UTAH ECONOMY TRENDS

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COVID-19 has left an indelible mark on the Utah economy. The economic recession spurred by the pandemic has been sudden, severe, uneven and long-lasting. Despite these impacts, however, Utah remains one of the best performing state economies in the nation. As a result, it can be said with a high level of confidence that the state can and will recover to better.

EMPLOYMENT

Utah’s nonagricultural employment decreased by an estimated 0.9%, or 14,800 jobs, between September 2019 and September 2020. Nationally, employment decreased by 6.4%, or 9.7 million jobs, between September 2019 and September 2020. Utah’s unemployment rate was 5.0% in September 2020, higher than the September 2019 rate of 2.5%. The national unemployment rate was 7.9% in September 2020, considerably higher than the September 2019 rate of 3.5%. Unemployment rates remain uneven across Utah, ranging from 3.4% in Cache County, to 12.8% in San Juan County. Rural counties in the eastern part of the state have been hit particularly hard, where local economies are less diverse and more dependent on the hard-hit energy and tourism sectors.

PERSONAL INCOME

Utah’s total personal income reached $173.0 billion[1] in the second quarter of 2020, rising 11.2% from the second quarter of 2019. Utah’s growth ranked 24th in the nation. Nationally, personal income increased 10.4% over the same period. Utah’s per capita personal income was $53,218 in the second quarter of 2020, growing 9.4% over the second quarter of 2019. Per capita personal income for the nation was $61,842, a year-over-year increase of 9.8%. RESIDENTIAL CONSTRUCTION AND HOUSING MARKET

Utah’s housing market set a record for the first six months of 2020 by permitting 13,792 units, edging out the previous record of 13,683 units set in 2005. There were 6,422 single-family permits, an increase of 9.6% from last year, and permitted condominium/townhome/duplex units increased 17.5%, adding 3,175 units.

Three major areas are keeping the housing market strong: Pent-up demand, record low resale of inventory and historically low mortgage rates. Utah’s housing shortage has led to a tight housing market over the last decade and continues to drive up housing prices. The shortage of 53,100 units as of 2019 has put homeownership out of reach for many young households.

As the home-buying season kicks off in the spring, the number of for-sale homes typically increases, but as the COVID-19 pandemic worsened, the hesitation of existing homeowners to put their properties on the market led to record low inventory. The average number of listings between May and August of 2020 is down 31.0% compared with the average listings for the same period in 2016 through 2019. This decline in supply, in combination with the housing shortage, has made the housing market more competitive.

Finally, while annual home price growth is staying in positive territory, changes in monthly payments are not, due to a steady decline in mortgage rates. In June of 2019, the monthly mortgage payment was $1,655 for a single-family home with a median sales price of $355,000 and an interest rate of 3.8%. By June 2020, the median sales price had increased by 7.0% to $380,000, but because the interest rate had fallen to 3.2%, the monthly mortgage payment shrank to $1,636 per month. Declining mortgage rates have incentivized buyers to lock in at historically low rates. COMMERCIAL REAL ESTATE CONSTRUCTION

Commercial real estate (CRE) has been the most susceptible to the COVID-19 pandemic and subsequent economic recession. The diverse property types of CRE are easily impacted by changes in employment and consumer preferences. Cultural shifts in CRE have been occurring for some time. The growth in e-commerce has added exponential demand for warehouse space and pushed more retail activity away from brick-andmortar stores. The recent pandemic-induced changes in consumer behavior are likely to accelerate this. Overall, Utah’s commercial real estate construction value through June 2020 is $1.1 billion, an 8.0% decrease over last year.

DEMOGRAPHIC TRENDS

Utah’s 2019 population was estimated at 3,220,262. Between 2010 and 2019, the state grew by 447,891, representing an average annual percentage growth rate of 1.7%. The state remains relatively young with 29.3% of the population being preschool or school age (under 18), compared with 11.2% at retirement age (65 and older). However, like the rest of the nation, the state continues to age rapidly as birth rates drop, people live longer, and baby boomers reach retirement ages. Between 2010 and 2019, the median age rose from to 29.3 to 31.7. The retirement age population grew faster than any other age group, averaging 4.2% growth annually. For all ages, the state is expected to continue growing, in large part due to above-average birth rates and positive net migration. Utah has emerged as a consistent net in-migration state because of an expanding economy, wide array of outdoor opportunities, and vast network of global cultural and economic interconnections.