Utah economists expect a tough summer before a winter recovery, as 9,000 more file for unemployment
(Trent Nelson | The Salt Lake Tribune) Mannequins in the window of UWM Men's Shop in Salt Lake City on Saturday, May 2, 2020.
Another 9,057 Utahns filed for unemployment last week, the lowest figure since mid-March when the pandemic
really began roiling the economy but still high in historic terms.
Those residents joined roughly 3.2 million across the country in seeking help for lost work for the week ending May 2. And in the past seven weeks more than 33 million Americans have filed for unemployment thus far in the health crisis, the Department of Labor reported Thursday
Gov. Gary Herbert said Thursday state officials remain deeply worried about the trend, with at least 9.5% of the state’s workforce now affected, but he said he took comfort that the state’s jobless numbers are not as bad as they are nationwide.
“It illustrates the strength of our economy and the fundamentals in place before COVID-19,” Herbert said Thursday at a briefing on the pandemic. “And the good news is, those fundamentals are still in place. So as we get through this dangerous time and work towards stabilization, then into recovery, I think we can feel optimistic.”
But there’s bad news, too: Utah economists say the latest unemployment numbers are likely an undercount. So far, 148,000 Utahns have sought traditional assistance for layoffs, furloughs or pay cuts and an additional 18,000 self-employed workers, independent contractors and those in the gig economy filed under a new program.
The economists, in a new report, say as many as 250,000 state residents could be out of work right now. They predict job losses could continue at least past June before the state starts to stabilize from the outbreak and eases into a recovery.
“The shutdown of much of the Utah economy for the past six weeks and the inevitable pandemic-induced recession will inflict a record short-term shock to the economy,” the economists said in a recent set of projections for Gov. Gary Herbert and state lawmakers, adding that 2020 will see “the greatest single-year job loss for Utah since the Great Depression.”
Herbert has started to ease stay-at-home restrictions, with the hope of spurring economic activity. Residents can eat at restaurants, get their haircut and go shopping, though they are urged to wear a face mask and keep adequate social distancing from others.
The jobless latest data, which covers weekly claims through last Saturday, shows little evidence of the effects Herbert’s loosening of state stay-at-home directives
, which began on Friday.
With so many people seeking unemployment benefits, Utah officials estimate that claims are now taking 21 to 30 days to process — a wait that has many increasingly desperate for help as rents, bills and other obligations come due.
“We are grateful for everyone that has continued to be patient as the incredible staff process this record volume of claims and meet this demand,” Unemployment Insurance Division Director Kevin Burt said Thursday in a statement.
Jobless claims in Utah last week came primarily from office workers and those in retail sales and the food-preparation and service sectors, officials reported.
The state Department of Workforce Services also reported paying out of a whopping $72,958,968 in total benefits last week, with $46,980,180 of that coming from a $600 weekly stipend added to each recipient’s check through a federal aid bill.
A new national poll finds
that nearly 77% of idled U.S. workers said the expect to be rehired by their former employer as stay-at-home orders are lifted — roughly matching Utah’s unemployment data, which indicates that 70% of those filing fall into this “job-attached” category. That, some experts say, could portend a quicker recovery.
But while filings peaked in mid-March — when Utah saw 33,000 claims in one week — they continue at a weekly clip well above the worst weeks of the Great Recession and estimates are up to one in four of all U.S. workers is now affected.
Data on unemployment rates, to be released Friday, is expected to show the nation’s jobless rate above 15%.
Utah economists are estimating that the state will see an overall unemployment rate for 2020 of 8.6%, which is higher than the peak of 8.1% seen during the Great Recession. That is also more than three times higher than Utah’s rate as of February, when it stood at 2.5%.
The Utah Revenue Assumptions Working Group includes fiscal analysts from the Utah Legislature, the governor’s office, the Utah Tax Commission and the University of Utah’s Kem C. Gardner Policy Institute as well as from the private sector.
They noted that jobless claims typically provide only a partial picture of those thrown out of work and that Utah could have as many as 250,000 workers affected, if patterns seen in the 2008 economic downturn hold true.
Other key economic indicators such as retail sales, home sales and commercial construction will also dip significantly through June and into the summer, before a recovery begins to take hold, they predict.
Taxable retail sales — a crucial engine of revenues to run state and local governments in Utah — will drop by 6.9% this year, they project, while homebuilding will fall by 29% for the year.
Commercial construction, according to this working group, will drop by 22.8%, although some of that anticipated decline is due to what economists say may now prove to be an excess supply of apartments on the Wasatch Front, after years of new construction.
But, in keeping with Herbert’s Utah Leads Together 2.0 plan
, these experts assume that economic damage to the state will fall heaviest between April and September, with a recovery starting in the last three months of 2020.
And as that picks up in 2021, they project, a strong rebound will produce 121,000 jobs to replace an estimated 97,000 jobs that these economists say will ultimately be wiped out in Utah by the pandemic.