Q3 2021
Utah continues to lead the nation with increasing job growth, jumping to 3.5% in the third quarter for two straight years of increases. Business leaders were mixed on their outlook for the future with almost an even split: 51% expecting better conditions and 49% expecting conditions to be the same or worse. Executives are also looking at headwinds for their own industry for the coming six months but expect firm profits to rise over the coming year. The outlook remains mixed for the immediate short-term due to structural factors weighing on the economy. Inflation remains a concern, with two-thirds of respondents expecting prices to remain higher for the longer term. Utah’s near record low unemployment rate means companies are continuing to face workforce shortages while Continued on page 5
CEOutlook
The Salt Lake Chamber's CEOutlook Confidence Index decreased from 74.3 in 2021-Q2 to 65.9 for 2021-Q3. 4.0% 3.0%
3.1% 2.9%
2.6%
3.1% 3.3% 3.3% 3.3% 3.1% 2.9% 2.9% 2.7% 2.5%
2.0% 1.0%
3.5%* 2.3%*
1.8% 0.8%*
2.5%*
1.7%*
0.0% -1.0% -2.0% -3.0%
-2.6%*
80.0 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
75.3 74.3 57.358.9
65.9
Optimism
Year-Over Job Change
50.0 40.0
32.3
30.0
Concern
The CEOutlook Index dropped for a third consecutive quarter this year with a rating of 65.9, down from a 74.3 in the second quarter. Much of the drop was attributed to the coronavirus Delta variant resurgence and growing concerns for other possible variants. For context, confidence remains above average and is 2x the lowest point of the index at the beginning of the pandemic. This continued drop signals that executives are concerned about the uncertainty caused by the lingering pandemic along with supply chain woes and workforce shortages.
Confidence Index and Job Change
Confidence Index
Derek B. Miller, President and CEO, Salt Lake Chamber
20.0 10.0 0.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2020 2019 2018 2017 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 The CEOutlook index slipped to 65.9 in the third quarter, as the Delta variant surged and concerns developed that we are not out of the pandemic just yet. This quarter’s index tallies well above the 32.3 low point recorded when the pandemic began and remains higher than average for the period. This strength signals that business leaders are more confident in navigating the new coronavirus variant. Utah remains the nation’s bright spot in terms of job growth, leading the nation at 3.5% two-year growth. Only two other states—Idaho and Arizona—experienced positive change during this period. The nation contracted by 2.1% on average. Utah’s unemployment reached near record lows of 2.5% in the third quarter, significantly less than the nation’s 5.1% unemployment rate. Risks to the outlook include global supply chain disruptions that continue to pressure prices, Utah’s labor shortage, and rising COVID cases as we progress into the holiday season. Utah is well positioned for these challenges, as our businesses, residents, and state leadership have proven time and time again just how resilient the Beehive State can be. Third 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 50.0 90.0 40.0 80.0 30.0 70.0 20.0 60.0 10.0 50.0 0.0 40.0
82.6
80.5 67.0
65.9
65.0
66.1
61.7
59.2
67.0
65.9
65.0
66.1
Q1
30.0
59.2
61.7
Q2
Q3
64.4
64.2
65.0
58.8
61.4
61.4
61.7 55.5
64.4
64.2
65.0
58.8
61.4
61.4
Q4
Q1
61.7 55.5
Q2
2017
Q3
55.6 50.0
55.6 50.0 Q4
58.8
59.0
54.8
50.0
57.7
56.3 48.2
45.6 58.8
59.0
54.8
50.0
57.7
56.3 45.6 Q1
48.2 Q3
Q2
2018
Q4
56.6 52.6
46.3
2019
60.4
80.5
48.84.2 46.3 Q2 Q3 Q4
64.0
82.6 78.7
65.1
62.8
56.6 52.6
75.0
54.1
48.8
Q1
78.7
65.1
62.8
75.0
64.0 60.4
54.1 Q1
Q2
2020
Q3
2021
20.0 10.0
51%
BETTER Q1
Q2
2021 Q3
0.0
Q3
Q4
Q1
Q2
SAME2017
Q3 2018 24%
WORSE BETTER
12%
Q4 32%
Q1
Q2
Q3
Q4
63% Q1 Q2
2019
51%
2021 Q3
80.0 12% Industry vs.WORSE Firm Expectations
Q4
Q1
Q2
Q3
2021
63%
N=41 24%
Q3 2020
17%
SAME
4.2
32%
17% 75.0
72.3
— What is your months 61.9 from now? 63.6 own 64.3 60.0 61.4 for — What are59.9your59.7 expectations your firm's profits in59.4the next 12 months? 59.3 58.1 58.3 57.8 Confidence IndexConfidence Index
70.0
50.0 80.0 40.0 70.0 30.0 60.0 20.0 50.0 10.0 40.0 0.0 30.0
68.5
66.4 N=41 your expectation for 61.7 61.3 62.5
67.9
64.1six 63.3 industry
53.1
67.9
66.4
68.5 61.7
61.3
64.3 59.9
Q1
Q2
59.7
Q3
58.1
Q4
62.5 61.4
Q1
2017
20.0
63.6
63.3
69.7
66.0
61.2 59.0
55.9
53.1
48.2
64.1
66.0
69.7
72.3
Q2
57.8
Q3
53.1
53.1
Q4
Q1
58.3
61.2
Q2
Q3
59.0
55.9
62.2
62.2
70.8
76.8
67.1 68.8
62.2
54.1
46.6
48.2
2018
67.1 68.8
75.0
61.9
59.4
76.8
54.1
46.6
29.8 59.3
62.2
70.8
Q4
Q1
2019
Q2 Q3 29.8 2020
Q4
Q1
Q2
Q3
2021
10.0 BETTER Q1 Q2
2021 Q3
0.0
SAME2017 WORSE BETTER
2021 Q3
Q3
Q4
Q1
Q2
Q3 2018
Q4 32%
Q1
Q2
39%
7% 7%
WORSE
53% Q4
32%
61% Q1
2019
Q2
Q3 2020
53%
N=41 SAME
Q3
Q4
Q1
Q2
Q3
2021
61%
39%
7% 7%
N=41
2021
I Third Quarter
CEOutlook
TIMELY TOPICS The reopening of the economy continues to boost prices. The Consumer Price Index rose 0.9% in June, stronger than many forecast. Do you believe higher inflation is a temporary or long term concern for the U.S. and Utah economy?
Only with significant increase to pay. We struggle to fill tech jobs. Depends on the level of position.
20%
Shortage of licensed mental health professionals and a long runway for pipeline development.
53%
No Depends
35%
Temporary
Utah’s unemployment rate currently ranks among the nations lowest. Are you able to fill vacant jobs right now? Yes
65%
Long-Term
28%
Certain jobs, including line workers and engineers, are hard to find. Financial workers are not so difficult to find.
(Comments listed to right)
Some positions are very difficult to fill. Depends on type of position. Skilled labor hard to come by.
Have you increased wages to attract the labor you need?
89%
Yes No
11%
On a 5-point scale, rate how much of an impact the following have on your company’s current ability to recruit and/or retain qualified employees? Workers not interested in the kinds of jobs they hadinpre-pandemic Workers not interested the kinds of jobs they had pre-pandemic Employees still concerned about COVID safety Employees still concerned about COVID safety Lack of access to child care amongto workers Lack of access child care among workers Expanded Unemployment benefits Expanded Unemployment benefits Workers expecting more flexibility in hours since COVID Workers expecting more flexibility in hours since COVID
25% 25% 8% 8%
23% 23%
20% 20%
30% 30%
38% 38%
26% 26%
13% 13%
15% 15%
23% 23%
28% 28%
26% 26%
31% 31%
21% 21%
10% 23% 10% 23% 1–No impact 1–No impact
21% 21% 2 2
3 3
8% 8%
30% 30% 4 4
13% 13% 13% 13%
18% 18%
3% 3%
15% 15%
25% 25% 5–Significant impact 5–Significant impact
What impact has this focus had on your company’s awareness, attitudes, and/or willingness to invest in support in the mental health of your employees in the last 12 months. 2.5%
2.5%
7.5%
7.5%
42.5%
1–No impact 1–No impact
CEOutlook
37.5%
42.5%
37.5%
2 2
3 3
4 4
10.0%
10.0%
5–Significant impact 5–Significant impact
Third Quarter
I 2021
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?
Labor needs.
Labor shortage will continue to negatively impact. The risk of higher interest rates due to inflation.
COVID trajectory. Water to enable irrigation, recreation, and development. Public safety in Utah relative to urban centers in other parts of the county will contribute to in-migration
Inflation and extremely low unemployment are not sustainable long term. Inflation can put recovery at risk. Low unemployment restricts employers from growing.
Supply and demand will continue to challenge retailers. COVID will continue to be a challenge. Supply chain issues continue.
Enrollment - especially among males slightly down.
With low unemployment and a robust economy, I think we will see increasing wage inflation, and we are already beginning to see it in our organization.
Increased inflation, increasing interest rates, and higher taxes.
Workforce availability.
Inflation - demand for vehicles, pricing for used vehicles. Seeing lower demand for in-theatre movies but higher revenue streaming is a challenge.
Hopefully supply issues and prices will come back to earth. (Lumber, concrete, steel to name just a few.)
Shortage of housing supply (negative), inflation (negative), passing of pandemic (positive).
The current COVID surge is a huge hit to the confidence we will be able to return to offices; staff are tired and waning. We need to see something from our state government besides pretending it is over to help boost our confidence that we can get past this. Inflation of home prices is driving our employees to look for remote work from out-of-state, which is a huge problem.
Concerns - Commodity pricing and availability. Long lead time. Positive the infrastructure package will be beneficial for our organization. Cost of energy increasing goods and transportation, mutating pandemic, federal regulations - particularly as they relate to energy. Energy prices going higher, inflation, excessive US government spending plans, and China’s aggressive policies. General drug-free employees in Utah - positive. Business friendly local and state governments that will start being protective - negative. Credit standards will tighten - negative. Child care or schooling so parents can go back to work. Positive - continuing construction boom. Negative - labor shortages. Labor constraints. New entrants along with growing demand amongst existing players is creating more and more of a talent battle. We have hit price thresholds on housing that will lead to more inflation and gut-migration, eventually slowing growth. Conversely, there is incredible amounts of capital flowing into our market especially in multifamily and industrial that will accelerate investments. Housing will continue to be a challenge. As we try to recruit talent into the state, housing has become an obstacle. Trends: Increased digital adoption, business as driver for social change (livable wage, health benefits, reduced carbon emissions). Risks: climate change, pathogens, affordable housing, strained supply chain. Other: population growth, transportation, diversity and inclusion. High cost of housing. Inflation effects, labor shortage and rising compensation, housing affordability, and COVID-19 whiplash.
COVID. Too much federal spending.
Covid-19 currently rising and related future variants/unknowns including declining immunity as well as coordination of vaccine booster. Continued supply chain disruptions. Workforce shortages in licensed mental health professionals and increasing demand. COVID, in all of its glory. Continued manufacturing and data center growth is positive. 1. Supply chain shortages and delays. 2. Shortage of labor and/or people who want to work. 3. Shortage of software engineers and other tech expertise. Leading economic growth; immigration of companies and people; institutional investors becoming aware of Utah. Supply chain disruption, higher wages, workforce, COVID Delta variant. COVID-19 variants and staffing challenges have the biggest impact on the retail sector of the economy at this time. Housing costs-Negative, Wages-Negative, Labor shortage continuesNegative, Continued growth-positive, Higher Inflation Housing prices and inflation Skilled labor tightness persists constraining schedules for our customers and our own ability to grow. Biden’s COVID-19 vaccine/testing mandate will likely result in some vaccine-hesitant employees quitting to work at smaller firms or companies that will not comply with the mandate.
Labor.
CEOutlook
Third Quarter
I 2021
Derek Miller, Continued from Page 1
adjusting to market demands by increasing pay to attract talent. These structural challenges are the result not only of lingering effects of the pandemic but the natural headwinds of a robust economic expansion. Despite these challenges, Utah is poised to continue leading the way. Prevalent attitudes indicate that Utah can expect strong leadership and community support to continue guiding the state upward.
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 Third 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 Dianne Meppen Director of Survey Research, Kem C. Gardner Policy Institute, 801-587-7807, dianne.meppen@utah.edu.
CEOutlook