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Utah residents know there are a lot of good things about living here—such as the beautiful mountains, low crime rates and family-friendly lifestyle. But there’s something else about Utah that sets it apart from other places: our robust economy. While most states are still reeling from the effects of the Great Recession, Utah’s economy is thriving. In fact, the Utah Department of Workforce Services reported that Utah’s unemployment rate dropped to 3.6 percent in May 2014. Compare that to the national level, which was at 6.3 percent in May.
Utah’s good employment numbers are particularly interesting because unlike states such as North Dakota and South Dakota, which are experiencing an energy boom, Utah is simply going about its usual business cycle. This isn’t a surprise to Mark Vitner, senior economist and managing director at Wells Fargo, who says “Utah stands out in the U.S. for its strong economy.”
But will that good fortune continue for our state? Here are the important factors to consider in evaluating Utah’s economic forecast.
Diverse and Resilient Economy
According to Steve Kroes, president of the Utah Foundation, “Utah has one of the most diverse economies in the nation.” Unlike some states that rely heavily on one particular industry for employment and investment opportunities, Utah has a wide range of profitable sectors. In fact, according to DWS, 10 private-sector industries posted net job increases in March 2014. Areas of industry that reported job growth included trade, transportation and utilities (8,400 jobs) and government (4,500 jobs).
The leisure and hospitality industry also experienced significant gains with 6,500 new jobs. This area of business can be especially lucrative for states, says Vitner. “The tourism industry attracts a high portion of wealthier consumers, which is what you want.”
Utah also has economic strengths in other areas, including the technology industry. In fact, Utah is increasingly becoming known as Silicon Slopes, as more and more information technology and software development firms choose to operate in the Beehive State. “A lot of tech firms like it here,” Vitner says. “People like it because of the outdoor life. Also, Utah has a reputation for clean living.”
On the residential real estate front, the reports are mixed. According to an April report published in The Salt Lake Tribune, “Home sales along the Wasatch Front are continuing to slow slightly as the effects of sizeable price gains and rising interest rates combined to dampen last year’s summer sizzle in residential real estate.” According to Kroes, this is part of a national trend. “Home sales have been slowing down across the country. We had some pent-up demand in the housing market last year, but things cooled down after the interest rates were raised last August.”
Utah is also home to several unique economic drivers, such as the annual Sundance Film Festival. The Bureau of Economic and Business Research at the University of Utah’s David Eccles School of Business found that the 2014 Sundance Film Festival produced an economic impact of $86.4 million. Additionally, the 2014 festival supported 1,434 jobs.
Positive Business Environment
What’s something else that sets Utah apart from other states? According to Vitner, “Utah has an incredibly favorable business environment.” Many business owners like operating in Utah because our regulations tend to favor businesses. In fact, Forbes has consistently named Utah as one of the best states to do business because of our pro-business approach, and last year a Governing magazine survey found that Utah earned the highest overall rating among small business owners.
A significant component of our business-friendly environment is our corporate tax rate. According to the Tax Foundation, Utah’s flat corporate rate of 5 percent is one of the lowest among states levying a corporate income tax. Compare that to a state like Iowa with a corporate income tax of 12 percent or Pennsylvania with a rate of 9.99 percent.
But will these Utah-specific perks for businesses continue? The Utah legislature tends to favor business-friendly policies, so that bodes well for companies. But Utah’s citizens are increasingly concerned about issues such as air quality. In Utah’s 2014 Legislative Session, two dozen clean air proposals were considered, and about eight of them passed. Most of the laws that passed aren’t overly detrimental to businesses, but that could change if the state’s dreaded seasonal inversion episodes persist.
Kroes, commenting on Utah’s quality of life issues, says, “There’s a balance between creating a favorable environment for employers without compromising our quality of life—specifically air and water quality.”