Written by Jeff Thredgold, President, Thredgold Economic Associates
Economic Consultant to Zions Bank
#1…#1…#2
The Utah economy has climbed to first and second place national rankings in three major areas in recent months:
- Utah ranked #1 in the growth rate of employment over the most recent 12-month period, with the addition of 59,000 net new jobs, an impressive 5.0% annual growth rate
- Utah ranked #1 as having the lowest statewide unemployment rate (2.5%) in the 48 contiguous states in the latest national employment data. While this is good news for the overall Utah workforce, it makes life truly challenging for employers trying to reach full staffing levels
- Utah ranked #2 in the latest 12-month period in average statewide home price appreciation, while Salt Lake City ranked #3 in another major measure of rising home values
The Details
These rankings are solid evidence that the Utah economy has boomed during the past 24 months. As before, all 11 major Utah employment sectors have added jobs during the most recent 12-month period.
Employment growth was led by powerful gains in construction (up 14,800 jobs, a 17.0% rise); professional & business services (up 11,000 jobs, a 7.2% rise); and trade, transportation & utilities (up 8,300 jobs, a rise of 3.5%). Education & health care (up 5,700 jobs, a rise of 4.4%); manufacturing (up 4,000 jobs, a rise of 3.4%); and financial activities (up 3,800 jobs, a rise of 5.5%) followed.
Powerful job gains have “soaked up” the majority of Utah workers who were previously unemployed. At the same time, the high level of net in-migration of new residents to Utah has found the majority of these people finding employment.
The powerful rise in Utah housing values is, in part, a reaction to the first two employment issues. The combination of strong income gains tied to rising employment and more potential homebuyers has helped push Utah home values higher. In addition, a large differential between Utah home values and those in nearby states had developed during 2001 to 2004.
This relationship led to a rising perception in 2005 and 2006 that Utah home values were attractive. The Office of Federal Housing Enterprise Oversight (OFHEO) noted the average Utah home value rose 17.41% in the 12-month period ending September 30, 2006, trailing only the 17.52% rise in Idaho. In addition, the National Association of Realtors noted the median (half cost less, half cost more) Salt Lake City home price rose 19.2% over the same time period, even as the median home value in the U.S. declined by 1.2%.
New “Old” Folks
The “retirement” of 78 million Baby Boomers over the next 20-25 years will have a major impact on Utah and its neighbors. More options will be available for Boomers and older retirees to live close to downtown areas in larger cities as a means of having close access to museums, shopping, the theater, and restaurants. Boomers will take advantage of such close proximity, while leaving the yard work or snow shoveling to someone else.
Universities, community colleges, and other sources will offer a wider array of classes and learning experiences than ever before, with many Boomers exploring interests and passions formerly displaced by the needs of generating incomes and raising families. Boomers will discover and develop talents never before considered.
Community Interest
More communities will entice retiring Boomers to live in their locales, recognizing the value they can bring to a community. The Boomer or Boomer parent in or approaching retirement age typically buys a local residence, shifts their financial resources to a local financial institution or brokerage firm, supports local retailers and restaurateurs, and creates little in the way of headaches for law enforcement personnel. One other major positive? They don’t bring children that need to be educated.
Boomers will follow a path formerly explored by many of their parents. A rising share of senior housing and assisted living centers for older people will have a wider array of recreational and learning opportunities than ever before. Limited medical care will also routinely be on site or close by.
Utah in 2007
The major constraint to even stronger Utah economic performance is a lack of people to hire. Numerous employers note their interest in expansion is limited by the availability of workers.
Such tight labor availability should lead the Utah economy to slow modestly in 2007. Even so, we expect Utah to remain among the top ten states in employment growth. The Utah real estate sector should see positive, but lesser, price appreciation in 2007. The Utah outlook remains bright.