At the annual Utah Economic Outlook & Public Policy Summit on Thursday, Utah Gov. Spencer Cox celebrated the state’s current economic vibrancy on the cusp of the 2022 legislative session, one riding an ongoing economic high and enjoying coffers flush with cash ready to finance a slew of projects and initiatives in the coming year.
Cox stumped for the highlight items in his 2022 state budget proposal, noting record spending proposals for education, investments in critical infrastructure in the face of nation-leading population growth, efforts to leverage state government’s regulatory role to create a bigger inventory of affordable housing, a new round of tax breaks and a plan to execute a wholesale revamp of the state’s economic development playbook.
He also invoked the words of author, Harvard professor and well-known social scientist Arthur Brooks in defining a critical role Utah has assumed, perhaps, as arguably the most economically successful state in the country and one that has weathered the trials and challenges of the COVID-19 pandemic better than just about anywhere.
“I had lunch with (Brooks) last week,” Cox told the audience at downtown’s Grand America Hotel. “And he just looked at me and said, ‘I hate to tell you this, but Utah is the last great hope of this country. The way you do things in Utah is the only way that our country is going to survive.’”
Cox noted the plaudit comes with a sizable burden but said he believes Utah has earned Brooks’ admiration thanks to its record of fiscal prudence and collaborative problem-solving.
But, he also alluded to the vitriol that’s become a hallmark of exchanges across political and social spectrums that could, if gone unchecked, erode the foundation upon which the state has built its success.
“It’s a heavy responsibility that we all bear, but we have to work together,” Cox said. “We can’t talk past each other, we can’t fight for the sake of fighting … and we certainly can’t fight about things that don’t matter.”
Cox also shared his concern that the state’s explosive growth and escalating housing costs could lead to a generational exodus as young people may need to seek more affordable climes when they leave school and enter the workforce. He noted rural Utahns have been familiar with the problem for years, thanks to the dearth of job opportunities in the state’s thinly populated areas, but one that could emerge as ubiquitous if the state can’t manage skyrocketing housing costs. And he said that the upcoming legislative session would see bills focused on smart growth strategies that, while necessary, may not find favor with all audiences.
“The problem is, the cost of living is so high that we’re going to have to start exporting our kids if we don’t get this right,” Cox said “We have to get this right. We cannot afford to become California. We won’t let that happen, at least not under my watch.”
Phil Dean, former state budget director and public finance senior fellow for the University of Utah’s Kem C. Gardner Policy Institute, noted that while most Utahns have found themselves on the upside of the state’s high-performance economy, it has not been a boon for all, and many rural and lower income Utah communities continue to suffer from high unemployment and limited opportunities.
Dean said escalating cost pressures, signified recently by a federal report that the U.S. had hit 7% inflation in December, the highest year-over-year increase in nearly four decades, hits families in those Utah communities the hardest.
“People have been left behind in this economic recovery,” Dean said.
Dean noted rising costs on basic necessities like food, shelter and transportation have disproportionate impacts on Utahns with lower earnings.
“Those at the lowest income levels ... are feeling it and feeling it more intensely than those who have more discretion in their family budget,” Dean said.
Dean said his one-word prediction for Utah’s economic prospects in 2022 is “hot,” but explained that “there are benefits to heat, but you can also get burned.”
Inflation issues figured largely in comments from Federal Reserve Bank of San Francisco President/CEO Mary Daly who made a remote appearance at the summit to participate in a conversation moderated by Gardner Institute director Natalie Gochnour.
Daly shared an upbeat view of the nation’s upcoming economic prospects but noted that until the coronavirus pandemic is truly abated, “as goes COVID, so goes the economy.”
“I am optimistic that when we get through this we’ll continue to move forward,” Daly said. “Consumers want to spend, businesses want to get open and people want to work.”
Daly explained how the impacts of COVID-19 have rippled through an interconnected global supply chain with shutdowns in Asia leading to shortages in the U.S. amid record high demand that, itself, is driven by pandemic conditions that have pushed consumer spending from services to goods. She noted some examples, including how a two-week shutdown of one shipping nexus in Vietnam resulted in three-month delays on goods passing through that particular port.
She also offered a deeper definition of the Fed’s contention, offered months ago, that rising inflation would be a “transitory” issue that would fade as broader systems returned to pre-pandemic operations.
Daly said that COVID-19 has simply persisted longer than expected and economic impacts like higher-than-normal demand for goods and supply chain bottlenecks that have exacerbated inflation rates will not persist past the time when pandemic conditions ease.
Daly also reiterated that the Fed’s plans to institute nominal upward adjustments to interest rates in the coming year will be aimed at “neither stimulating nor pulling back the reins” of the U.S. economy.
When asked to weigh-in on the year ahead, Daly said she was “bullish” on 2022 and, pending any further unexpected changes in pandemic conditions, sees a positive economic road ahead, and particularly so for Utah.
“I see the beginnings of really building back from what we’ve gone through,” Daly said. “I’m very optimistic. Many sectors are still disrupted and not at all back to what they were. Those are the people and businesses and areas we need to draw in. Some places, like Utah, will be leading and we need everyone else to get in and follow.”