Q2 2021
These jobs represent stable, high-paying, family-supporting jobs that can help alleviate our housing affordability challenges as they continue to increase supply. This industry has met the challenges of the pandemic, overcoming frozen supply chains, price volatility on key commodities, and labor shortages to continue building Utah. Construction jobs also support adjacent industries such as travel and tourism by creating spaces for visitors and consumer economic activity. One notable project is the new Continued on page 4
CEOutlook
80.0
75.3 74.3
70.0 66.3 62.8 61.2 59.4 62.0 60.6 62.4 62.3 60.9 60.1 55.5 53.2 60.0 53.3 50.0 40.0
57.3 58.9 32.3
30.0 20.0
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% 2.6%* 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
Consistent inmigration to Utah is catalyzing a housing and construction industry boom, and the endurance and response of our construction industry is currently Utah’s fastest growing major industry. Over the past couple of years, Utah’s construction companies have filled 13,300 new jobs.
The Salt Lake Chamber's CEOutlook Confidence Index decreased from 75.3 in 2021-Q1 to 74.3 for 2021-Q2. Year-Over Job Change
This CEOutlook shines a light on Utah’s strong rebound and shows consolidation of a robust recovery. The economic fundamentals are flashing green as industries continue full speed ahead in hiring and growth. Our workforce participation remains high with the unemployment rate at 2.6%, ranking second nationally and half the broader 5.4% U.S. rate.
Confidence Index and Job Change
Confidence Index
Derek B. Miller, President and CEO, Salt Lake Chamber
10.0 0.0
Q1
Q2 Q3 2017
Q4
Q1
Q2 Q3 2018
Q4
Q1
Q2 Q3 2019
Q4
Q1 Q2 Q3 Q4 Q1 Q2 2020 2021
*Q2 calculated on 2-year percent change
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 employment data prepared by the Bureau of Labor Statistics.
Natalie Gochnour, Director and Chief Economist, Kem C. Gardner Policy Institute and Salt Lake Chamber Utah’s economic expansion remains on track, even as COVID-19 continues to pass from person to person. This quarter’s CEOutlook confirms that business leaders believe the worst of the pandemic’s economic impact is behind us. Both the first and second quarter confidence indices register record high levels as business leaders sense a full recovery is afoot. Their optimism tracks with the data. The most recent job report shows Utah’s two-year job growth rate of 4.2% ranks second among states and far above the -2.8% contraction seen nationally. Only four states showed positive change – Idaho, Utah, Arizona, and Montana. It’s reasonable to project that Utah will continue to be a top-performing state. Risks to the outlook remain. I’ll be watching three indicators carefully: consumer confidence, COVID-19 health outcomes for children, and price instability. We are not out of the woods yet, but Utah’s strengths, coupled with business, consumer, and employee adaptations, have kept us in a nation-leading position. It’s great to live in Utah! Second 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? 90.0 80.0 Confidence IndexConfidence Index
70.0 60.0
67.0
65.9
61.7
59.2
40.0 80.0 30.0 70.0
67.0
20.0 60.0
66.1
30.0
65.0
66.1
50.0 90.0
10.0 50.0 0.0 40.0
65.9
Q1
64.4
Q2
61.4
64.4
61.7
55.5
65.0
61.4
Q4
61.7
61.4
64.2
58.8
Q3
65.0
64.2
58.8
65.0
59.2
61.7
61.4
Q1
55.5
Q2
2017
20.0
Q3
58.8
55.6
54.8
50.0
57.7
56.3
50.0
48.2
45.6 58.8
55.6
54.8
50.0 45.6 Q1
48.2 Q3
Q2
2018
59.0 57.7
56.3
50.0 Q4
59.0
Q4
52.6
46.3
48.84.2
Q1
Q2
2021 Q2
Q3
Q4
Q1
Q2
11%
SAME 2017
Q3
Q4
Q1
2018
6%
Q3
Q4
Q1
Q3
Q4
2021 Q2
WORSE
Confidence IndexConfidence Index
80.0 40.0 70.0 30.0 60.0 20.0 50.0 10.0 40.0 0.0 30.0
11%
0%
66.4N=41 61.7 61.3 62.5 your expectation for
67.9
66.4
59.9
Q1
Q2
68.5
63.6own your
68.5 61.7
61.3
64.3 59.7
Q3
58.1
Q4
62.5 61.4
Q1
2017
20.0
Q2
2021
6%
75.0
72.3
— What is industry six months now? 64.3 60.0 61.4for your —50.0What are 59.9 your expectations firm's profits in the 59.3 59.7 59.4 next 12 months? 58.1 58.3 57.8 55.9 70.0
89% 92% Q1
89% 92%
3% 80.0 Industry vs. Firm Expectations 67.9
Q2
2020
WORSE 0% 3% BETTER N=41 SAME
Q1 2021
Q2
2019
75.0
54.1 46.3 Q3 Q4
2020
Q2
78.7
65.1
62.8
52.6
82.6
80.5
4.2
BETTER Q1 Q2
75.0
54.1
48.8
56.6
2019
78.7
65.1
62.8
56.6
10.0 0.0
82.6
80.5
63.6 59.3
57.8
Q2
Q3
63.3
64.1
53.1
53.1
63.3
64.1
69.7
66.0
61.9 from
66.0
48.2
53.1
Q4
Q1
2018
Q3
67.1 68.8
75.0 61.2
58.3
70.8
54.1
46.6
29.8
59.0
55.9
62.2
70.8
67.1 68.8
54.1
46.6
48.2 Q2
59.0
61.9
59.4 53.1
69.7
72.3
61.2
62.2
Q4
Q1
2019
Q2 Q3 29.8 2020
Q4
Q1
Q2 2021
10.0 WORSE Q1 Q2
2021 Q2
0.0
8% 6% Q4
SAME 2017 BETTER WORSE
2021 Q2
Q3
N=41 SAME BETTER
Q1
Q2
Q3 2018 22%
Q4
Q1
31%
8% 6%
Q2
Q3 2019
Q4
Q1
Q2
Q3 2020
64% 22%
Q4
Q1
Q2 2021
69%
31% 64%
69%
N=41
2021
I Second Quarter
CEOutlook
TIMELY TOPICS What, if any, is the biggest risk to Utah’s near-term (6-12 months) economic outlook? What, if any, is the biggest risk to Utah’s medium-term (2-5 years) economic outlook? Labor availability
22%
Inflation and commodity prices Housing affordability COVID-19 National debt No risk
31%
0%
42% 36% 36%
17% 6%
0% 0% 0%
11%
Medium term (2-5 yrs) Near term (6-12 mon.)
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? Inflation in construction will slow things down Decarbonization and electrification of things. Copper primary elemental need. The largest positive and negative we see for Utah in the next 12 months and in the coming few years is the ability to manage growth.
Rising costs of energy, labor, and commodity goods is a challenge. The potential for increased taxes and regulatory oversight is always a concern. Positive impact - just the idea that we all can get back out into society. This can be called a trend - strangely enough
Emergence from COVID-19; ongoing activity in construction
Lack of affordable inputs into housing will cause problems. Increased housing prices will drive up salaries. What dominos from there is what is most concerning.
Any potential fourth wave of COVID; individuals not getting vaccinated and spreading as masks have come off; schools and young people spread of the virus; being able to fill service jobs; business relocating to Utah; inflation and federal debt
Inflation may increase with such a strong economy with the availability of savings and additional stimulus money. The low unemployment rate may attract more in-migration to Utah from other states that are not doing as well economically.
Republicans spreading more lies and getting rid of democracy.
Capital expenditures leading to organic growth.
Supply chains are the main source of disruption and cost impacts to our business. This is followed by labor shortages and associated cost increases. As interest rates climb demand will temper, and hopefully so will costs.
Ongoing supply chain problems will negatively impact business.
Housing affordability, inflation, workforce shortage, immigration
Pent up demand after COVID, inflation, lack of available skilled and unskilled workers. Continuing construction boom Lack of commercial real estate product available to sell. Uncertainty of the pace of return to office jobs by workers. Biden›s ridiculously expensive proposed spending bills, coupled with likely large tax increases. In the commercial real estate market, being able to meet the demands of incoming buyers who have heard that Utah is a great place to invest. Our supply of real estate for sale is limited and buyers can get discouraged if they cannot make a purchase. They will quickly deploy capital to other places. Tight labor market Diversification of employee skills Construction costs A COVID resurgence. Housing costs. Water. 1. Inventory for homes - affordable pricing for homes. 2. Not enough workers - CDL drivers Labor and material shortages are a huge concern.
Pent up demand (and return to pre-COVID levels) for health care services will increase costs in the health insurance market Inflation is the key issue, followed closely by availability of people. The confluence of in-migration, accelerated housing and transportation costs, and insufficient infrastructure, and strains from environmental change (air and water issues) may have a significant impact on the quality of life along the Wasatch Front. Inflation and shortage of qualified workers Housing prices. Potential inflation. Supply chain/key materials. Continued scarcity of highly skilled human capital constrains Utah›s economy. Reliable networking to interconnect potential resources in rural areas could make a difference. I believe inflation could slow the economy. There are factors around the world that are driving up costs and having an impact on many sectors. Demand is greater than supply and driving up costs. Another issue is low unemployment and the challenge to find qualified employees for some of the lower paying jobs even though those positions range from $16-$18 per hour plus excellent benefits. Return of conventions and tourism should help, while the raging housing market I think will continue to impact affordability and price out locals while remaining attractive to those relocating from the higher-cost coasts
I think that continued positive net migration, increased travel, and the diversity of the economy will help Utah in the coming year. I’m concerned about the amount of government spending and the impact it may have on inflation.
CEOutlook
Second Quarter
I 2021
Derek Miller, Continued from Page 1
25-story Hyatt Regency linked to the Salt Palace Convention Center. This new centerpiece will support convention activity for decades to come and enhance the overall downtown experience. Lastly, another exciting project is Zions Bank’s Technology Campus in Midvale.
This space will continue to grow our technology and innovation ecosystem and add to the magnetic power of our state. Both Salt Lake and Utah counties have 2.5 million sq. ft. of commercial projects under development, and this will bring jobs, create companies, and contribute durability to Utah’s economy.
This report shows the strength and resilience of Utah businesses and employees› determination to keep our economy and quality of life elevated!
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 Second 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