Wells Fargo: Utah leading economic boom in West

The West’s economy continues to outpace the rest of the country and few states have performed as solidly and consistently as the Utah over the past five years. So says a report from the Wells Fargo Economist Team released last week. 

Real GDP growth in Utah remained one of the fastest-growing in the nation in the first quarter of 2018, expanding 3.7 percent on a year-over-year basis. The state’s burgeoning tech sector is driving much of the growth, helped by its deep talent pool and relative affordability compared with other growing tech hubs. Production out of the mining sector, backed by higher commodity prices, has also been supportive of growth. A sharp decline in the price of copper leading into the summer, however, may stymie production in coming quarters, the report said.{mprestriction ids="1,3"}

Utah payrolls grew 3.4 percent in July on a year-over-year basis. With the exception of natural resources and mining, most major industries added jobs over the past year, according to data in the report. The state’s service sectors are especially healthy, driven by professional and technical services. The construction sector has also been leading in terms of job growth, a consequence of several years of robust new residential building activity. Utah’s lack of physical land constraints is an ongoing competitive advantage.

The report confirmed what most economists have been saying about the Beehive State. Utah’s growing population and highly educated workforce remain valuable assets. Utah has the third-fastest-growing population in the country, driven by both a rapid in-migration and a high birth rate. The young and rapidly growing workforce is a durable competitive advantage over less demographically robust areas and is helping attract new employers.

The tech sector continues to propel the West — especially Utah — adding jobs and attracting new residents. Deteriorating affordability in several traditional tech centers, including Southern California, the San Francisco Bay Area, Seattle and Denver, however, has caused firms to seek out more affordable locations. Utah is one beneficiary, as proximity to Silicon Valley, an educated talent pool and lower real estate costs have spurred development of the “Silicon Slopes” cloud-computing cluster around Salt Lake City.

In the Western region, Real GDP in grew 3.6 percent on a year-to-year basis in the first quarter, well ahead of the nation as a whole, which saw a 2.6 percent increase. Strong economic growth has become a familiar story and current economic conditions continue to be favorable for most Western states. On a year-to-year basis, real GDP growth in all but three of the 13 states outpaced the national rate. Further, economic growth accelerated during the first quarter in the vast majority of Western states, and employment data for the more recent months suggest that growth has remained strong throughout the summer.{/mprestriction}