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Utah's Economy: On the Mend?

We should see signs of modest improvement in 2010 with continued improvement in 2011. Photo courtesy iStock Photo.

 

By Ken Holman
Overland Group President
 
Commerce Real Estate Solutions, a division of Commerce CRG, recently published its November 2009 issue of Utah’s Economy, Utah’s Economic Indicators 2009-2011. Following is a summary of the results.
 
Utah’s rate of employment likely bottomed in the third quarter of 2009, although unemployment is expected to continue rising from its current level of 6.5 percent to 6.8 percent in 2010 before beginning a modest decline to 6.4 percent in 2011. This is well above historic levels of 5 percent, according to the report.
 
The Department of Workforce Services projects that manufacturing jobs will show little improvement by 2011, but construction employment will increase by 4,500 jobs. The health care sector is expected to see the biggest increase of 12,000 jobs over the next two years.
 
Total wages have held up quite well during the recession, but are projected to fall 4.2 percent through 2010 to $44.9 billion before rising to $47 billion in 2011. The average annual wage in Utah in 2009 was $37,764, only one percent higher than in 2008, but 21 percent below the U.S. average wage of $47,714. In 2009, personal income declined by 1.3 percent to $81.8 billion. Personal income is expected to rise by 2 percent in 2010 and 4.5 percent in 2011.
 
Utah’s annual population growth rate fell to 1.7 percent. In Utah, there are around 55,000 births and 14,000 deaths annually for a net natural increase of 41,000. This guarantees a 1.5 percent constant growth rate. Net in-migration fell to 1,500 in 2009 and is expected to increase to 8,000 in 2010. These numbers are compared to the 2007 peak of net in-migration in Utah of 44,250.
 
Retail sales are expected to fall by 8.1 percent from 2008 to $24.3 billion. Modest growth is forecasted at 2.2 percent in 2010 and 3.4 percent in 2011. Building, garden and furniture sales are the two hardest hit sectors; down 20.6 percent and 24.1 percent respectively. Motor vehicle sales are down 20 percent to $1 billion, according to the report. In 2009, vehicles unit sales will bottom at 65,600 before increasing to an estimated 78,800 vehicles in 2011. Vehicle sales peaked in 2007 at 115,000.
 
The residential construction hints at turning upward. In 2010, the number of new dwelling units receiving building permits will be 10,000 units, about the same as 2009. New detached single-family homes will account for 5,500 units and multifamily (condominiums, townhomes and apartments) will account for 4,500 units. In 2011, dwelling units are expected to rise to 13,000, an increase of 30 percent.
 
Due to excess capacity and rising vacancy rates, nonresidential construction will continue to decline in 2010. With the loss of 60,000 Utah jobs in 2009, demand for office, retail and industrial space will continue to cause problems for this sector. The value of permits for nonresidential construction will likely drop below $1 billion in 2010.
 
We should see signs of modest improvement in 2010 with continued improvement in 2011.