Jan. 10, 2007

  

A Publication of the Economic Development Corporation of Utah
CEO Jeff Edwards

PRESIDENT'S  

MESSAGE

What's Ahead for Utah? Highlights from 2007 Economic Report

This past week, the Governor’s Economic Advisors, in partnership with Office of Planning and Budget, presented the 2007 Economic Report to the Governor. This report has served as a source of information about Utah’s economy for more than two decades. This week’s feature article provides an overview of the report and insight into what’s ahead for Utah.

In addition, this issue of the Economic Review includes links to many of the ED-related news stories from the past week. If you have comments, suggestions or topics you’d like to see in the Economic Review, please contact us by clicking the “Comments” link on the bottom of this page.

Enjoy!

Jeff Edwards
Jeff Edwards
President and CEO

FEATURE

Can Utah’s Economy Get Any Better?


What with projected job growth of 4.7 percent for 2007 (which dwarfs the projected national employment growth rate of 1.1 percent), the fifth fastest personal income growth in the nation, construction valuations at record highs, and the nation’s lowest unemployment rate (2.5 percent as of November 2006), where do we go from here?

Answer:  Forward.

The economic horizon calls for continued strong economic growth—not as high as 2006—but still strong, with average pay continuing to grow strongly, and retail sales growing at nearly double digit levels, says Robert Spendlove, chief economist for Gov. Jon Huntsman Jr. Based upon the 2007 Economic Report to the Governor, Utah will surpass most other states on virtually every front.

Some areas of the state are feeling the pinch of a tight labor market, but Utah’s population growth (the sixth highest in the nation) and in-migration are helping to ease the pressure. “We are seeing wage pressure, but we are not really seeing downward pressure on the economy, largely thanks to in-migration,” he says.

Utah’s population, which grew 2.7 percent in 2006, enjoyed a natural increase of just over 39,000 and in-migration of nearly 30,000, which helps keep the unemployment rate from dropping to abnormally low levels, according to Spendlove. “Utah is quite unique. Its population growth is primarily from natural increase (2006 also saw the most births in state history at over 52,000), we have the highest fertility rate, we are the youngest state in the nation, and have the third highest life expectancy,” he says. “Utah is known nationwide for its young, hardworking, well-educated labor force.”

Even Utah’s rural areas, which typically have lower economic growth and higher unemployment, are booming. For example, San Juan County’s unemployment rate, which is typically double-digit, was lower than the national average in 2006, Spendlove says. “The rural, traditionally economically depressed areas of the state are seeing very strong economic growth.”

Energy development and mineral extraction industries are big economic drivers in eastern and southeastern Utah. Employment growth in this sector was 18 percent in 2006, thanks largely to big increases in energy and mineral prices, Spendlove says. The state is enjoying strong demand for coal production, mineral production, and base metals like copper. What’s more, Utah’s foreign trading partners are hungry for Utah magnesium, beryllium, and molybdenum. According to the Utah Geological Survey, Utah’s mineral production in 2006 was valued at more than $3 billion.

The construction sector is also a big economic driver across the state, with 18 percent employment growth last year. “Construction is a very important part of Utah’s economy,” says Spendlove. “In 2006 total state employment grew by 60,000 jobs. Construction job growth provided nearly a quarter of that, with 15,000 jobs added.” While residential construction is slowing, Spendlove says non-residential construction is actually starting to heat up, with many large projects either in planning stages or construction. Combined construction valuation permits totaled $7.6 billion in 2006, with resident valuations totaling $5.1 billion and non-residential permits totaling $1.6 billion.

Mega Construction Projects Planned or in Process in Utah

Project

Value

IPA coal-fired power plant expansion

$2.1 B

City Creek Center

$1.5 B

Daybreak by Kennecott Land

$1.3 B

Legacy Highway

$680 M

Traverse Mountain Mixed Use

$650 M

FrontRunner Commuter Rail

$581 M

Jordan Bluffs Mixed Use

$500 M

Intermountain Medical Center

$387 M

Currant Creek Power Plant

$350 M

Lake Side Gas Power Plant

$300 M

Amangiri Resort & Spa

$200 M


Another important economic driver for the state is its export sector, totaling $6.8 billion last year, with an increase of 13 percent. “The growth in our export sector will remain very strong in 2007,” Spendlove says. Utah exports computers and electronics, minerals, chemicals, and transportation equipment, with the United Kingdom being the state’s top trading partner, followed by Canada, Japan, Belgium, and Mexico. China is also in the top ten trading partners.

With a strong correlation to the state’s export business, Utah’s manufacturing sector is increasingly becoming an important economic driver. The manufacturing sector is Utah’s fifth fastest growing. And while manufacturing has been contracting in other areas of the nation for decades, Spendlove says, Utah added over 5,500 manufacturing jobs last year and manufacturing job growth is expected to continue.

Defense spending is another sector of increasing importance to the Utah economy. In 2005 defense spending with Utah companies topped $3.7 billion, an increase of over $400 million from 2004. Spendlove says a big reason for the growth in Utah’s defense spending sector is the state’s large prime contractors; including Northrop Grumman, which received nearly $900 million in prime contracts, and L3, with just over $300 million in prime contracts.

CALENDAR

Feb. 8, 2007:

23rd Annual Investors Choice® Venture Capital Conference (Salt Lake City)
Learn the venture process, build a fundraising presentation and meet with venture, corporate and angel investors.  Submission deadline is October 30th. For more information visit: www.venturecapital.org/utah.

June 6-8, 2007:

The New West Summit, in Big Sky, Montana will bring together business leaders, entrepreneurs, politicians, journalists, academicians, and engaged citizens to talk about the future of the Rocky Mountain West.

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IN THE NEWS

Economic Development Headlines

Windzup Will Move to Sanpete

- This Spring Windzup will be moving to Sanpete. Windzup distributes Ozone snowkite/ surfkite equipment for the entire United States. (Sanpete Messenger)

Ogden Gondola: Developer could own, operate it; city might not sell golf course

- Chris Peterson, who wants to build a resort in the mountains above Ogden and a gondola to reach the resort, may make "significant" changes in his proposal before formally filing it with Ogden City this winter, Mayor Matthew Godfrey said Monday. (Salt Lake Tribune)

Report: Full Steam Ahead for SL County Real Estate Market

- Highlights and Projections for Salt Lake County from a recent report released by commercial real estate brokerage Commerce CRG and predictions for 2007 for the Salt Lake County market. (Enterprise)

Fire Truck Dealership to Open in Salt Lake City

- A Phoenix-based supplier of parts and service for a wide assortment of buses, trucks and trailers, will enter the Utah this month with its initial focus acting as a dealer for Seagrave Fire Apparatus LLC. (Enterprise)

Two Downtown SLC Buildings to be Converted to Condos

- Two vacant downtown Salt Lake City buildings, the Sterling Building and the Patrick Dry Goods Building, are about to be transformed into commercial and residential condominiums. (Enterprise)

Corner of 700 S. and 200 W. in Salt Lake to be Transformed

- The corner of 700 South and 200 West in Salt Lake City, is being transformed into a new $6 million mixed-use condominium project to be known as Angelina's Corner. (Enterprise)

Lack of Workers a Constraint, but Utah Economy to Remain Strong, Economist Says

- Utah’s growing population will continue to stimulate the local economy, but the low unemployment rate will act as a slight impediment to job growth, according to Mark Knold, senior economist for the Utah Department of Workforce Services. (Utah Business Magazine)

Economic Report Predicts Strong 2007

- The 2007 Economic Report to the Governor, released Thursday, reflects what analysts have stated over the past 12 months: Utah’s red-hot economy should remain strong during the next year. (Utah Business Magazine)

Utah and Davis Counties’ Commercial Real Estate Boom to Continue in 2007

- The residential growth in Utah and Davis counties has spurred record-breaking low vacancy rates for the retail and industrial sectors, according to the Commerce CRG report issued Wednesday. (Utah Business Magazine)

Ethanol Boom Divides Farmers and Ranchers

- From corn fields to Wall Street, enthusiasm for ethanol is at an all-time high. But not everyone is enthusiastic.
Demand for the corn-based fuel is driving up the cost of feed corn, making it more expensive to feed cows, chickens and pigs. (Salt Lake Tribune)

Hotel showdown: U.S. Military Could use Supremacy to Build Hotel in Park City's Open Space

- A new developer in this resort town has rare power. It is exempt from local zoning laws. So it soon may build a huge hotel/condominium project on a pristine hillside that the city had long planned to preserve as open space. (Morning News)

$10 million for a 'UVU'?

- At the same time a prominent donor announced his plans to help raise $10 million so Utah Valley State College can achieve university status, a new Deseret Morning News/KSL-TV poll indicates that fewer than half of Utahns want UVSC to become the state's next public university. (Morning News)

Utah Economy is ‘Hot, Hot, Hot!’

- Jobs, household income and tax revenues are soaring in Utah, and this year should see more of the same. (KCPW) (Standard-Examiner)

Salt Lake is Urged to Eliminate Obstacles to Development

- Downtown revitalization has been a hot topic in Salt Lake City for years and years. Now, as a handful of big projects loom in the city's heart, leaders want to avoid putting up unnecessary barriers to future development. (Morning News)

Huntsman Stresses China Trade

- Gov. Jon Huntsman Jr. said Thursday that his recent trade mission to China "was an opportunity to open a lot of eyes" to how important the country is to Utah's economy.  (Morning News)

RSL Funds Far From a Done Deal

- Not only does Real Salt Lake's public money for a Sandy soccer stadium remain in question, but its private cash is hardly a sure bet either. Instead, Wall Street giant Goldman Sachs may want taxpayers to pony up before it commits millions toward the Major League Soccer franchise. (Salt Lake Tribune)

'07 Utah Economy Slower but Healthy

- If not "full speed ahead," Utah's economy in 2007 likely will push forward at least at a healthy pace, according to a report released Tuesday. Utah's Business Conditions Index dipped slightly to 53.6 in December from November's 56.4. (Morning News)

Salt Lake Council Hashing Out Housing Policy

- The Salt Lake City Council still has a handful of issues to hash out before it revamps its citywide housing policy.  (Morning News)

Utah Employers Disagree on a Minimum-Wage Hike

- If a minimum-wage hike is in the cards, now is the time to do it, as most Utah employers already pay more than $5.15 per hour, some local economists and businesses leaders say. (Morning News)

Utahns' Earnings Get a Boost in Q3

- Personal income in Utah jumped 1.9 percent during the third quarter of 2006, more than almost every other state in the country, according to numbers released this month by the U.S. Department of Commerce. (SL Tribune)

Station Park Project Moves Ahead

- Developer CenterCal and city officials reached agreement on key issues Friday night to bring the Station Park project closer to approval. The shopping center could bring high-end retail, restaurants, and movie theaters to Farmington if approved. (Standard-Examiner)

Natural Gas Rate Increase Would Help Some Utah Communities

- Questar Gas Co. wants to raise its rates by $2.28 a year to help more than two dozen rural communities, primarily in southwestern Utah, attract new businesses and jobs. (Salt Lake Tribune)

Utah Firms Seeking More Engineers

- Wanted: More engineers. Utah is launching a campaign, including a phone hotline and e-mail address, to attract more engineers to the state. (Morning News) (KCPW) (Utah Business Magazine)

Development Starting in Layton’s Northeast

- It’s mostly mud, right now, but initial development on Layton’s last major land parcel is starting. And the 400 to 500 acres will see a big variety of development, as city officials envision it. (Clipper)

Tourism Booster Talks up Japanese Market

- Now would be a good time for Utah to try to increase its appeal to Japanese tourists, the state Board of Tourism Development is being advised.  (Salt Lake Tribune)

Planner for Sandy is Taking Salt Lake Post

- As Salt Lake City embarks on a handful of major development projects, a new planning director is ready to take the helm. (Morning News)

ZCMI Retailers Biding Time

- Non-chain-store merchants are confused but hopeful about their future as the ZCMI Center demolition approaches. (Morning News)

81 Applicants Apply for Top Davis Chamber Position

- Applicants from virtually every corner of the country sought the top job at the Davis Chamber of Commerce. Incoming president Vaughn Jacobsen, who is also heading up the search committee, said 81 people applied for the post. (Clipper)

3 Energy Producers Sign Lease Deal With Ute Tribe

- The Ute Indian Tribe on Friday signed an agreement with three energy producers to develop 146,000 acres of land on the Uintah and Ouray Reservation in eastern Utah. (Morning News)