SALT LAKE CITY — Is Utah’s eight-year economic expansion nearing an end?
Local and national experts joined Gov. Gary Herbert and others Friday at the 2018 Utah Economic Summit to address that question. The takeaway for the 800-plus in attendance at downtown’s Grand America Hotel was that all signs point to continued growth, at least for the near-term.
But the rosy outlook did come with a few asterisks.
Richard Barkham, London-based chief economist for global real estate powerhouse CBRE, reeled off a list of projects and investments happening in Utah that he highlighted as positive indicators for the state’s continued fiscal well-being. And, he was happy to share an economic prognostication.
“In the extended cycle, the global economy is growing extremely strongly, and so is the U.S. economy, and there is not much inflation at the moment,” Barkham said. “So, we’re looking at an extended cycle.
“I think Utah will follow the national cycle, but do even better in the long run.”
Barkham likened the $3.6 billion Salt Lake City International Airport reconstruction to a 19th century revamp of London’s underground sewer system. At the time, Barkham said the project was widely criticized as being unnecessary, but time would prove it out as a visionary move. The arc of time, Barkham said, will reflect well on the airport investment as well.
“What I like about the airport is you’re investing in infrastructure ahead of the game,” Barkham said. “It pays off in the long-term.”
Natalie Gochnour — Utah’s leading economist, associate dean of the David Eccles School of Business at the University of Utah and director of the Kem C. Gardner Policy Institute — noted Utah ended 2017 as the fastest-growing economy in the nation, has had a net in-migration of over 100,000 people in the last four years and boasts one of the top five most diverse economies in the country.
But, she said there are both ongoing challenges to address, like air quality improvement and ongoing recession-like conditions in many rural Utah counties, and some indications that the past economic exuberance is showing some signs of slow-down. Those indicators include rising costs for things like land acquisition and housing, as well as rising interest rates. The state’s long-running job expansion success is also showing some signs of ebbing.
“We have to monitor the business cycle, and be smart about it,” Gochnour said. “Job growth is moderating and has been since 2015. We’ve had a long expansion and prosperous economy, but moderating.”
Gochnour said the new inland port project in Salt Lake City’s northwest quadrant — one that’s raised some consternation between Salt Lake City government officials and state government representatives — is nevertheless a move in the right direction that she says will have multiplying positive economic impacts extending to the entire state.
“This is an exciting economic development opportunity,” Gochnour said. “The reason it’s exciting is you get an economic benefit from building the port, then an economic benefit from all of the warehousing and distribution associated with the port, and you get much more close ties with the global supply chain.
“And, anything that makes you closer to the global supply chain is an economic plus for your state’s economy.”
In his keynote address to summit attendees, Herbert also underscored the plusses of building Utah’s connection with the global economy.
“Businesses in Utah last year exported over $11.5 billion in goods and services and nearly 1 in 4 Utah jobs is now tied to international trade,” Herbert said. “Over the last 10 years, Utah’s value-added exports have grown an impressive 75 percent.”
Herbert also took the opportunity to make some measured criticisms of decision-making coming down from the administration of President Donald Trump. Herbert noted new trade tariffs, as well as a threat to upend the long-running North American Free Trade Agreement, would lead to negative economic impacts on the Beehive State’s growing international business trade.
“I actually don’t doubt for a minute the good intentions of our government officials who are pushing for things like increased tariffs in order to protect domestic businesses from international competition,” Herbert said. “But in my considered opinion, the consequences of such protectionism could, in fact, be catastrophic.”
Utah’s growing tech sector continues to be an economic bright spot for the state and helped drive the nation-leading 3.7 percent job growth reported in March. One of the national tech industry’s biggest stalwarts, Mitch Lowe, shared some thoughts on his series of high-profile successes as a founding executive of Netflix, former president of Redbox and the current CEO of MoviePass.
All of Lowe’s endeavors have been aimed at disrupting staid business models, but he said that “disruption” really boils down to thinking about what is at the heart of a successful new business.
“There are all kinds of things that need solving,” Lowe said. “As you think about the future, any time you can reduce a person’s transactional friction, you have a great opportunity looking at you.”
Lowe also noted at nearly every critical juncture in his business career, the ability to take the negative energy of naysayers and use it as the fuel for solving problems was a key to his accomplishments.
“When people think you can’t accomplish something, that is a great motivation,” Lowe said. “You really just want to show that, yes, you can. And, you can’t make things happen if you just respond by doing nothing.”
In concluding his talk, Lowe offered this parting bit of advice to the summit attendees:
“Make life better for your customers, take risks, be brave and move forward,” Lowe said.