Utah's metro areas have done better than much of the country when it comes to recovering from the so-called Great Recession, making 2012 a good year. And yet, despite the generally favorable news, such as Forbes Magazine recently choosing Utah as the best place to do business for the third year in a row, economic activity is nowhere near what it was before the recession, and recovery remains fragile.
All of which provides more reason to look with a hopeful eye toward fiscal-cliff negotiations in Washington. As a recent report in the Deseret News noted, unless politicians find a way to fix expiring tax cuts, virtually everyone in the state will see taxes rise. A median-income family of four could see its income taxes rise by $2,200 a year, and Utah's chief economist, Juliette Tennert, estimates this would impact the state's economy by $2 billion and lead to a shortage in state revenues, as well.
No one knows the exact impact of a failure to reach an agreement on tax cuts and cuts to federal programs. The cliff is, in many ways, misnamed. The impacts would not be felt immediately. In addition, the automatic cuts and tax hikes that would take effect Jan. 1 would at least jolt the federal budget in the right direction which, after a period of adjustment, may be a positive thing for the economy. So much is unknown. Taking a chunk of money out of the pockets of consumers, however, would most likely slow an already glacial economic recovery.
The Mountain Monitor, a product of Brookings Mountain West and affiliated with the Brookings Institution, catalogs the economies of metropolitan areas within the Mountain West. Its most recent report, released earlier this month, shows that Utah's largest cities are recovering better than most places in the nation. Provo was one of only six large metro areas in the nation that posted employments gains of 1 percent or more in the second quarter of the year, the most recent figures available. The Salt Lake area remained in the nation's top quintile in terms of overall recovery, but job growth was slowing. Ogden's overall performance began to wane, as well.
Home prices, meanwhile, fell during the second quarter in every regional metro area except Phoenix. In Salt Lake City, prices fell to new lows, the report said.
Utah owes much of its overall economic success to smart political leadership at the state level, where a combination of rainy day funds and strategic budget cuts kept lawmakers from having to raise taxes. But there is a sharp difference between being the state with its head held highest above troubled waters and sailing briskly with strong winds. The state can only do so much on its own. The impacts of federal decisions such as the costs associated with the Affordable Care Act and fiscal cliff negotiations, are beyond the reach of Utah's Capitol.
The state may well remain a leader among its peers, but that is an honor of relative value during tough times.