Economist Natalie Gochnour is director of the Kem C. Gardner Policy Institute at the University of Utah and is an associate dean in the David Eccles School of Business. She has a long history of public service and continues to be a key economic advisor to state political and business leaders.
We asked this seasoned professional to answer six questions in relation to the economic difficulties presented by the 2020 coronavirus pandemic and how Utah will weather the storm in 2021.
Deseret News: Back in July we asked you to give us an economic overview. At that time you said if we get a second federal stimulus and no shutdown, the worst of the job loss and slowdown would be over. Unfortunately that stimulus didn’t materialize until late December’s approval — assuming it is signed by President Trump. Is it too late to make a difference?
Natalie Gochnour: No, it’s not too late to make a difference.
Utah’s economy has demonstrated enormous resilience and continues to improve. Year-over job change was minus-1.6% in August, minus-0.9% in September, minus-0.5% in October, and minus-0.2% in November. We expect year-over job losses to end this month. This is steady progress.
The new federal stimulus (if finalized) will do two major things. First, it will provide a needed boost and bridge until vaccinations are widespread. This bridge will boost consumer confidence and keep the economy progressing.
Second, the stimulus will provide critical aid to industries, businesses and households most severely impacted by the pandemic. This list includes leisure and hospitality service workers and businesses (this sector in Utah is still down 19,300 workers on a year-over basis), public transit and air transportation support (particularly Delta Air Lines), public and higher education support, small business support, and support for other Utahns in need (rental assistance, nutrition, child care, and broadband. and such).
DN: What is the greatest economic challenge facing Utah in 2021?
Gochnour: The greatest challenge in 2021 for the Utah economy is helping the many individuals and families that have sustained significant loss during this pandemic. The data clearly shows the COVID-19 recession to have a K-shaped recovery, with an initial shock at first for everyone, but two distinct paths to recovery — one more positive than the other.
This recession magnified the already significant differences between those with and those without economic security and means. Many low-income Utah children suffered a significant education loss, which must be made up. Many small businesses have been destroyed and these livelihoods must be reinvented. Utah’s multicultural community has sustained more serious impacts, as have those in select occupations — energy and tourism have been the hardest hit.
In 2021 the state must continue to invest in a full recovery for all Utahns and close the gap between those who have largely prospered and those who have suffered greatly.
DN: Which sectors of the Utah economy are poised to do well?
Gochnour: With continuing in-migration, relatively strong employment opportunities, and a multiyear and growing housing shortage, construction will continue to be Utah’s major growth industry in 2021.
I also expect Utah’s tech sector to continue to be a bright spot as years of investment in engineering schools and STEM fields pay dividends for the Utah economy, and Utah’s life quality relative to other expensive tech centers will carry the day with new remote work possibilities.
DN: Leisure and hospitality services took the biggest hit in Utah’s economy. What will it take to bounce back and how long do you expect the recovery to take?
Gochnour: I expect leisure and hospitality to have a significant bounce back in fall 2021. The pent-up demand from Utahns, Americans, and the world will find its way into hotel and convention bookings, restaurant sales, and sports and entertainment venues.
This forecast is based on widespread vaccinations and the containment of the virus.
DN: Will the nation’s newfound ability to work remotely from home have an impact on Utah and is it positive or negative?
Gochnour: COVID-19 accelerated many trends that were already in play. Chief among them is remote work, which will be a game-changer for the economy. It will change where and how people live and work.
In Utah this will be a major plus for our air quality challenges. Consider red air days when large swaths of the Utah workforce can work from home.
Utah will also be a beneficiary of the “Zoom town” trend as attractive communities throughout Utah attract well paid professionals to live in Utah. I expect Summit, Morgan, Wasatch and Utah counties to continue to experience significant growth pressures. This growth will challenge Utah’s life quality and require significant infrastructure investment. Don’t count on growth being cheap.
The real prize will be opportunities for rural Utah to escape the “tyranny of distance” and realize economic gains as more money is invested in these communities. This will particularly be true for high-amenity rural areas that are proximate to urban Utah, close to beautiful landscapes, and that have an institution of higher learning in the community.
DN: Why is Utah able to withstand, better than other states, economic upheaval during a pandemic? Is there actually something to “The Utah Way?”
Gochnour: Gov. Mike Leavitt once told me that nobody looks good in a pandemic. This resonates with me after watching the ebb and flow of leadership successes and challenges in Utah over the past nine months. Nothing has been easy.
But through it all, I’m confident at the other end of this historic event, Utah will rank well in the top-line economic and health measures, and yes, I will attribute this to our ability to work together to prevent and solve problems.
Our institutions still work, our associational life is strong, and our care for others is real.
I recently wrote for American Affairs the following:
“Social capital is like a bank account. Communities with abundant social capital make withdrawals and invest in civic virtue to prevent and solve complex problems. As this investment occurs, a variety of positive things happen.
“First, people convene and learn from one another. Listening occurs. Understanding blossoms. Trust builds.
“Next, innovative ideas begin to catalyze. Human ingenuity — fueled by trust, collaboration and goodwill — takes over. Those walking the path begin to create a better community, step by step, and mile by mile. They don’t always make the right choices. Sometimes they experience major setbacks and take a stroll down an ill-advised route. But their ‘associational life’ brings them back.
“The journey creates all sorts of laudable characteristics. In Utah’s case these characteristics include equality of income, high social mobility, low poverty rates, strong work ethics, high rates of volunteerism, high educational attainment, trust in institutions, and positive health outcomes.
“Finally, the cash that was withdrawn gets redeposited — tenfold. The social capital bank account swells and becomes an even larger community asset for challenges later on. Communities that walk this path are prosperous today and prepared for tomorrow.”
Utah is on this path.