Five Things to Watch for in 2016
Summer Olympics in Rio
The spirit of the Olympic flame burns bright in Utah, and we look forward to the Olympic Games in Rio de Janeiro this summer. It’s bound to be a remarkable international celebration of sport as images of Copacabana Beach and the statue of Christ the Redeemer atop Corcovado are beamed around the world. Unfortunately, the Brazilian economy is suffering from its worst recession in over three decades and many wonder whether the country will pull off a successful Games.
I’m optimistic, in part because of the way people rally before the Olympics. We saw that in Salt Lake City, and while Rio will be different, Brazil will bring its own kind of energy to the Olympic movement. One of the more interesting things to watch will be the partnership between Airbnb and the Rio 2015 Organizing Committee. An estimated 380,000 foreign visitors will travel to Rio for the Games and Airbnb will offer around 20,000 home-sharing listings. The sharing economy will be tested this summer in new and exciting ways.
Salt Lake City Takes Flight to London, Heathrow
An international development of more local relevance will be the commencement of Delta’s nonstop service May 1 from Salt Lake City International Airport to London Heathrow Airport. Salt Lakers have long hoped for this connection because of London’s significant draw for business and leisure travel.
Even more important is what it says about Salt Lake City’s progression as an international city. Salt Lake is located in the interior American West and lacks the size and presence of many world cities. In actuality, Salt Lake City and Utah offer an internationally engaged population that speaks many different languages. Our economic connections in terms of global trade are also impressive. Delta already offers nonstop service from Salt Lake City to Amsterdam (seasonal) and Paris. London now joins the fun.
As the U.S. economy enters its seventh year of expansion, expect the chatter about the likelihood of another recession to increase. The current expansion is 78 months old. Many point to the 58-month average for all recessions since 1945 and say the U.S. economy is overdue for a correction.
Not so fast. The national economy is currently adding about 20,000 jobs a month. Many expect the U.S. economy to reach full employment by mid-year. Expansions are getting longer and longer for structural reasons: the growth of the more stable service economy, better inventory management because of technological improvements and improved macroeconomic policy understanding. In my view, the U.S. economy still has room to run. I would make business decisions in the new year carefully, but optimistically, especially in Utah.
Mark Twain said, “Whiskey is for drinking, water is for fighting.” I expect Utah’s water wars to become louder in the coming year. In economic terms, water infrastructure investment is a lumpy good, which means the investments don’t occur gradually, but in big steps. Utah policy makers are poised to take a big step in the coming years as they invest in a growing population and aging infrastructure.
The Lake Powell Pipeline will take center stage as Utah makes plans to use its Colorado River water rights and provide for a rapidly growing population in Utah’s Dixie. The challenge will be three-fold: how much of this development should be paid for by Northern Utah taxpayers, how far can we push the conservation ethic, and what role should user fees (water rates) play? I expect the debate to be a combination of data-driven policy making and water-as-religion analyses.
Election Year Excitement
Leap year also means a general election year, and this time there will be a strange mix of crazy and dull. The crazy part starts at the top of the ticket where Donald Trump continues to appeal to a select and large group of voters. I have to be honest—I don’t get it. He strikes me as more of a showboat than a leader, and I think his temperament, use of language, and lack of experience in public service are serious problems, especially for the leader of the Free World. Hillary Clinton is experienced and smart, but in my mind represents the past and not the future. I find myself yearning for something more.
Closer to home, the major elections feel dull rather than exciting. The Democrats still have not put forward a candidate to challenge Gov. Gary Herbert. Democrat Jonathan Swinton will challenge Sen. Mike Lee, but Swinton is unknown and will struggle facing a well-known and smart Republican incumbent. The only excitement in a marquee race will be Doug Owens’ challenge of Congresswoman Mia Love in the 4th Congressional District. Buckle up for this one.
Natalie Gochnour is an associate dean in the David Eccles School of Business at the University of Utah and chief economist for the Salt Lake Chamber.