From where a seasoned economist sees it, Utah could have a good year in store.
John Mitchell, former chief economist at U.S. Bank and Boise State University economics professor, outlined his mixed but mostly upbeat outlook at a regional outlook conference hosted by Bank of Utah Wednesday morning. Utah has low unemployment, an attractive housing market and harder-to-quantify geographic qualities that promote venture capital. But while 2014 looks to be a year of growth for the Beehive State — an aging population might mitigate the speed.
The so-called Baby Boomers are retiring and labor force participation is slowing down nationwide, Mitchell pointed out. The retirements potentially prevent Utah from reaching a "strong" economic growth, keeping the state at "moderate," as it rebounds from The Great Recession, according to the Utah Department of Workforce Services.
"It’s one of the things you worry about all the time," Mitchell said. Some of the participation will come back, but the situation casts doubt on how fast the economy can grow in the future. "And that’s the big issue. When we have a system that relies on transfer of payments from the working population to the [other population] — with the working population, size is very important."
The Utah Department of Workforce Services’ February employment situation report recognizes Mitchell’s concern — and adds some reassurance.
While a lot of states may theorize that the Baby Boomer retirements will cement labor force participation declines, Utah, "with its consistently high birth rates, is justified in expecting that rate to recover back to [pre-recession levels] with individuals aging into the labor force," according to the report. Every 1 percent increase in Utah’s labor force participation rate represents roughly 21,000 working-age adults entering the workforce, the report adds.
Military spending, considering Hill Air Force Base, is another question for Mitchell. Such spending makes up a lot of the declines in overall federal spending, in part because of the sequester and the wind-downs in Afghanistan in Iraq.
"You look at the data from Ogden, you’ve got declines in government employment … the military stuff is going down," he said. But on the other hand, Mitchell foresees the pressure out there to cut back possibly diminishing with the recent unrest around the Ukraine.
Otherwise, the job market looks good for Utah. Mitchell expects to see the state’s market grow 2.5 percent this year and about 3 percent next.
Unemployment, as of February, was at 3.9 percent, well below the national average of 6.7 percent, according to state statistics.
The Wasatch Front in particular is well positioned for a healthy economy. Mitchell, relating what he had read in Enrico Moretti’s book "The New Geography of Jobs," touched on the concept of "hubs" of rapid growth across the country. Such hubs of creativity and innovation are often associated with universities — of which the Wasatch Front has a few — that produces a skilled and diverse labor force. It also helps when geography allows for close proximity among venture capitalists; they like to be able to "walk down a hall or drive down the street to see what’s going on," Mitchell said.
"Utah’s one of the stronger states, one of the 15 states that have regained pre-Recession levels of employment," Mitchell said. "You’ve got rapid growth, you’ve got a broad mix of activity."
Mitchell’s presentation comes the day before the governor’s annual Utah Economic Summit.
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