Brice Wallace
Utah’s economy in 2017 should see nearly a repeat of 2016, with perhaps some moderation, according to a report recently presented to Gov. Gary Herbert.
The annual Economic Report to the Governor indicates Utah had a “healthy” economy in 2016. “The consensus forecast predicts moderating — but still healthy — job and wage growth, low unemployment, and increased net in-migration in 2017,” it said.
The annual report was prepared by the Utah Economic Council in collaboration with the University of Utah’s David Eccles School of Business and the Governor’s Office of Management and Budget. It was presented during the Salt Lake Chamber’s Utah Economic Review and Policy Summit and is available at http://gardner.utah.edu/economic-report-to-the-governor/.
The report noted that internal risks to the Utah economy include the supply of workers, education warning signs and air quality issues. It also faces risks on the federal level in the form of trade policy changes, normalization of monetary policy and geopolitical instability.
During 2016, the state saw expansion in every major industrial sector, including the creation of 49,500 jobs. Utah’s annual employment growth rate was 3.6 percent, above the state’s long-term average and among the strongest in the nation.
“Utah’s economic performance was among the strongest in the nation in 2016,” said Juliette Tennert, director of economic and public policy research at the Eccles School’s Kem C. Gardner Policy Institute and the co-chair of the Utah Economic Council. “Our state added jobs at more than twice the pace of the nation, and our unemployment rate is the lowest it’s been in more than eight years. We expect that growth will moderate in 2017, but Utah’s economy will continue to be a top performer among states.”
Other highlights from the report show that Utah’s population topped 3 million mark in 2016. Net in-migration of just over 24,000 was the most in 10 years and contributed to 40 percent of the state’s total population growth. Utah’s construction sector posted the highest job growth in 2016 — 6.8 percent — strengthened by both robust residential and commercial activity. The value of commercial construction reached a record $2.5 billion in 2016. Utah’s leisure and hospitality sector posted 6.1 percent job growth during the year, aided by low unemployment and rising wages for Utahns, along with growth in travel and tourism activity. Utah’s ski resorts and national parks hosted a record number of visitors in 2016.
Speaking at the Utah Economic Review, Herbert said Utah’s economic success “is not just happening” but is the result of several government policies that allow entrepreneurs the opportunity to discover and take advantages of niches in the marketplace. Those policies include competitive tax rates, “sensible” regulations, efficiency in state government and fiscal prudence, he said.
“Those are the things that allow us to, in fact, excel and have a healthy, diverse economy, which is recognized as probably the most healthy, diverse economy in America today,” the governor said. “That doesn’t mean we should, in fact, rest on our laurels.”
Despite Utah’s strong economic situation, Herbert said issues remain in parts of rural Utah.
“I’ve said it before and I’ll say it again: None of us should rest until everybody — every city, 245-strong, [and] 29 counties — that everybody has an opportunity to participate in the healthy economic situation,” he said.
Primarily, rural Utah needs economic diversification, Herbert said. It cannot rely just on farming, natural resources and tourism and travel.
“What we don’t want to have said is, ‘Well, it’s their problem.’ Particularly those of us on the Wasatch Front saying, ‘Well, that’s their problem down in Piute County and rural Utah.’ If they have a challenge economically, then that’s our problem, and we need to work together to make sure that we provide them with the opportunity to have success economically.”
Herbert, like many other speakers at the events, also stressed that education is a key to Utah’s long-term economic success. While high school graduation rates have grown in recent years, the state needs to “raise the bar on student achievement,” he said. “If we do that,” Herbert said, “our long-term economic success will be assured.”
While Utah’s economy is as healthy as it was at the same point last year, the revenue stream into state coffers is $100 million less now, which the governor attributed to a narrower tax base. The economy is focused more on services and less on goods, more items are being purchased online and thus owed sales taxes are uncollected, and the state has a lot of tax exemptions and credits, he said.
He vowed to support policies that help the economy and push back against those that might damage it.
“We will continue to make sure that the private sector is in power because that’s where the wealth creation comes from,” he told the crowd. “Government ends up stymying innovation. Government ends up redistributing the wealth — sometimes for good and noble purposes.
“But what we don’t want to do is stifle your creativity, your ability to go out there and find niches in the marketplace, to have that risk-reward that’s called free-market capitalism and enjoy the fruits of your labors. If we do that, I’m confident Utah will continue to excel economically, and really the economic foundation is what gives us a great quality of life.”
