a new survey shows.
The Salt Lake Chamber’s "CEOutlook" for the second quarter of 2018 indicated 60 percent of executives believe the state economy is a little better than six months ago, giving them confidence for the short term, explained Natalie Gochnour, director of the Kem C. Gardner Policy Institute at the University of Utah and chief economist at the Salt Lake Chamber.
But she also noted that business leaders expressed some concern about the future.
“I’m struck by the difference or gap between executives’ views about current economic conditions compared to six months ago (versus) economic conditions six months from now,” Gochnour said. “I read this to mean that Utah CEOs believe rising interest costs, tight labor, rising housing prices, tariffs and other issues will weave a more cautionary economic tale by the end of the calendar year.”
She said the study also showed that executives are mostly upbeat about Utah’s future economic outlook, with 49 percent responding they feel that economic conditions in the Beehive State will improve at least somewhat over the coming six month period. Additionally, nearly half of executives expressed optimism about their own industry growth with 49 percent reporting that their industry would perform somewhat or significantly better six months from now, she said.
The survey showed factors that executives believe could negatively affect the local economy include the tight labor market, increasing housing prices, rising interest rates and the recent federal actions regarding international trade and tariffs.
And if the price of fuel remains high or continues to climb, Gochnour said, the amount families could afford to spend on other things will decline, therefore impacting local business revenue.
"The same money that a family would use to decide if they are going to dinner or if they are going to a movie or buy a new pair of Levis is some of the same money they use to fill up their car with gas," she said.
Some of the CEOs surveyed mentioned that increasing gasoline costs could impact how much and where families could spend their hard-earned "disposable income," she added.
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New research shows that housing demand has outpaced wage growth, which is prompting an affordability gap along the Wasatch Front.Gochnour also noted the rising cost of housing as a significant concern for business leaders who worry about long-term affordability as they recruit people to come to work in Utah.
"We are seeing rising wages, but they are not keeping pace with rising (living) costs," she said. "There is truly a growing gap between our income and the cost of living in our state. There is nowhere that is more evident than in housing."
Derek Miller, president and CEO of the Salt Lake Chamber and Downtown Alliance, agrees with that concern.
“Executives are concerned about rising costs, detrimental actions on trade, an acute need for talented labor and tackling our housing affordability challenges,” Miller said.
And while he said the survey "shows that in many cases executives are optimistic about our economy,” Miller cautioned that "there are also clear signs that the collaborative and problem-solving nature that has made us great is needed more than ever.”
There is truly a growing gap between our income and the cost of living in our state. There is nowhere that is more evident than in housing.
–Natalie Gochnour
Gochnour also noted that recently imposed federal tariffs imposed on some key foreign imports such as steel and aluminum are likely to have an impact on businesses, including the already pricey construction industry.
"(The tariffs) introduce a lot of uncertainty (into the economy)," she said. "There is definitely angst about the tariffs."
Conducted by the Gardner Policy Institute in conjunction with the Salt Lake Chamber as an authoritative statewide business poll on economic sentiment in Utah, CEOutlook was developed as a quarterly survey of business executives across a range of industries, Gochnour explained, seeking to provide a forward-looking view of the Utah economy.
The results could help business and community leaders make informed decisions about likely future economic conditions, she said. These and other survey results will be tracked and compared to overall economic conditions to assess the predictive power of the survey, she added.
