Q1 2021
In the survey, business leaders praised Utah’s balanced budget and expressed concern about untethered spending by the federal government. Many CEOs shared their worry about inflation becoming a major economic concern in the coming months. This, coupled with the rising cost of housing, will be two of the most important economic challenges on the immediate horizon. For Utah, having sufficient people for the workforce is a rising concern with our nation-leading unemployment rate. This also feeds into inflation and places our economy in a unique position. I remain optimistic about our ability to attract talent if we can address our pressing housing challenge. The Utah CEOutlook continues to provide valuable information about what’s in the sightlines of Utah CEOs. As business continues to lead, we can stay ahead of emerging challenges.
CEOutlook
80.0
75.3
70.0 66.3 60.0
62.8 62.0 60.6 62.4 62.3 60.9
50.0
55.5 53.2
60.1
53.3
61.2 59.4
40.0
57.3 58.9 32.3
30.0
Optimism
4.0% 3.1% 2.9% 2.6% 3.3% 3.4% 3.2% 3.3% 3.1% 2.9% 3.2% 2.9% 2.9% 2.7% 3.0% 2.0% 1.0% 0.0% 0.0% -1.3% -1.0% -0.8% -2.0% -3.0% -4.0% -5.0% - 5.0% -6.0%
Concern
With each CEOutlook, CEOs are surveyed about an economic topic of interest, and this quarter focused on federal and state economic leadership. Not surprisingly, Utah CEOs have significantly more optimism in state leadership than they do in federal. This confidence coincides with the state’s commitment to remain safe and open throughout the pandemic. That path was not easy to take but it proved fortuitous and saved many jobs.
The Salt Lake Chamber's CEOutlook Confidence Index increased from 58.9 in 2020-Q4 to 75.3 for 2021-Q1. Year-Over Job Growth
Utah’s economic recovery and growth continue to lead the nation. The indicators show a strong, positive trend that is expected to continue, especially as the incumbent challenges of growth return in full measure.
Confidence Index and Job Growth
Confidence Index
Derek B. Miller, President and CEO, Salt Lake Chamber
20.0 10.0 0.0
Q1
Q2 Q3 2017
Q4
Q1
Q2 Q3 2018
Q4
Q1
Q2 Q3 2019
Q4
Q1 Q2 Q3 Q4 Q1 2021 2020
The Salt Lake Chamber’s CEOutlook Confidence Index is based on responses to the four standard questions included in each quarter’s survey (Questions 1-4). The Index can range from 0 to 100. A score below 50 indicates executives believe the economy will worsen; a score above 50 indicates a belief among executives that the economy will improve. Source: Index is produced from the Salt Lake Chamber’s CEOutlook with support from the Kem C. Gardner Policy Institute, including analysis of the Utah Bureau of Labor Statistics.
Natalie Gochnour, Director and Chief Economist, Kem C. Gardner Policy Institute and Salt Lake Chamber Utah CEOs report a much more positive view of the Utah economy in the first quarter of 2021. In fact, we measure the highest overall index since we began collecting the CEOutlook. I see several reasons for this. First, Utah’s economic and health performance during the pandemic bested most, if not all, states. Second, labor market conditions have turned quite favorable with an end to the contraction in jobs and low unemployment rates. Finally, Utah’s vaccine rollout has been impressive. While we still need to make progress in communities with less access to vaccines, overall vaccination rates are high and getting better every day. Case counts and hospitalizations are down. This is great news after over a year of pandemic hardship. I’m grateful for business leaders who have innovated and adapted during these times. I’m also impressed with our governor, legislative leaders, and health care professionals who have served our state in such a dedicated way. I look forward to the better days that lie ahead.
First Quarter
I 2021
A Look Back and to The Future
— How would you describe the current economic conditions in Utah compared to six months ago? — What is your expectation for economic conditions in Utah six months from now? 80.0 70.0 Confidence IndexConfidence Index
60.0 50.0 80.0 40.0 70.0 30.0 60.0 20.0 50.0 10.0 40.0 0.0 30.0
67.0
65.9
66.1
61.7
59.2 67.0
65.9
58.8
64.4
61.7
59.2
Q1
64.4
65.0
66.1
Q2
58.8
Q3
Q4
65.0
64.2 61.4
10.0
65.0
64.2 61.4
2021 Q1
61.7
61.4
Q1
55.5
Q2
Q3
50.0
55.6 50.0 Q4
58.8 50.0
54.8
48.2
45.6 58.8 50.0
54.8
59.0 57.7
56.3 48.2
45.6 Q1
59.0 57.7
56.3
Q2
2018
Q3
Q4
Q3
SAME 2017 BETTER WORSE
Q4 Q1 12%
7%
Q2
Q3
Q4
Q1
Q2
2018
Confidence IndexConfidence Index
62.8
54.1 46.3
48.8 4.2 Q2
Q3
Q3
Q4
Q1
61.7
61.3
64.3 59.7
Q2
Q4
Q1 2021
Q2
2019
Q3
Q3
Q4
2020
Q1 2021
88% 69.7
57.8
68.5
59.9
78.7
65.1
93%
12%
7%
66.4
80.5
88%
58.1
Q1
48.8
2020
68.5 N=41 66.4 66.0 from now? —70.0What67.9is your expectation for your63.6 own industry months 63.3 six64.1 61.9 61.7 61.3 62.5 —60.0What64.3are your expectations61.4 for your firm's profits in the next 12 months? 59.3 59.9 59.7 59.4
58.1
Q4
63.6
62.5 61.4
59.3
Q1
57.8
Q2
2017
20.0
Q1
78.7
54.1
56.6 52.6
65.1
46.3
0% 0%
N=41 SAME
67.9
52.6
2019
Industry vs.BETTER Firm Expectations 80.0
50.0 80.0 40.0 70.0 30.0 60.0 20.0 50.0 10.0 40.0 0.0 30.0
62.8
56.6
4.2
Q2
2021 Q1
55.5
55.6
0% 0%
WORSE Q1
61.7
61.4
2017
20.0
0.0
65.0
80.5
Q3
53.1 63.3
58.3
53.1 64.1
66.0
48.2
53.1
Q4
Q1
2018
61.2 55.9 72.3
Q3
93% 75.0 67.1
54.1 75.0
61.2 58.3
62.2
46.6
29.8
59.0
55.9
62.2
67.1
54.1
46.6
48.2 Q2
59.0
61.9
59.4 53.1
69.7
72.3
Q4
Q1
2019
Q2 Q3 29.8 2020
Q4
Q1 2021
10.0 WORSE Q1 Q2
2021 Q1
0.0
2%
SAME 2017 BETTER WORSE
2021 Q1
Q3
N=41 SAME BETTER
Q4
Q1
17%
Q3 2018 24%
15% 2%
Q2
Q1
Q2
Q3 2019
Q4
Q1
Q2
Q3 2020
68%
17% 15%
Q4
Q4
Q1 2021
73%
24%
68%
73%
N=41
2021
I FIrst Quarter
CEOutlook
TIMELY TOPICS On a scale of 1-10, please rate your level of optimism for the new state and federal administrations. 35% 30% 25% 20% 15% 10% 5% 0%
1
2
3
4
5
State government
6
7
8
9
10
Federal government
Please expand on your choices regarding new state and federal administrations. We rely upon the Federal ITC and clean energy policies which Biden is favorable on.
Federal government needs divided government restraints to be smarter, more fiscally disciplined and provide clearer leadership balance.
We have a great state leadership who have maintained a balanced budget for years and put Utah as a leader in the Nation. I have nothing positive to say about the leadership at the National level (President, House, Senate) and fear what lies ahead to the National economy which will impact the State. Appreciate most of our State’s federal leaders and know they face an uphill battle of party over politics.
Increased Federal regulatory control and taxes, along with untethered spending and rising energy prices, will put the national economy at risk from everything from inflation to increased unemployment.
We don’t believe Governor Cox is the caliber of Governor Herbert, especially if tough decisions are needed. However, he has enough good people around him to give us optimism for state leadership. Federal leadership is another matter. It’s difficult to tell who’s in charge. We expect federal decisions to mostly hurt business, especially small businesses. Utah doing a good job overall. Better support of mask wearing and more public announcements and awareness. The Feds are finally taking it more seriously and trying to provide support. This will take time. Do not like the $1.9 trillion or $15 minimum wage. Would like to see a less costly more targeted relief program. Utah has low unemployment and we’ve been saving money and are now ready to start spending the money while being safe. Federal government is spending many dollars to help bailout local governments that do not have a sustainable model to stay out of debt or to be able to work within their budgets. Our Fed Gov is spending too much money that our grandchildren will need to payback at some point. The federal government is at a standstill on what could help this country the most. Taxation policies will have major impact on public optimism Spencer Cox will do very well as he grows into the job. Large in migration may create unusual housing, schooling and transportation requirements.
I have every confidence in Governor Cox and his administration. I believe if one of Governor Cox’s well-articulated plans is not working, he will waste no time in responding to change it. I have a wait-and-see attitude for the new Federal administration. While it is nice to see someone more Presidential in the White House, I am not a fan of all of the policies that burden us with so much debt. I fully support Governor Cox and have been impressed with his inclusive leadership so far. My continued support will be highly dependent on his approach and support for infrastructure. I disagree and am concerned with many of President Biden’s policies, positions, and executive orders. I am encouraged by his focus on infrastructure, some stimulus, and potential for improved decorum and collaboration across the aisle. I am slightly optimistic about our state’s future. I am concerned about our move toward government solving all our problems I am very discouraged by the political moves of our nation’s citizens and our leaders toward socialism and government and monopoly control I am concerned about our state vaccine distribution. We are not prioritizing essential workers, and converting testing locations into vaccine distribution. Hopeful that the State Government will continue support of economic development and business friendly tax and regulation environment. Gridlock in our federal government is a real and extending problem Common sense and inclusiveness will prevail in the long term.
What emerging trends, risks and other factors do you think may have a positive or negative impact on Utah’s economy in the next 12 months? Stimulus Spending We’re carefully watching the effects of the massive government spending. The spending will likely lead to increased spending across all industries. We also expect that inflation will become a major factor in the next 12 months and beyond. We see inflation as a real concern with the amount of stimulus being injected into the economy from the national government.
CEOutlook
The amount of capital in the system feels unprecedented. The impact of this should help stabilize those on the bottom end of the economy but we are watching inflation closely. The money going to local governments and the state should also help the economy. Impact of spending on government spending on COVID Relief. Given the level of federal stimulus coming into Utah, we are looking carefully at potential for inflationary pressures. The local economy should be very strong given the level of spending that is being injected.
First Quarter
I 2021
Federal and state infrastructure investment will boost our economy while improving safety, mobility, and quality of life.
Speed of recovery from COVID-19; material regulatory changes resulting from new federal leadership.
Low unemployment and competition for skilled labor may inhibit economic and company growth; continued emphasis on pathways programs focused on increasing skilled labor should be a increased priority.
Remote working conditions will impact the brick and mortar footprint of the office sector. Also, an increased demand in online commerce will likely impact brick and mortar retail operations.
Elimination of Covid. Stimulus package will be beneficial for construction as infrastructure and fiber projects come forward.
Positive - Opening up recreation - sports - entertainment - Finding ways to help stay safe while growing UT’s economic business. When we have hope we function much better mentally. Negative: Republicans continue their cult around Trump and continue to pursue silly policies.
Unforeseen or unknown slowing of stimulus or relief regulations adversely impacting business sentiment.
Positive: The new administration will establish science and common sense in the US governments.
Federal relief package targeted in the correct areas.
Vaccinations Vaccination adoption and governmental loosening of business restrictions. Take up of the vaccine. I’m assuming it will be available but worried that some may not get it. Ultimately, relaxation of Covid restrictions will be a big positive. It’s all about the vaccine. We need the vaccine to be effective against COVID_19 and all of the emerging strains. We need vaccine supply and delivery to remain steady and efficient. Increasing the availability of vaccines and the number of Utahns who choose to be vaccinated will be a key factor in continuing to emerge from the pandemic with an intact economy and workforce. Immunizations. Continued vaccinations without emergence of dangerous Covid variants. Concern over vaccinations really allowing people to be comfortable returning to work. While numbers are dropping- still a fair amount of paranoia over Covid. The effectiveness of the vaccine. Vaccine distribution timeliness and effectiveness of vaccine against new variants and mutations.
Other We expect steady reactivation downtown among workers, event patrons and visitors that will drive restaurant, bar and retail sales. We expect a surge in live event production as artists and producers bring events to market where there is significant pent-up demand for gathering and social engagement. The housing market has reached a crisis moment with a lack of existing inventory, new construction is the only additional supply. This has led to many existing homeowners to not sell, as they have no available inventory to purchase if they sell. This is issue will continue to grow as a significant drag on our economic development and efforts to improve upward mobility.
In Utah, we continue to see a very destructive political environment for residential solar. However, we are seeing strong demand in almost every other state we work in. So even thought we HQ in Utah, we do little customer sales here. Fear will not let us get past the pandemic. Current administration in Washington could have a very negative effect on UT and the country. COVID resurgence. Cost of living in Utah. Continue to find employees. Even with increased unemployment, this has still been a problem for manufacturers. Construction Material prices are out of control due to supply / demand as well as other ongoing COVID impacts at manufacturers in other States and Countries. Companies and individuals have increased their capacity and flexibility to not only remain relevant throughout the pandemic but contribute significantly to mitigating its negative economic Impacts. This creativity and growth through adversity will strengthen the foundation upon which Utah’s economy will grow. As the economy improves overall it will increase demand for business services. Regional conditions driving business investment to meet demand given the pace we’ve reopened will drive credit/bank needs. Affordable housing is a big challenge in the state of Utah and first-time home ownership will continue to be a big issue. How the public chooses to utilize (spend) the personal savings that has increased dramatically during the pandemic period. Adherence to mask wearing and other health policy recommendations. Recovery of restaurant, entertainment and other highly affected sectors.
About the Salt Lake Chamber’s CEOutlook
Methodology
Respondent Industry Make-Up
The Salt Lake Chamber’s CEOutlook is a statewide economic survey of Utah business executives. Modeled after other national business sentiment surveys, it provides a forward-looking view of the Utah economy. The survey results are intended to help business and community leaders make informed decisions about likely future economic conditions. The survey will continue to be evaluated through 2020 to assess its predictive value. All past CEOutlook reports can be found here: https://slchamber.com/ceoutlook/
The Salt Lake Chamber partners with the Kem C. Gardner Policy Institute at the University of Utah to design, tabulate and assist in analyzing the survey. Sixty business executives from Utah’s fourteen major industries are asked to respond to 6-8 questions, depending on their responses, about their company and Utah’s economic performance. Respondents are selected by each industry’s contribution to the Utah economy. Panelists come from a range of firm sizes and locations within Utah.
• Arts, entertainment, recreation, accommodation, and food services • Construction • Educational services, health care, and social assistance • Finance, insurance, real estate, rental, and leasing • Information
The Salt Lake Chamber is Utah’s largest and longest-standing business association. A statewide chamber of commerce with members in all 29 Utah counties, the Chamber represents the broad interests of the state’s 63,000plus employers, which employ more than 1.4 million Utahns. This includes thousands of members and their employees. The Kem C. Gardner Policy Institute at the University of Utah develops and shares economic, demographic and public policy data and research that help individuals and the community make informed decisions. Housed in the David Eccles School of Business, the Institute seeks to be a vital gathering place and center for independent economic, demographic and public policy thought leadership that helps the Utah economy to prosper. The Institute is a strategic partner with the Salt Lake Chamber in serving Utah.
2021
I FIrst Quarter
• Manufacturing • Mining • Other services, except government • Professional and business services • Retail Trade • Utilities • Wholesale Trade
For More Information Heidi Walker COO, Salt Lake Chamber 801-328-5081, hwalker@slchamber.com Natalie Gochnour Director and Chief Economist, Kem C. Gardner Policy Institute and Salt Lake Chamber 801-585-5618, natalie.gochnour@eccles.utah.edu Marin Christensen Research Associate, Kem C. Gardner Policy Institute 801-581-6521, marin.christensen@utah.edu
CEOutlook