Utah Economic Report

The Governor’s Utah Economic Summit April 10, 2012

Innovation and

Investment

Olympic Math Viewers -- 2.1 billion from 160 countries

Guests of state -- 350 VCs and 600 corporate guests

World leaders -- 77 countries and 8 presidential Cabinet members

Visitors – 220 thousand

Print media -- $22.9 million in earned advertising

Torch relay -- 11,250 people carried the torch in 46 states

Subsequent games -- Torino and Vancouver Games

Subsequent events -- Seven World Cups or U.S. Championships

“The Olympics remain the most compelling search for excellence that exists in sport, and maybe in life itself.” - Dawn Draser, Australian swimmer, 3-time winner of Olympic Games.

Utah Economic

Basics

$115 Billion

Gross State Product

Rank 33rd

In size among states

Less than 1%

of U.S. economy

Utah job growth 2.5%

Compared to 1.6% nationally

Fastest Growing Economies

Source: GOPB Analysis of Bureau of Economic Analysis Data

Job growth Feb. 2011 – Feb. 2012

0.0% 2.0% 4.0% 6.0% 8.0%

Louisiana

Colorado

Texas

Utah

Oklahoma

North Dakota

2.1%

2.2%

2.6%

2.7%

2.8%

6.8%

Year-Over Percent Change

Utah has the third fastest growing economy in the country

Gross Domestic Product by Industry 2010

3%

5%

13%

17%

4%

22%

11%

7%

3% 3%

14%

3% 4%

12%

14%

5%

21%

12%

9%

6%

2%

13%

0%

4%

8%

12%

16%

20%

24%

Ag. Nat'l Res. & Min

Const. Mfg. Trade, Trans., & Utilities

Information Fin'l Prof. & Bus. Services

Educ. & Health

Leisure Other Serv. Gov't

Utah U.S.

Source: Bureau of Economic Analysis

Economic Diversity

90.8

91.6

91.8

92.1

92.2

92.7

93.3

93.6

94.0

95.3

88 89 90 91 92 93 94 95 96

Florida

Washington

Minnesota

Tennessee

Utah

California

Pennsylvania

Colorado

Missouri

Illinois

Source: GOPB Analysis of Bureau of Economic Analysis Data

Hachman Index: Ten most diversified economies in the country

Utah Employment

1,020

1,070

1,120

1,170

1,220

1,270

1,320

00 01 02 03 04 05 06 07 08 09 10 11 12

Source: U.S. Bureau of Labor Statistics; March 2012

Seasonally adjusted

Peak to trough a loss of 80K-90K jobs!

PEAK

Trough

Utah Job Growth Monthly Year-Over Percent Change

-4.4% -4.1%

-3.3% -3.1%

-2.8% -2.9%

-2.3%

-1.9%

-1.4%

0.7% 1.0%

1.5% 1.5% 1.5% 1.2%

1.5%

0.8%

1.5% 1.8%

1.6% 1.5% 1.6%

2.1%

2.5%

2.9% 2.7% 2.7%

2.5% 2.5% 2.6% 2.5%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Au

gust

-09

Sep

-09

Oct

-09

No

v-0

9

Dec

-09

Jan

-10

Feb

-10

Mar

-10

Ap

r-1

0

May

-10

Jun

-10

Jul-

10

Au

g-1

0

Sep

-10

Oct

-10

No

v-1

0

Dec

-10

Jan

-11

Feb

-11

Mar

ch-1

1

Ap

r-1

1

May

-11

Jun

-11

Jul-

11

Au

g-1

1

Sep

-11

Oct

-11

No

v-1

1

Dec

-11

Jan

-12

Feb

-12

Source: Utah Department of Workforce Services and Salt Lake Chamber

Modest expansion

Healthy expansion

Utah Job Growth Monthly Year-Over Percent Change

-4.4% -4.1%

-3.3% -3.1%

-2.8% -2.9%

-2.3%

-1.9%

-1.4%

0.7% 1.0%

1.5% 1.5% 1.5% 1.2%

1.5%

0.8%

1.5% 1.8%

1.6% 1.5% 1.6%

2.1%

2.5%

2.9% 2.7% 2.7%

2.5% 2.5% 2.6% 2.5%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Au

gust

-09

Sep

-09

Oct

-09

No

v-0

9

Dec

-09

Jan

-10

Feb

-10

Mar

-10

Ap

r-1

0

May

-10

Jun

-10

Jul-

10

Au

g-1

0

Sep

-10

Oct

-10

No

v-1

0

Dec

-10

Jan

-11

Feb

-11

Mar

ch-1

1

Ap

r-1

1

May

-11

Jun

-11

Jul-

11

Au

g-1

1

Sep

-11

Oct

-11

No

v-1

1

Dec

-11

Jan

-12

Feb

-12

Source: Utah Department of Workforce Services and Salt Lake Chamber

Training wheels

Free-riding

Utah Job Growth by Industry February 2012

0 2 4 6 8 10 12

Government

Other Services

Leisure and Hospitality

Education and Health

Prof. and Business

Financial Activities

Information

Trade, Trans, Utilities

Manufacturing

Construction

Natural Resources

Total

0.0

2.1

0.3

3.0

3.9

4.4

4.5

1.9

4.3

4.9

10.1

2.6

Year-Over Percent Change

Source: Utah Department of Workforce Services

Critical issues

Discouraged workers

Housing

Oil prices

Discouraged Workers

Pre-recession labor force participation rate 72%

Post-recession labor force participation rate 66%

50

55

60

65

70

75

76 81 86 91 96 01 06 11

Utah Labor Force Participation

Source: U.S. Bureau of Labor Statistics; LAUS: January 2012 LAUS = Local Area Unemployment Statistics

Employed

Unemployed

Number of unemployed if participation rate of past 20 years held – 133,600 people

Employed % at a 28 year low

No significant change in last recession

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

1,500,000

1,600,000

1,700,000

04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Utah’s Potential Timeline to Recovery

Trend without the Recession

Recovery Path

Employed

Housing

0

5

10

15

20

25

30

19

73

19

74

19

75

19

76

19

77

19

78

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

f

20

13

f

20

14

f

Th

ou

sa

nd

s o

f U

nit

s

Single-Family Multi-Family Total

Utah Residential Construction Activity

Source: University of Utah, David Eccles School of Business, Bureau of Economic and Business Research

Utah’s Housing Stock

Year Housing Stock Housing Stock Change

Excess Housing Inventory

2010 982,400 10,900 18,600

2011 991,900 9,400 12,900

2012 1,000,600 8,700 6,900

2013 1,010,600 10,000 1,000

2014 1,023,600 12,500 -5,100

2015 1,039,200 15,600 -11,300

Ivory Homes, Ivory Institute

Oil Prices

Oil Prices 101 A penny increase in the cost/gallon costs consumers

$1.25 billion over the subsequent year.

Gas prices are up 60 cents since late 2011.

U.S. consumers will take a $75 billion hit this year.

If prices rise further the entire $100 billion tax cut will be erased.

“An issue ignored is a crisis invented.” - Henry Kissinger

U.S.

Concerns

Oil prices

European debt crisis

Policy paralysis

Over regulation

U.S. corporate tax rate

Utah

Concerns

National economy

Education

division/complacency

State-level immigration reforms

Infrastructure complacency

1st Law – For every economist there exists an equal and opposite economist. 2nd Law – They are both wrong.

- David Wildasin

Two Economic Laws

U.S.

Optimism

Best universities

Best capital markets

Best rule of law

Near-best demographics

Utah

Optimism

Downtown Rising

International trade

Marquee expansions

Internal population growth

Western hub

PAC 12 Public policy leadership