Economy could see strength of last year - but some troubles, too

By Brice Wallace

This year could see a repeat of Utah’s strong 2017 economy but also feature many of the same bugaboos that have challenged the state for several years.

Economists and other experts gathered last week at the Utah Economic Outlook & Public Policy Summit, produced by the Salt Lake Chamber and the University of Utah’s Kem C. Gardner Policy Institute, described Utah’s economy as anywhere from “moderating” to “booming.” But they agreed that Utah is still struggling with troubles that include a shortage of skilled labor and lingering air quality issues.

{mprestriction ids="1,3"}Juliette Tennert, chief economist at the institute, said Utah is at full employment, with an unemployment rate hovering at about 3.1 percent. “Moving into 2018, we’re in a very tight labor market,” she told the audience. “You all are competing for labor.”

The state not only faces the challenge of having enough workers but also having enough skilled workers, she said. Among people of prime working age, 43.3 percent of people coming to Utah have a bachelor’s degree or higher, compared with 47.8 percent of those leaving.

“We’re just wondering if perhaps this issue of exporting education will be a headwind for us to be thinking about,” Tennert said.

Carrie Mayne, chief economist at the Utah Department of Workforce Services, said the state needs in-migration because efforts to improve education take a long time to come to fruition.

Mayne also predicted that Utah will see lower job growth in 2018 than the 3.1 percent rate seen in 2017.

“We expected to see more of a labor shortage affect us in 2017, and while we did see some of that in some industries, it did not hit us across the board,” Mayne said. “2018, it will likely hit us across the board, and it will pull our job growth rate down.”

Poor air quality was an oft-cited example of a Utah economic challenge. Tennert said that statistics show that during the past decade, Utah’s air quality has improved, but the state has three times more unhealthy air quality days than the national average.

Economic development officials looking to lure “the next Adobe relocation” into Utah understand air quality can be an obstacle, she said.

“This becomes an economic issue as companies looking to locate to our state or expand in our state are thinking about their labor force and whether or not people want to be here,” she said. “So, this is one more thing that our economic developers need to deal with. … This air quality thing has got to pop as a potential issue that could potentially leave an incredible company outside of the state of Utah.”

Robert Spendlove, economic and public policy officer at Zions Bank, said Utah’s air pollution has lessened during the past 20 years despite its population growing by a million people.

“It’s better than it used to be; however, that doesn’t change the fact that we still have a week in December where you can’t see across the street,” he said.

“As policymakers and lawmakers, we need to be doing more about educating people about the true causes. Most people think it’s all Kennecott and the refineries. Who’s causing the problem? It’s everyone in this room. It’s everyone driving their cars, it’s everyone burning fuels in their homes, having logs in their fireplace. We’ve all got to be looking at ourselves and saying, ‘What can we do to be doing a better job at controlling air pollution?’”

Gov. Gary Herbert said Utah’s air is as bad as anyplace in the United States on its bad days, but Utah has fewer bad days than many other places and its pollution figures are improving.

“That being said, it does impact our health,” Herbert said. “It doesn’t only impact health, but it does impact our businesses, it impacts tourism, it impacts people who want to come here to set up a business.”

A couple of speakers, including Herbert, said significant improvement could be just a few years away with the advancement of Tier 3 fuel and vehicles. Tier 3 usage is projected to cut 80 percent of vehicle emissions, the top pollution culprit in Utah.

Among other challenges to Utah’s economy cited during the summit is “the fact that we are late in the business cycle,” Tennert said, pointing to the 102-month-long post-recession expansion.

While there is “no better economy in the nation” and Utah could benefit some from recently passed federal tax reform, “the fact of the matter is that we are probably closing in on the end of this long, long economic expansion,” she said.

Herbert boasted that Utah has “the greatest, most-diverse economy in the U.S. today” and has seen more per capita job growth than any other state in recent years. He said the achievements have been not the result of luck but instead by design.

“We’ve understood that if we’re going to have a miracle, it’s going to be hard work that’s behind it,” the governor said.

“We can rest on our laurels, or, as we climb the summit, we can review, reflect and kind of appreciate, I guess, where we’ve come from and enjoy the view. But we’ve got to look forward and say, ‘There’s more on the horizon, there’s more for us to accomplish, there are more challenges ahead of us,’” Herbert said.

The summit also featured a panel of legislators discussing policy issues, a keynote speech by former Massachusetts Gov. Mitt Romney — expected to run for U.S. Senate — and the unveiling of the Salt Lake Chamber’s top 10 legislative priorities for the 2018 general session. The priorities include modernizing Utah’s tax code, meeting Utah’s talent needs by investing in education, continuing investments in transportation, tackling housing affordability, and reducing pollution emissions by 40 percent by 2050.

The chamber also released  “Utah’s Next Economic Blueprint,” a publication that is designed to be a framework for Utah’s continued economic success.  The publication outlines 20 top objectives and 54 key milestones.

Details about the chamber’s public policy efforts are at slchamber.com/policy.

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