by Howard Stephenson
The national recession finally hit Utah – with a vengeance – following the 2002 Winter Olympics, leaving the state with its worst economic slump since the 1950s, according to the 2003 Economic Report to the Governor. The biggest economic story for 2002 was Utah’s negative job growth – a loss of 11,000 jobs – according to the report which was released last week.
Job growth during the past twenty years peaked in 1994 at 6.2 percent and steadily dropped each year until it reached a negative 1.0 percent in 2002 for a loss of 11,000 jobs, the biggest drop since 1954. The loss of jobs left Utah’s jobless rate for 2002 at 6.0 percent, the highest in a decade; up from 4.4 percent in 2001. An average 70,000 persons were out of work each month during 2002.
While total employment dropped 1.0 percent, the employment sectors showing the biggest declines were Construction, down 9.2 percent; Information, down 6.6 percent; Manufacturing, down 6.0 percent; Mining, down 3.0 percent; Trade, Transportation & Utilities, down 2.5 percent; Professional & Business Services, down 2.3 percent. Utah employment sectors showing increases in 2002 were “Other” Services, up 5.3 percent; Leisure and Hospitality, up 5.1 percent; Education and Health Services, up 3.5 percent; Financial Activity, up 1.9 percent; and Government, up 1.1 percent.
Utah’s 2002 total personal income (TPI) is forecasted at $56.4 billion, up just 2.7 percent from the 2001 total. If the forecast holds, this will be the lowest TPI growth in at least 40 years. Nationally, TPI growth for 2002 is projected at 3.0 percent, also the lowest national growth rate in 40 years.
The report showed that four major industry sectors generate over three-fourths of Utah’s total earnings. The service sector is the leader, providing 28 percent of earnings; government (including military) pays 19 percent. Trade (wholesale and retail) accounts for roughly 15 percent of Utah’s total earnings, while manufacturing constitutes 13 percent. Construction, transportation/utilities, and finance/insurance/real estate each are about 7 percent to 8 percent, while mining and agriculture each generated about 1 percent of earnings.
Utah’s population growth continued to outpace the national average, growing 1.9 percent in 2002, mainly due to the highest number of births (48,000) in state history and Utahns living longer, the report said. However, net migration fell from 14,000 in 2001 to 7,400 in 2002. Most Utah in-migration occurs from Mexico and Latin America.
On the positive side, Utah’s economy showed strong sales of residential real estate, job gains in the services sector and increased defense spending. Defense spending in Utah totaled $2.35 billion in 2001, up 23 percent from the previous year. This activity is expected to continue in 2002 and 2003 as a result of the war on terrorism. Defense spending had been as low as $1.26 billion in 1997 as a result of the closure of defense facilities in Weber and Tooele counties.
Utah’s economy has changed drastically over past decades, moving from an agricultural and natural resources economy to one that closely mirrors the national economy. In fact, if the U.S. and Utah pie charts showing employment by industry were displayed side-by-side, one would be hard-pressed to tell which was the U.S. and which was Utah.
One thing is certain about Utah’s current economic downturn: We have not enjoyed the “V” shaped recovery predicted by Utah’s Executive Branch 12 months ago. In fact, we will be fortunate, as Senate President Al Mansell says to have a “check-mark” shaped recovery.
by Howard Stephenson