Pub.1 2019-2020 Issue 2

• Total construction jobs were 107.2 thousand in October 2018 and 114.1 thou- sand in October 2019, for a total increase of 6.4%. Compare that against the total Utah economy for the same period. The total number of jobs in October 2018 was 1,542.0 thousand. In October 2019 it was 1,593.2 thousand. That represents an increase of 3.3%. As a result of Utah’s strong construction industry, the value of permit authorized construction in Utah, was $4,748.2 million. What is driving construction in Utah? It’s population growth. Although the population is not growing as fast as it was in 2016, 2018 population growth was still strong, and net migration is positive. What factors could endanger Utah’s economy? • A national recession, a manufacturing recession, and/or a global slowdown • Continuing political disfunction on a federal level • Federal policy errors • Geopolitical problems such as a no-deal Brexit, political unrest in places like Hong Kong or the Middle East, and changes in oil prices • Labor shortages • Stock market corrections • Trade war escalation What causes any expansion to end? Natalie Gochnour has said it’s a combina- tion of vulnerability within the private economy and exposure to risk as a result of public policies. That’s why the fact that the global policy uncertainty index, which is higher now than it has been since 1997, is a concern. What were the specifics of Utah’s Economic Forecast as of October 2019? The best numbers are bold, and the worst numbers are highlighted in red. Category 2019 (%) 2020 (%) 2021 (%) Job growth 2.8 2.3 1.5 Personal income 5.6 5.7 5.0 Unemployment rate 2.9 2.8 3.1 Taxable sales 4.4 5.2 5.0 Annual pay 3.7 4.2 4.0 Auto/truck sales 2.3 1.7 1.5 In short, 2020 looks like a good year, but 2021 probably won’t be as good. Ken Simonson had key points to watch in several different areas. Roads, Transportation, and Sewer or Water • The federal government won’t increase infrastructure spending until 2021 or later, but states are acting by adding highway funding and toll projects. • Transit construction is selective. For example, there are many airport projects, public and private, that are either new or ongoing. • Spending on water and sewer or wastewater is at or near record levels, but long-term new funding is unlikely. • The federal government has increased the amount of money available for conservation. The Corps of Engineers is having a hard time keeping up. It cannot award and manage additional projects fast enough. Power and Energy, Manufacturing, Amusement, and Communication • Solar and wind power efforts are growing. Court and regulatory delays are affecting oil and natural gas pipelines. Falling gas prices have discour- aged companies from new drilling projects. • Project cancellations will stall manufacturing construction because of the effect of tariffs, foreign retaliation, and a slowing global economy. • Funding for local, state, and federal parks is continuing to erode. Big spending on amusement and recreation tends to be slow and irregular. • As wireless firms build out 5G networks, their efforts could revive communication. Education and Health Care • The fact that property values are increasing for homes and commercial properties is supporting preK-12 projects that are being built with money from school district tax receipts and bond issues. • Districts are spending more money on school reconstruction and expan- sion in cities and suburbs than on new schools in new subdivisions. • University enrollment is decreasing and some small colleges are closing completely. Why the decrease? Fewer students are choosing to invest in a university education; in addition, there are fewer full-tuition foreign students. • The stock market is affecting capital campaigns for college construction. • Health care spending is being increasingly redirected from hospitals to doctors’ offices and special-care stand-alone facilities such as hospice, rehab, surgery and urgent care. Retail, Warehouse, Office, Hotel, and Data Centers • Retail is turning toward mixed-use buildings and renovations. Massive numbers of stores are closing. • E-commerce has meant increased warehouse growth, but trade wars have reduced shipment traffic in both directions. • Instead of new suburban office parks, companies are building in cities or renovating existing buildings. Employees have smaller work spaces. • Many hotels are being built, but the sector is extremely sensitive to rising interest rates. • Data centers are a strong niche, but most are not reported separately. Instead, information about them is usually included in data about office totals. Residential Spending • People have money to buy homes because of low interest rates, increased income and wealth, but builders are having problems finding workers and getting permits. • Multifamily occupancy rates and rents are level. Although some millenni- als are (slowly) moving to houses, that is being offset by seniors moving to apartments. There are more high-rises, and most multifamily construction is for rentals, not condos. • Data is weak for construction additions and renovations, but it should closely track homebuying. Construction Employment • The two hottest construction markets between Sept. 2018 and Sept. 2019 were Ogden-Clearfield, Utah, at 6% (up 5% from the peak until September 2019), and Provo-Orem, Utah, at 4% (up 4% from the peak). • Logan, Salt Lake City, and St. George are all down from the peak, but between Sept. 2018 and Sept. 2019, Logan grew 9%, Salt Lake City grew 2%, and St. George grew 5%. By Sept. 2019, Logan had lost 3% from its peak, Salt Lake City had lost 4% from its peak, and St. George had lost 9% from its peak. The unemployment rate in Utah is currently 2.7%. The national unemployment rate is 3.5%. 19 UP DATE