CEOutlook 2020 - Q4

Q4 2020

The Salt Lake Chamber's CEOutlook Confidence Index rebounded from 32.3 in 2020-Q2 to 58.9 for 2020-Q4.

4.0% 3.1% 2.9% 2.6% 3.3% 3.4% 3.2% 3.3% 3.1% 2.9% 3.2% 2.9% 2.9% 2.7% 3.0% 2.0% 1.0% -0.1% 0.0% -1.3% -1.0% -2.0% -3.0% -4.0% -5.0% - 5.0% -6.0% 80.0 70.0 66.3 62.8 61.2 59.4 62.0 60.6 62.4 62.3 60.9 60.1 55.5 53.2 60.0 53.3 50.0 40.0

57.3 58.9

Concern

32.3

30.0

Optimism

Year-Over Job Growth

Despite concerns over election results and COVID-19 vaccine approvals, Utah business leaders indicated in the Salt Lake Chamber Q4 2020 CEOutlook that the one thing they were not worried about is our state’s economic recovery.

And their optimism was well founded: Utah’s unemployment dropped to a remarkable 3.6% in December 2020 -- three percentage points lower than the national average.

While many still struggle to find work, and our objective is to keep the economy coming back strong, 3.6% is generally considered by experts to be full employment.

The nature of this recovery is such that broad swaths of Utah’s economy are facing significant challenges and shortages of demand. Utah’s leisure and hospitality sector, for example, lost 20,900 jobs from December 2019 to December 2020 -- a 13.3% contraction. The secondorder effects of this circulate to demand for consumer goods and weaken the overall economic recovery.

Going forward, the strategy should be to target new federal stimulus dollars to those businesses and individuals most affected by the pandemic, while continuing to promote vaccination and safety measures

Confidence Index and Job Growth

Confidence Index

Derek B. Miller, President and CEO, Salt Lake Chamber

20.0 10.0 0.0

Q1

Q2 Q3 2017

Q4

Q1

Q2 Q3 2018

Q4

Q1

Q2 Q3 2019

Q4

Q1

Q2 Q3 Q4 2020

The Salt Lake Chamber’s CEOutlook Confidence Index is based on responses to the four standard questions included in each quarter’s survey (Questions 1-4). The Index can range from 0 to 100. A score below 50 indicates executives believe the economy will worsen; a score above 50 indicates a belief among executives that the economy will improve.

Source: Index is produced from the Salt Lake Chamber’s CEOutlook with support from the Kem C. Gardner Policy Institute, including analysis of the Utah Bureau of Labor Statistics.

Natalie Gochnour, Director and Chief Economist, Kem C. Gardner Policy Institute and Salt Lake Chamber For the second consecutive quarter, Utah CEOs see a brighter economic future for Utah. The CEOutlook index increased to 58.9, matching or exceeding several quarters in 2018 and 2019. This more positive outlook matches many of the macroeconomic indicators, including job expansion and reduced unemployment.

I marvel at how resilient the Utah economy has been through this gut-wrenching pandemic. The December jobs report showed the Utah economy is expanding once again, only the second state in the nation to do so. With vaccinations progressing with pace, additional federal stimulus, and pent up demand it looks like, for the first time in ten months, we can finally see the economic path back to growth. Many industries will lag in this improvement, but the Utah economy is on its way.

Continued on Page 5

CEOutlook

Fourth Quarter

I 2020

A Look Back and to The Future

— How would you describe the current economic conditions in Utah compared to six months ago?

— What is your expectation for economic conditions in Utah six months from now?

80.0 70.0 Confidence IndexConfidence Index

60.0 50.0 80.0 40.0 70.0 30.0 60.0 20.0 50.0 10.0 40.0 0.0 30.0

67.0

65.9

65.0

66.1

61.7

59.2 67.0

65.9

65.0

66.1

61.7

59.2

Q1

Q2

Q3

64.4

64.2 61.4

58.8

64.4

64.2 61.4

58.8

Q4

Q1

65.0 61.4

55.5

65.0

61.7

61.4

55.5

Q2

2017

20.0

61.7

Q3

55.6 50.0

55.6 50.0 Q4

58.8 50.0

54.8

57.7

56.3 48.2

45.6 58.8 50.0

59.0

54.8

57.7

56.3 48.2

45.6 Q1

59.0

Q2

2018

Q3

Q4

62.8

56.6 52.6

54.1 46.3

48.8

62.8

56.6 52.6 Q1

65.1

65.1 54.1

46.3

48.8 4.2 Q2

Q3

2019

Q4

2020

10.0 WORSE 2020 Q4

0.0

Q1

Q2

Q3

9% Q4

Q1

Q2

2017

SAME

Q3 2018

BETTER WORSE 2020 Q4

25% Q4

4.2 Q1

26%

N=47 SAME

Q3

Q4

65%

Confidence IndexConfidence Index

69.7

30.0 60.0

64.3

68.5 61.7

59.9

20.0 50.0

57.8

59.7

61.3 58.1

62.5 61.4

63.6 59.3

57.8

10.0 40.0 0.0 30.0

Q1

Q2

20.0

Q3

Q4

Q1

2017

Q2

Q3

53.1 63.3

Q4

65%

37%

58.1

66.4

Q3 2020

68.5 N=47 66.4 66.0 now?

—70.0What67.9is your expectation for your own industry 63.3 six months from 64.1 61.9 61.7 63.6 61.3 62.5 —60.0What64.3are your expectations for your firm's profits in the next 12 months?

61.4 59.3 59.9 59.7 59.4 67.9

Q2

37%

26%

Industry vs.BETTER Firm Expectations 80.0

50.0 80.0 40.0 70.0

Q1

37%

25%

9%

Q2 37%2019

64.1

66.0

48.2

53.1

Q4

Q1

2018

69.7

72.3

61.2 58.3

Q3

62.2 54.1

46.6

29.8 55.9

59.0

62.2 54.1

46.6

48.2 Q2

59.0

55.9

61.9

59.4 53.1

61.2

58.3

53.1

72.3

Q4

Q1

2019

Q2 Q3 29.8 2020

Q4

10.0

2020 Q4

0.0

11%

WORSE Q1 Q2

Q3

Q1

2017

SAME BETTER WORSE

2020 Q4

Q4

N=47 SAME BETTER

Q2

18% Q3 2018

11%

18%

Q4

Q1

Q2 33%2019

Q3

Q4

Q1

Q2

33%

Q4

56%

33% 33%

Q3

2020 49%

49% 56%

N=47

2020

I Fourth Quarter

CEOutlook

TIMELY TOPICS Decision-makers are interested in the relationship between COVID-19 infections and economic performance.

Economists observe about a one-month lag between increased infections and increases in unemployment. What is the relationship in your business? relationship No relationship NoNo relationship About a one About a one About a one month laglag month month lag

Do you expect subsequent universal vaccine coverage to change hiring and purchasing decisions next year?

9%9% 9% 9% 9% 9%

When do you anticipate accelerating hiring and/or purchasing?

16% 16% 16% 5%5% 5%

51% 51% 51%

53% 53% 53%

30% 30% 30%

53% 53% 53% 26% 26% 26%

16% 16% 16%

Longer than Longer than Longer than one month one month one month

23% 23% 23%

Shorter than Shorter than Shorter than 7%7% 7% one month one month one month

Increased purchasing Increased purchasing Increased purchasing Both hiring and purchasing Both hiring and purchasing Both hiring and purchasing

Increased Increased hiring hiring Increased hiring No plans to increase hiring purchasing No plans to increase hiring or purchasing No plans to increase hiring oror purchasing

Q1 2021 2021 Q1Q1 2021 Q2 Q2 2021 Q2 20212021

Q3 2021 2021 Q3Q3 2021 Depends Depends Depends

What emerging trends, risk and other factors do you think may have a postitive or negative impact on Utah’s economy in the next 12 months?

The COVID pandemic will continue to create uncertainty into the next year.

Immunization availability and acceptance of the public for such.

Affordable housing for young adults and professionals.

Return back to the office and returning of students to higher education facilities. Neither are likely to happen unless case rates drop dramatically.

Stimulus would have a significant positive impact on helping consumers as we wait for mass distribution of the vaccine. We worry about the pain our hospitality and restaurant industries will likely need to go through.

Political turmoil associated with a non peaceful transfer of power could have a negative impact as well. effective vaccine, attractiveness of Utah as growing business hub, more group activities in person, continued low interest rates, stable Utah government transition.

In migration from California Pandemic recovery with vaccine The losses in the hospitality industry affect our students and families, which will have an impact on our revenues. Additionally, Utah may face some reputational risks depending on how well we manage continued testing, vaccinations, and rogue public actors.

We see manufacturing continue to strengthen. Would expect to see this carried forward and possibly more capital expansion.

The pandemic will challenge Utah›s economy in the first part of the year, but we should see improvement in the second half of the year leading Utah out of the recession caused by the pandemic.

Finding skilled labor. Even with unemployment up over last year, the quality of candidates is still disappointing.

Impact of the losses associated with commercial real estate and the fact that many businesses may change the way they house and interact with employees. This may also lead to an adverse effect on city business incomes for restaurants, retail stores, and other companies dependent on a strong city center.

We have to get the COVID situation under control before any significant improvement will occue.

CEOutlook

The final outcome of the election and who will control the senate will likely have an impact on taxes and how various investors choose to allocate their investments. post-Covid return to work and how businesses see the future of working from home will also impact the construction industry pending if all return to work and additional space is needed.

Decreased state, county, and city funding for infrastructure and maintenance. COVID-19 will continue to drain resources from other parts of the economy and many small, service oriented businesses will suffer.

Continuing uncertainty with the pandemic and its impact; transition of the new administration and political change and related uncertainties possible changes to regulations adversely affecting business and tax, «returning to work» issues, Permanent increases in remote work utilization will continue adversely affecting downtown SLC and other businesses around the State who rely on the office space utilization.

Interest Rate fluctuations.

The efficiency of the distribution of he vaccine; the long term effectiveness and side effects of the vaccine; the willingness and confidence of people to receive the vaccine; mask wearing leadership from the state and cooperation of the citizens of Utah; the potential of over-running our medical facilities Successful COVID-19 vaccine deployment The homeless population may increase as the eviction moratorium goes away. The renters were given temporary leniency, but still owe back rent.

Many remain unemployed in leisure and hospitality fields and may not be able to get caught-up.

Home buyers who were given temporary foreclosure leniency that have been unable to work out past due payments will also be a problem, hopefully not enough to cause major damage to the for-sale housing market.

New presidential administration with new taxes and significant US debt from COVID and uncontrolled spending.

Ecconomic downturn following epidemic and stimulus coming to an end.

Fourth Quarter

I 2020

Derek Miller, Continued from Page 1

to prevent the spread of COVID-19. I’m confident Utah business leaders will do their part to assist with these efforts.

Our business community has consistently risen to meet these challenges with innovation, flexibility,

and focus. The Q4 CEOutlook indicates significant improvement in the economy for the second half of the year, and as Utah’s largest and longestserving business association, the Salt Lake Chamber thanks hardworking

Utahns who have pressed forward through the downturn, supporting jobs, community, family, and state.

About the Salt Lake Chamber’s CEOutlook

Methodology

Respondent Industry Make-Up

The Salt Lake Chamber partners with the Kem C. Gardner Policy Institute at the University of Utah to design, tabulate and assist in analyzing the survey. Sixty business executives from Utah’s fourteen major industries are asked to respond to 6-8 questions, depending on their responses, about their company and Utah’s economic performance. Respondents are selected by each industry’s contribution to the Utah economy. Panelists come from a range of firm sizes and locations within Utah.

• Arts, entertainment, recreation, accommodation, and food services • Construction • Educational services, health care, and social assistance • Finance, insurance, real estate, rental, and leasing • Information • Manufacturing • Mining • Other services, except government • Professional and business services • Retail Trade • Utilities • Wholesale Trade

The Salt Lake Chamber’s CEOutlook is a statewide economic survey of Utah business executives. Modeled after other national business sentiment surveys, it provides a forward-looking view of the Utah economy.

The survey results are intended to help business and community leaders make informed decisions about likely future economic conditions.

The survey will continue to be evaluated through 2020 to assess its predictive value.

All past CEOutlook reports can be found here: https://slchamber.com/ceoutlook/

The Salt Lake Chamber is Utah’s largest and longest-standing business association. A statewide chamber of commerce with members in all 29 Utah counties, the Chamber represents the broad interests of the state’s 63,000-plus employers, which employ more than 1.4 million Utahns. This includes thousands of members and their employees.

The Kem C. Gardner Policy Institute at the University of Utah develops and shares economic, demographic and public policy data and research that help individuals and the community make informed decisions. Housed in the David Eccles School of Business, the Institute seeks to be a vital gathering place and center for independent economic, demographic and public policy thought leadership that helps the Utah economy to prosper. The Institute is a strategic partner with the Salt Lake Chamber in serving Utah.

CEOutlook

For More Information Heidi Walker COO, Salt Lake Chamber 801-328-5081, hwalker@slchamber.com Natalie Gochnour Director and Chief Economist, Kem C. Gardner Policy Institute and Salt Lake Chamber 801-585-5618, natalie.gochnour@eccles.utah.edu Marin Christensen Research Associate, Kem C. Gardner Policy Institute 801-581-6521, marin.christensen@utah.edu

Fourth Quarter

I 2020