SALT LAKE CITY — How do you keep Utah's economy vibrant for the current generation of workers and for future generations in a state with a population expected to nearly double in the next 35 years?
The answer to that question is the identified priority of lawmakers tasked with sustaining and promoting “all of the things that are targeted at business and research, jobs and commercialization," said Sen. Brian Shiozawa, R-Cottonwood Heights.
That means investment in technology and education, renewed efforts at cleaning up air pollution, and realizing the forecasted gains in personal income to strengthen Utah families throughout the state.
Shiozawa, co-chairman of the Business, Economic Development and Labor Appropriations Subcommittee, said he and his panel of colleagues will spend the next several weeks creating legislation designed to spur economic expansion across Utah.
That includes funding for the Utah Science Technology and Research initiative, which seeks to bolster Utah’s research strengths and significantly increase technology commercialization to create good paying jobs for Utah's workforce.
In 2006, the Utah Legislature allocated $179 million to the USTAR Economic Development Initiative. The program allocated $15 million in ongoing annual funding to support research teams at the University of Utah and Utah State University; $4 million to support economic outreach programs around the state; and $160 million toward the construction of new research facilities at both research institutions.
Shiozawa also noted the potential job-creating economic impacts of accepting the federal dollars that would come with the implementation of Medicaid expansion, “with the side effect of taking care of a population as well.” He said it would have an immediate economic impact.
He also noted the continued need to support Utah's tourism industry and cited the negative impacts of air pollution on the local population and those who visit Utah.
“So people aren’t scared off by thinking, “We are going into a polluted state.” “(We should) demonstrate that we are making some sensible changes," he said.
Doing so would give the impression around the country that Utah is moving forward and show that “we care about our children, the environment, health care and a whole broad range of topics” that affect the economy, Shiozawa said.
The year ahead
Earlier this month, the Utah Economic Council, a panel of local economic analysts, released its 2014 Utah Economic Outlook and offered insights on where the state economy is headed in 2014.
The conclusion: The state’s economy is poised for growth if Congress avoids sending the national economy into a tailspin from bureaucratic gridlock.
Though the overall forecast is positive, economists highlighted their shared concerns about policy paralysis in Washington, D.C.
“The greatest risk to the Utah economy right now is the constant bickering within the beltway about the nation’s fiscal condition,” said Natalie Gochnour, chief economist for the Salt Lake Chamber and Utah Economic Council member.
“The gridlock creates serious uncertainty for businesses throughout the country, preventing them from investing and hiring like they want to do. As the nation’s economy struggles, it ultimately impacts Utah,” Gochnour said.
Despite the potential for trouble in Washington, D.C., the state is well-situated for economic expansion this year, said Juliette Tennert, chief economist in the Governor’s Office of Management and Budget.
Tennert noted that the state economy has a potential to grow at a more robust 4 percent this year, which would mean more jobs and increased revenues for the state.
“We are very well-positioned for accelerating growth in the Utah economy in 2014,” she said. “As long as the national economy performs at a moderate pace, then Utah’s economy should perform quite well.”
The number of Utah jobs is expected to grow at 3.1 percent, equal to its long-term average, while the nation increases to 1.7 percent, the report stated. With job growth near the long-term average, the unemployment rate is forecast to decrease to 4.2 percent or below this year.
The state's average annual nonfarm wage was $41,245 last year, an increase of 1.5 percent from 2012. This year, the average annual wage is forecast to increase 2.2 percent, the report noted.
The rise in wages is due in part to higher pay from technology sectors jobs, as well as the financial services industry.
The area known as “Silicon Slopes” — where southern Salt Lake County meets northern Utah County — has experienced the highest rate of tech growth. Home to high-profile technology firms such as Adobe, eBay, IM Flash and Microsoft, the concentrated technology hub has brought with it thousands of high-paying jobs and enhanced Utah’s reputation as a sought-after locale for high tech.
A task force has recommended four proposals to move the Utah State Prison from its location at Point of the Mountain in Draper to open land for further development in the tech sector, which could lure additional business to Utah and promote opportunities for expansion.
Additionally, global investment bank Goldman Sachs' Salt Lake City office is its second largest in the Americas with about 1,500 employees. Last year, state economic development officials said they conducted talks with three major banks on projects that would bring an additional 1,000 financial services jobs to the Wasatch Front.
In contrast to the early stages of the recovery, housing will provide support to economic growth, said Jim Wood, director of the Bureau of Economic and Business Research at the University of Utah.
Construction employment is expected to grow 7 percent in 2014, with the continuing housing recovery accounting for most of the strong showing in construction, he said.
Utah’s construction sector is forecasted to expand in 2014 with valuation increasing by 18 percent to $4.8 billion. Nonresidential or commercial construction is likely to see the greatest improvement as job growth and reduced vacancies in office, retail and industrial buildings spur new development, the Utah Economic Council report said.7 comments on this story
The value of nonresidential construction in 2014 is forecast to reach $1.1 billion, while multifamily construction should also see some improvement with 3,000 new units, a 20 percent increase over last year.
The report said Utah would continue to experience population growth at a rate higher than most states this year due to a strong natural increase (births minus deaths) in addition to in-migration. Utah’s population is anticipated to add 37,200 people in 2014.