SALT LAKE CITY — A consensus of Utah economic analysts is predicting a measure of continued strength in the state's economy in the New Year. However, they don't all agree on the level of vitality Utahns should expect in the coming year.
A panel of renown local economists offered their views on the state's perspective economic fortunes for 2018 during the Salt Lake Chamber's annual Economic Outlook and Public Policy Summit on Tuesday at the Salt Lake Marriott Downtown at City Creek.
The quintet of three women and two men concurred on the state's overall robustness but diverged on their perspectives of what to expect this year. While the female panelists described the economy in relatively moderate terms, the men were less reserved.
Phil Dean, chief economist for the Governor's Office of Planning and Budget, used "strong" to describe the Utah economy in 2018.
The recent upward trend of the Dow Jones Industrial Average — which rose above 26,000 — had another economic observer equally optimistic and excited about the economic future for the nation and the state. Robert Spendlove, economic and public policy officer at Zions Bank, said he expects 2018 to be a "booming" year for the Beehive State.
"Utah has the highest job growth in the nation right now," Spendlove said. "When you look at consumer optimism, consumer confidence and the inflation rate in Utah, the reason for that is because people feel better, wages are higher and things are going really strong."
An inflation rate of between 2 percent and 4 percent is ideal, he said, noting that "in Utah we're at 3.5 percent. It's a sign that everything is hitting on all cylinders."
Federal tax reform, Spendlove noted, also could be positive for the local economy.
"If done well, it could have a nice boost on the economy," he said. "For instance, if you pass tax cuts that have a stimulative effect on the economy,like dropping the corporate tax rate from 35 percent to 21 percent."
Such changes would likely have a positive impact on Utah and national economies, Spendlove said.
Somewhat conversely, Natalie Gochnour, associate dean at the David Eccles School of Business at the University of Utah, said she believes the state is already past its peak growth phase and probably will fall just short of its previous yearly improvement levels.
"We actually peaked in job growth in 2015 (after eight years of growth)," she said. "In 2016, we were a little lower, and in 2017, we were a little lower again.
"The Utah economy is strong and robust, but it has passed its peak, and we're going to continue to see a moderation of job growth in our state."
Gochnour noted that rising business costs and other factors will impact the state economy in a way that will still see improvement, just not to the same levels as the recent eight-year growth period.
Despite a growing economy, the state experienced a labor shortage last year — meaning there are too few qualified candidates to meet the demand for workers needed to fill available positions, explained Carrie Mayne, chief economist for the Utah Department of Workforce Services.
In 2017, the shortage affected a few industries, she said, but the problem could grow in scope this year.
"2018 will likely hit us across the board, and it will pull our job growth rate down," Mayne told the audience of about 900 at the half-day event. "We'll likely be below (the) 3.1 percent growth rate of 2017, and our unemployment rate will hold lower as well because there is so much demand on the supply of workers."
Meanwhile, Juliette Tennert, chief economist for the Kem C. Gardner Public Policy Institute at the University of Utah, mentioned that another critical concern is likely to be air quality. While the state has made strides in recent years, the challenge of air pollution still persists.
"This is an environmental issue that we are seeing emerge as a true economic issue. We risk becoming known for bad air quality, and that’s bad for business," she said. "It makes it harder to attract both new business as well as the talented labor supply that is critical to future prosperity."
Tennert said developing innovations to improve the environment would help put Utah in a better position to achieve long-term economic success in the future.
When the state Legislature convenes Monday, tax reform is expected to be a big topic for lawmakers.
"It's just time for us to update," Gov. Gary Herbert told the summit audience.
Herbert said Utah went through several years of tax reform under his predecessor, Gov. Jon Huntsman Jr., that resulted in lowering state income tax rates to 5 percent.
He said the changes made during what was a time of significant budget surpluses helped the state recover from the recession "quicker and faster because we had good policies in place."
Now, the governor said, the state's tax structure should be modernized. He said the sales tax base should be broadened so the rate can be lowered, citing the amount of sales taxes on online purchases that is not collected.
Also a concern is that gas tax collections make up less than half the revenues needed to pay for roads.
House Speaker Greg Hughes, R-Draper, and other lawmakers also brought up the need to take a new look at state taxes.
"It is absolutely a fact that in 2018 our tax structure and our tax code does not match up with how people spend money," the speaker said. Services, for example, aren't subject to tax, even though they are an increasing expenditure for most people.
On the agenda for the upcoming session, he said, are corporate income tax changes, as well as re-examining the so-called truth in taxation requirements before property taxes can be increased to allow for inflationary or some other form of growth.
The impact of the federal tax changes just passed by Congress still has to be sorted out.6 comments on this story
Hughes has said it could bring $75 million to $150 million in additional income tax collections, but others, including Senate President Wayne Niederhauser, R-Sandy, have said further study is needed to see if that's really going to happen.
"There's some questions out there about that reform because it is so massive and so significant. We're not exactly sure," the speaker said at the summit.
If there is more money going into state coffers, he said lawmakers will likely spend some and give the rest back as a tax cut.