The Great Recession was the longest, deepest and broadest in our lifetime. But we have now recovered all the jobs that we had lost, our unemployment rate has fallen to 5.2 percent — the sixth lowest in the country. We are presently the fifth fastest growing state in the country. —Natalie Gochnour
SALT LAKE CITY — Utah's economy has bounced back to pre-recession levels in 2012, and more of the same can be expected next year as long as leaders in the nation's capital can avoid falling off the "fiscal cliff."
Speaking at a news conference Tuesday in downtown Salt Lake City, Natalie Gochnour, executive vice president and chief economist for the Salt Lake Chamber, said this year has been “surprisingly” strong economically for Utah due to increased commercial and retail development, along with the completion of major transportation projects such as I-15 CORE in Utah County, as well as growth in the technology sector.
Utah's employment numbers also have climbed back to pre-recession levels, Gochnour said, giving the state optimism that is among the highest in the nation.
“The Great Recession was the longest, deepest and broadest in our lifetime,” she said. “But we have now recovered all the jobs that we had lost, our unemployment rate has fallen to 5.2 percent — the sixth lowest in the country. We are presently the fifth fastest growing state in the country.”
Because of the growth, 2013 should mirror 2012, Gochnour said, unless leaders in Washington, D.C., are unable to resolve the impending negative impacts of the fiscal cliff.
“If we don't see the right kind of economic leadership, we're vulnerable,” she said.
The risk posed by the uncertainty on Capitol Hill is affecting not only the U.S., but the global economic outlook as well, Gochnour said.
According to a joint report released by the Salt Lake Chamber and commercial real estate firm CBRE, accumulating risks for the global, U.S. and Utah economies are reaching critical levels, with the most pressing being the fiscal cliff — made up of tax increases and automatic spending cuts totaling several hundred billion dollars annually that are set to take effect Jan. 1.
While Utah's economy maintained healthy growth in various economic sectors, much of that growth could be undone if compromise isn't reached in Washington, D.C., according to Darin Mellott, CBRE senior research analyst.
“It would be a very painful scenario for families and individuals across the country,” Mellott said.
In the Beehive State, that would mean 90 percent of Utah households would experience a tax increase, averaging $3,500 across all incomes on an annual basis. On the spending side, Utah's greatest exposure to cuts is through defense, with automatic spending reductions reaching $250 million to $500 million, affecting jobs across the state.
Of particular concern would be the impact on Hill Air Force Base, the state’s third largest employer, Mellott said.
“This would affect jobs not only on base, but also people who support operations on the base,” he said.
Provided worst-case scenarios are avoided, Mellott said job growth would be near long-term averages statewide. Some near-term slowing in job creation is likely, the report said. However, healthy growth averaging 3 percent during 2013 is expected.
The tech sector and natural resources, particularly related to energy, will be bright spots in the state's economy, creating positive ripple effects across the state, Mellott explained.
The report stated that in figurative terms, if the United States is a safe harbor in the global economy, Utah is becoming a preferred docking place in that harbor. Absent any significant deterioration in the macroeconomic environment, Utah's economy is expected to continue outperforming the broader U.S. economy.
“We have every reason to be optimistic in Utah,” Mellott said.
Despite that cautious optimism, the specter of the looming fiscal cliff is troubling to Utah's governor, who wrote a personal letter to President Barack Obama expressing his concern about the matter.
“All of us — federal and state officials alike — must find solutions that represent the best interests of America, and our ongoing efforts to restore our economy,” Gov. Gary Herbert wrote. “Utah is one of the states in America experiencing great progress in our economic recovery. To suffer a substantial setback because federal officials cannot find a compromise economic solution would simply be an unwarranted tragedy. Mr. President, now is the time for bold leadership to protect our economy, our nation and our future.”