The recovery has taken hold, but if that recovery can start to accelerate Utah is really well positioned to eventually have a robust expansion. – Juliette Tennert, Office of Planning and Budget Demographic and Economic Analysis
SALT LAKE CITY — In a slow recovery, any sign of improvement is welcome.
More Americans felt financially secure in 2011 than they have since 2005, according to a report released by the Economic Security Index in October. Yet despite the surge in economic security the report notes that nearly 20 percent of Americans still experienced a significant loss of revenue in 2011.
The Economic Security Index is a publication by the Institution of Social and Policy Issues at Yale University.
For the past 25 years ESI has measured household economic instability by tracking Americans who experience a 25 percent or greater loss of household resources. This could be because of the loss of a job, but it also takes into account resources after paying for medical care and financial debts.
The percentage of people in the United States that feel economically insecure dropped from 20.3 percent in 2010 to 18.9 percent in 2011.
Craig Israelsen, a family finance professor at Brigham Young University questioned the validity of ESI because employment is the largest factor of economic security.
"This is just another way of coloring the number of people who have experienced job loss or wage reduction," Israelsen said. "Because savings, most people don't have savings, so it's kind of a none issue. It really comes down to their current income."
Juliette Tennert, chief economist and deputy director of the Governor's Office of Planning and Budget Demographic and Economic Analysis said that ESI is trying to combine economic factors.
"Basically what they are trying to do, they are trying to aggregate a bunch of different types of economic indicators so they can compare states," Tennert said. "What the ESI is trying to do is good, it seems to me that it is trying to provide a bigger picture of the economy."
Tennert said that the Office of Demographic and Economic Analysis is responsible for forecasting revenue and advising the governor on policies, and what the ESI is trying to show is accurate.
"What we see in this index (ESI) is really consistent in what we are seeing in the data," she said. "Over the past year Utah's economy has been improving, we've been seeing job gains, the unemployment rate has been coming down."
She said that the unemployment rate got as high as 8.3 percent in Utah, which is very high by historical standards for Utah, but it's now down to 5.4 percent.
"The index does show some degree of economic insecurity for some people, we still do have people in Utah facing economic insecurity," Tennert said. "And we still see that in the unemployment rate, while it has come down from 8.3 percent to 5.4 percent, that is still elevated. We had an unemployment rate that was under three percent leading up to the recession."
Utah's unemployment rate of 5.4 percent in September placed it sixth in the nation for unemployment rates.
Tennert said that aside from current uncertainty in the economy because of the looming fiscal cliff, the actual data shows that Utah is well positioned for that recovery.
"The recovery has taken hold, but if that recovery can start to accelerate Utah is really well positioned to eventually have a robust expansion," she said.
Tennert did take issue with one aspect of the ESI’s Utah report from June of this year.
"To say that the number of people classified as economically insecure increased from '86 to 2012," She said, "well of course it likely increased because we had an explosive population growth over that time.
In 1986 Utah had a population of 1.66 million people. In 2010 Utah's population was 2.8 million.
In the October 2012 economic summary by the Governor's office of Planning and Budget, Utah's nonagricultural employment increased by about two percent, or 24,400 between September and October.
Tennert said that job growth, declines in the unemployment rate, state revenue and a stabilized housing market with fewer foreclosures and increasing housing prices show that Utah is positively positioned for a continued recovery.