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About the Salt Lake Chamber’s CEOutlook 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 forwardlooking 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/

Utah CEOs battle COVID-19 recession

Methodology

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

2020

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 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.

2020

I Second Quarter

As leaders spur change in their organizations, they have worked with state and local officials to unite around overcoming this pandemic. CEOs gave state leaders an 83% “above average” or “far above average” rating in response to the crisis. It is a reflection of the spirit of collaboration and unity in our state.

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

CEOutlook

Utah’s economy is improving and initial unemployment claims have dropped now for seven weeks running. Likewise, economic conditions in Utah continue to lead the country, even during these challenging times. To ensure this trend continues we must remain vigilant and follow the Utah Leads Together plan to adapt, innovate and overcome. I admire and am grateful for how Governor Herbert, the Utah Legislature and our business community have come together to lead throughout this pandemic. By doing what Utahns do best and are known for, we have been able to keep our economy going and serve a vital need for our collective wellbeing.  CEOutlook

80.0 70.0 66.3 60.0 50.0

62.8 62.0 60.6 62.4 62.3 60.9

55.5 53.2

60.1

53.3

-5.8% Optimism

• • • • • • • • • • • •

3.4% 3.3% 3.4% 3.2% 3.1% 3.4% 4.0% 3.0% 3.1% 2.9% 3.0% 2.6% 2.5% 3.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0%

61.2 59.4

40.0 30.0

32.3

20.0 10.0 0.0

Q1

Q2 Q3 2017

Q4

Q1

Q2 Q3 2018

Q4

Q1

Q2 Q3 2019

Q4

Concern

Respondent Industry Make-Up

Year-Over Job Growth

The CEOutlook Index saw a 45% decline in the second quarter, and we learned the United States is officially in a recession. The impact of the coronavirus on Utah businesses was acute, and job displacement was severe. However, despite this challenging news it is heartening that many Utah CEOs are allowing this crisis to spur innovation in their product offering, business model and approach to health and safety.

The Salt Lake Chamber’s CEOutlook Confidence Index decreased from 59.4 in 2020-Q1 to 32.3 for 2020-Q2 due to effects of the COVID-19 pandemic.

Confidence Index

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.

Confidence Index and Job Growth

Q1 Q2 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.

Utah CEOs react to the COVID-19 recession

By Natalie Gochnour, Director and Chief Economist, Kem C. Gardner Policy Institute and Salt Lake Chamber The CEOutlook index fell a record 27.1 points in the second quarter, a difficult, but unsurprising result from the economic shock caused by the COVID-19 pandemic. The index, which is a composite of CEO sentiments concerning current and future economic conditions, was measured at a time when Utah businesses furloughed or laid off approximately 150,000 positions, an amount roughly equivalent to all of Utah’s job gains over the past three years. Impacts from the COVID-19 recession are still playing out. Uncertainty, risk, and opportunity are the watchwords, as this cataclysmic economic event rocks business and consumer confidence, even as it creates new economic possibilities. The survey makes clear Utah CEOs are focused on managing risk, consumer sentiment, and the potential for a second wave of the virus. They are also focused on the need to have cash reserves and crisis plans. When asked about the economic lessons learned one CEO commented, “I’ve learned that having a disaster plan that you test and revisit each year is vital.” Pandemics end and we will get through this. I think the recovery has begun, but it will be a long and slow process. COVID-19 is not a short-term problem, but rather a new risk we must manage.

Second Quarter

I 2020


A Look Back and to The Future

TIMELY TOPICS

— 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 58.8

64.4 58.8

Q4

64.2 61.4

64.2 61.4

Q1

65.0 61.4

50.0

48.2 54.8

Q1

59.0 57.7

56.3 48.2

45.6

Q4

59.0 57.7

56.3

58.8

50.0

Q3

54.8

45.6

55.6

55.5

Q2

50.0

50.0

61.7

61.4

58.8

55.6

55.5

65.0

2017

20.0

61.7

Q2

2018

Q3

Q4

56.6 52.6

48.8

56.6 52.6

Q2 2020

10.0 WORSE 2020 Q2

0.0

Q1

Q2 Q3 0% 2017 SAME 7%

2020 Q2

BETTER WORSE

Q4

Q1

100%

45% Q3

Q2

Q4

Q1

Q2

2018

Q3

Q4

Q1

2019

4.2

Q2 2020

0%

100%

48% 45%

N=420% SAME

48%

— your expectation for your own industry six months 63.3 61.7 63.6 61.3 62.5 64.3 60.0 — What are your expectations for your profits in the next 12 months? 61.4 firm's 59.3 59.9 59.7 59.4 Confidence IndexConfidence Index

68.5

N=42 66.4

58.1

50.0 80.0 40.0 70.0

67.9

30.0 60.0

64.3

53.1

68.5

66.4

59.9

20.0 50.0

66.0 from 64.1 now?

57.8

61.7

61.3

59.7

58.1

62.5

63.6

61.4

59.3

63.3

53.1

10.0 40.0 0.0 30.0

Q1

Q2

Q3

Q4

Q1

2017

20.0

Q2

53.1 64.1

69.7

Q3

58.3 48.2

66.0

Q4

2018

55.9 72.3

46.6

61.9 29.8 58.3

53.1

Q1

69.7

55.9 46.6

48.2 Q2

Q3

Q4

2019

Q1

Q2 29.8

2020

10.0

2020 Q2

0.0

43%

WORSE Q1

Q2

Q4

2017

SAME

14%

BETTER WORSE 2020 Q2

Q3

N=42 SAME BETTER

Q1 19%

14%

Q3

Q4

2018

Q1

Q2

Q3

72% Q4

2019

38%

14%

14%

Q2

Q1

Q2 2020

43% 72%

19%

I Second Quarter

45% 45%

Federal government Federal government

What emerging trends, risks and other factors do you think may have a positive or negative impact on Utah’s economy in the next 12 months? Not surprisingly, the major theme from Utah’s business leaders is the impact of COVID-19. Comments included below are a sample of sentiment heard from Utah executives. “There will not be a return to the ‘old normal’ for a long period.”

“I think a fair amount of Utahans will not feel comfortable going back to shopping centers, sports events, movie theaters, etc... for up to 9 months which will have a drag on the economy.” “So far, our supply chain has not been greatly affected by the pandemic, but as it continues we believe the supply chain will be harder to maintain.” “COVID-19 impacts will be widespread, deep, and enduring until the virus is treatable or a proven vaccine is widely available. Contraction of Utah’s residential, commercial, or infrastructure construction markets will impact the whole economy.” “Working paradigms have shifted. Remote working will likely be more accepted for some business types. Could allow some businesses to be more efficient in use of resources and reduce office space requirements. The negative element is the potential reduction in required commercial office space leaving higher vacancies and lower demand for new construction.”

57% 57% 38% 38% 10% 10% State government State government

21% 21% 10% 10% Private entities Private entities

The COVID-19 health and economic crisis has created substantial economic hardship for Utah businesses. What is the most important economic lesson you’ve learned? Utah’s business leaders cited the need for preparation, flexibility, and rainy-day cash on hand. Comments included below are a sample of sentiment heard from Utah executives. “Resilience and frequent communication with colleagues is critical. We have realized good results by putting employees and their health/well-being first.” “I’ve learned the benefits and need to have multiple models every year even when things are going well. I’ve learned that having a disaster plan that you test and revisit each year is vital.” “Same as for family finances, spend below what you earn, save for a rainy day, have money in the bank, be prepared.” “Everything is flexible.” “For us, we are in a more delayed impact of COVID-19. Our lessons are yet to be learned.” “I didn’t think all our administrative people could work from home, but we found ways they could still be productive there.” “Consumer sentiment is actual and perceived. Both must be dealt with.” “Cash flow is king.” “You can’t anticipate the future. Black swans are more common than you think.” “Good disaster preparation and strong liquidity are very important.” “There are other ways of performing work in the business sector. I am part of, sat in a cubicle is not necessarily the most efficient approach all of the time.”

“COVID-19 and the related governmental decisions to essentially shut down large parts of the economy have had a significant economic impact. A cost-benefit analysis needs to be conducted to determine what how to better approach anything similar to this in the future needs to be conducted.”

38%

N=42

2020

31% 31%

“Balancing reopening the economy with the risk of a second and third wave of COVID-19. This is a new global societal challenge. There will be missteps along the way leading to business closures and reopenings. This will continue until there is rapid testing, reliable treatments and vaccine.”

72.3

61.9

59.4

57.8

21% 21%

“We have to get business back and running. I worry the effects of the shutdown will be worse than the virus.”

0%

70.0 What67.9 is

Far above average Far above average Somewhat above average Somewhat above average Average Average Somewhat below average Somewhat below average Far below average Far below average

12% 12%

21% 21%

“We need to figure out how to run a business safely and take care of customers while dealing with COVID-19.”

7%

Industry vs.BETTER Firm Expectations 80.0

10% 10% 17% 17%

48.8 4.2

Q1

2019

How do you rate the COVID-19 response of the following entities?

CEOutlook

CEOutlook

Second Quarter

I 2020

Profile for Salt Lake Chamber

CEOutlook 2020-Q2  

The Salt Lake Chamber’s CEOutlook is a statewide economic survey of Utah’s foremost business executives. As an authoritative business survey...

CEOutlook 2020-Q2  

The Salt Lake Chamber’s CEOutlook is a statewide economic survey of Utah’s foremost business executives. As an authoritative business survey...

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