2000 Econom ic Report to the Governor
Presented to: Utah Employer’s Conference January 12, 2000 Presented by: Natalie Gochnour Governor’s Office of Planning and Budget
Overview
n Contributors n H ighlights
– M o d e ration – Stabilization – Transition – Position
n O u tlook
w w w . g o v e r n o r . s t a t e . u t . u s /d e a /d
Council of Econom ic Advisors
M a jor Contributors
n
B u reau of Econom ic and Business Research Utah Foundation First Security Bank Utah State University Utah Transit A u thority State G o v e rnm e n t Agencies
– W o rkforce Services – T a x C o m m ission – C o m m u n ity and Econom ic Developm e n t – N a tural Resources – G o vernor’s Office of Planning and Budget – Legislative Fiscal Analyst
n n n n n
M o d e ration
Utah’s Rate of Job Growth has Fallen for the Past Five Years
7% 6.2% 6% 5% 4% 3.0% 3% 2% 1% 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999p 3.2% 3.0% 2.6% 4.7% 4.2% 5.4% 5.6% 5.1%
Source: Utah Department of Workforce Services
M o d e ration
Industry Focus
n Tourism
and Defense and High Technology
n Exports
n Energy,
Minerals, and A g riculture
M o d e ration Construction and Services are the Major Catalysts for Growth
Total 2.6%
Construction Services FIRE* Government Trade TCU** Manufacturing Mining -4.3% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% -1.0% 3.1% 2.5% 2.0% 1.3% 4.1%
7.0%
Utah Percent Change in Jobs: 1998-1999
-6.0%
8.0%
*Finance, Insurance and Real Estate **Transportation, Communication and Utilities Source: Utah Department of Workforce Services
Stabilization
Utah’s Longest Sustained Expansion Leads to Steady, More Modest Growth
8% 7% 6% Job Growth 5% 4% 3% 2% 1% 0% -1% 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
Source: Utah Department of Workforce Services
Stabilization
Utah’s Steady Growth Path Occurs W ithin the Context of International Recovery and National Prosperity
n
The worst of the Asian financial crisis appears to have ended In February 2000, the U .S. economy is poised to post its longest expansion ever
n
Transition
W ith the Boom Over, Utah’s Economy Enters a Period of Transition
n
Construction Pause O lym p ic Acceleration New Economic Environment
n
n
Transition
Construction Activity is Very Cyclical
Utah Residential Construction Activity: 1970 to 1999
25
Thousands of Units
20
15
10
5
0
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 Single-Family Multi-Family Total
Source: University of Utah, David Eccles School of Business, Bureau of Economic and Business Research
Transition
Utah’s Construction Boom has been Significant
n
Total value of new c o n s truction reached another all-tim e h igh in 1999 C u rrent boom is now in its ninth year There are currently 73,000 construction jobs in the state, nearly three tim e s a s many as existed at the start of the decade O n e o u t of every six housing units in the state w a s b u ilt since 1990 Large non-residential projects include
– Interstate 15 ($1.6 billion) – T R A X ($312 m illion) – L D S C o n ference Center ($240 m illion)
n n
n
n
Transition
Utah’s Residential Construction Cycle Shows Extraordinary Post-Peak Strength
Number of Residential Units
25,000 20,000 15,000 10,000 5,000 0 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999
Cycle I 1960-66
Cycle II 1966-73
Cycle III 1973-82
Cycle IV 1982-89
Cycle V 1989-present
Source: Bureau of Economic and Business Research
Transition
The 2002 Olympics Creates an Acceleration Effect
n
The existence, tim ing, and extent of acceleration is difficult to identify
– E -Center – U o f U R ice Stadium – U of U Student Housing (Olym p ic
V illage)
– TRAX – Trappers Loop Road – S k i Area Expansions – N e w H o tels – Gatew a y – Interstate 15 – L D S A s s e m b ly H a ll
Transition
A New Economic Environment is Emerging
n Increasing n M o re
globalization
intense com p e tition
n Accelerating
pace of technological change from industry-based to knowledge-based activity
n Transition
Transition
Utah’s International Exports have been Flat for Five Years
$4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0
8 9 0 1 2 3 4 5 6 7 8 8 8 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 1 1 1 1 1 1 1 1 1 1 1 9 1
Source: U.S. Census Bureau, Massachusetts Institute for Social and Economic Research
Millions of Dollars
9
9
(e
)
Transition
But ... Utah Ranks Among the Top States in Readiness for the New Economy
New Economy Index: Rankings by the Progressive Policy Institute
Below National Average Above National Average Above National Average and Among Top Ten
Transition
Utah’s Demographics Pose Opportunities and Challenges
Utah Population Ages 5-17
650,000 600,000 550,000 500,000 450,000 400,000 350,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Source: Governor’s Office of Planning and Budget
Position
Utah is Well-Positioned to Prosper in the New Economic Environment
n
Concentration of Knowledge Jobs
– Utah ranks 11th among states
n
W o rkforce
– Utah ranks 3rd among states
n
Technology and Innovation
– Utah has a variety of positive rankings
n
Quality of Life/Education/Infrastructure
– Keystones of state governm e n t’s role
Position -- Q u a lity Growth Takes Center Stage
O u tlook
Utah’s Expansion has Matured; Expect 2000 to be a Repeat of 1999
Population Jobs Unemployment Average Pay Personal Income
1998 1999 2000
0
1
2
3
4
5
6
7
Percent Change and Rates
Source: Council of Economic Advisors