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Utah poised for economic recovery in 2021, but infrastructure remains issue, leaders say

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Cars drive on I-15 in Lehi.

Traffic moves along I-15 in Lehi on Wednesday, Dec. 16, 2020. 

Steve Griffin, Deseret News

SALT LAKE CITY — Utah leaders and economic experts looked ahead Tuesday to recovery and growing pains in 2021 after a year when the state gained thousands of new residents but lost nearly as many jobs.

Utah is poised for an economic rebound this year, said Natalie Gochnour, director of the Kem C. Gardner Policy Institute, speaking at the Salt Lake Chamber’s annual Utah Economic Outlook and Public Policy Summit in downtown Salt Lake City.

“Unemployment will get lower, total wages will grow more and taxable sales will be higher. Those are our forecasts,” Gochnour said as she presented findings from the institute’s Utah Economic Report.

Gochnour said Utah “fared better than really any state economically during this downturn” and suffered the smallest economic contraction.

“We’re now in a period where vaccines are going to be put in arms, and we have a lot of pent-up demand in the travel industry, in dining out. We have a lot of excess savings. ... We think the nation’s had $1.3 trillion in excess savings as people who have felt uncertainty and at risk have held that money, and they will start to spend it in the mid- to later part of 2021,” she said.

Business revival

Utah lost 22,000 jobs in 2020, Gochnour said. This year, eight of the state’s 11 biggest industries, especially those in the hospitality arena, will see a decline in jobs, Gochnour said.

But the institute forecasts an overall 3.8% job growth in 2021, which Gochnour described as “well above historic average.”

The tourism industry in Utah suffered last year, the state’s national parks saw a 32% decline, and lodging visitation was down 22% in the third quarter, Gochnour said.

But money is expected to come into the state due to federal stimulus funds, she said, as another larger pandemic aid package is anticipated in 2021 following the one passed late in December.

“By the time we’re done with this, we will have experienced about $5.2 trillion of stimulus money of a sugar high coming into the U.S. and Utah economy,” Gochnour said, which will amount to about 25% of the state’s gross domestic product this year.

Gov. Spencer Cox said Utah will need to take a strategic approach to problems like poverty. He called economic development “a means to an end” for helping families survive.

“We have to focus on the people. And as our administration moves forward, you will see that opportunity for everyone, making sure that no one gets left out of the conversation,” Cox said.

He said it would be “actually making the state worse” to add jobs that can’t be filled by those who live in Utah.

When asked about his short-term plans to help the state recover economically from the pandemic, Cox emphasized that the current focus is to speed up the vaccination rate, as well as increase testing and contact-tracing efforts.

“People are ready. There’s so much pent-up demand to travel, to eat out, to go to a Jazz game, to do those things. The people of Utah will support those things, but we’ve got to bridge that gap,” Cox said.

To promote long-term economic development, the new governor said his administration will use lessons learned during the pandemic like “harnessing” remote work opportunities for places like rural Utah. He asked business leaders at the summit to consider rural areas that have infrastructure for expanding their businesses.

Senate President Stuart Adams, R-Layton, called the Utah Inland Port “the future” of the state’s economic growth.

“If we can’t get our goods and services out into the world, and we can’t receive them from the world, we’re going to be in trouble. We’re on the cutting edge of a great inland port,” he said.

Ongoing growth of Utah’s aerospace industry around Hill Air Force Base also points to Utah being “in good shape,” he said.

“And I think our economy is going to thrive. It’s not just going to do good, it’s going to do great. And we just need to help manage it, and that’ll be our biggest problem is managing growth,” Adams said. “I think our future despite COVID, despite what we’ve experienced this last year, I think it’s just bright and probably brighter than I’ve ever seen it.”

As businesses work to recover, leaders with the Salt Lake Chamber, which presented the summit, asked legislators not to pass further regulations on businesses this year.

“These businesses — especially small businesses — they’re spending every single day focused on keeping their doors open and keeping their people employed in jobs,” said Derek Miller, president and CEO of the chamber.

“To add new regulatory burdens in that environment would just be a distraction. It would require them to take their eye off the ball and it would not be good for this fledgling economic recovery that we’re in,” Miller said.

Lawmakers who spoke at the summit indicated they will work to prevent further regulating of businesses.

“We want to make sure that private industry has the ability to do the work they do to drive the economy, to build their economies, and make sure we aren’t putting unintended regulatory barriers in front of them,” said Senate Majority Whip Ann Milner, R-Ogden, adding that she plans to work on the issue.

“I think we’ve worked very hard to try to get a balance there to the regulatory environment we find ourselves with COVID-19,” said House Majority Assistant Whip Rep. Val Peterson, R-Orem, pointing to “the fact that our restaurants are open as much as they are.”

The state’s “diverse economy” has allowed the state to fare well financially throughout the pandemic, according to Peterson. But if Utah doesn’t continue to invest in infrastructure, it will create a “stumbling block” for economic growth, he said.

Like Cox, Milner said creating opportunities for rural areas will be key for the state’s economy.

“We have to make sure that we’re really building a support system that makes sure we have strong economic development that goes across the state. And I think we have to do that in a way that’s based on the community assets of those particular communities, and they’re different,” Milner said.

But state leaders need to ensure infrastructure requirements in those areas are met to support remote working, learning and health care “in ways that really make sense,” the senator said.

Housing, infrastructure needs

The construction industry will grow this year by 5.4% with 5,900 more jobs as the industry hustles to keep up with housing needs, according to Gochnour. The state added 55,000 people in 2020, with net migration at over 24,000, she said.

“People are still moving here in the face of hard times because we’re doing relatively better in Utah. There’s a lot of opportunity here,” she said.

International exports from Utah in 2020 will be the third-highest on record for the state, according to the report. The state also had a record 30,745 new dwelling units permitted, but the housing shortage remains, Gochnour said.

The value of residential construction exceeded $6.3 billion in 2020, Gochnour said, and the median sales price of a Utah home increased by 11%.

Communities need dense housing around mass-transit options, Cox said. But the state also needs single-family starter homes in every community.

“And that’s going to take a lot of work for our local governments. Because local governments know best,” he said, noting that they play a role in making sure there’s room for “our kids and grandkids.”

The “not in my backyard” mentality needs to change, Cox said. “We don’t do density where there’s no infrastructure. When we don’t have an east-west corridor, then yes local government is right” that high-density housing shouldn’t be built there.

“But we can work together on these issues, and we can improve the quality of life and still facilitate the growth that is coming,” he said.

Rep. Mike Schultz, R-Hooper, said Utah can succeed in its efforts to expand its infrastructure “regardless of what happens inside Washington.”

When asked if legislators might consider approving a bond for infrastructure, Schultz said “the state has a ton of capacity in regards to our bonding capacities. Our debt levels are significantly lower than what they were at 2012. So we have the room to do that.”

Legislators also have one-time surplus funding at their disposal this year in the state budget. Schultz said they have discussed potentially coupling some of that money with a bond to tackle transportation infrastructure projects. But roads won’t be the only answer — trains and buses will play a large part.

A big priority is double-tracking the FrontRunner system, offer express trains “and speed the trains up so we can get to Provo to Salt Lake much quicker and Salt Lake to Ogden much quicker, and vice versa,” Schultz said.