Mark Knold, Supervising Economist
I have been observing the Utah economy for nearly 30 years. In many cases, its ebbs and flows are quite predictable. So when economic surprises pop up, it brings a little flavor to the economy-watching game. Such a surprise occurred in 2018’s first quarter.
The Utah employment high point occurs every year in the fourth quarter – the October, November, December period. It is related to the hiring spike of the holiday shopping season. On average, that quarter’s job count is 29,000 higher than the average job count of the year’s remaining three quarters. Naturally with more jobs comes more earnings, and with year-end bonuses, the highest total quarterly payrolls occur in the fourth quarter.
The move into the next year’s first quarter brings a return to routine employment and total payrolls declining. On average, first quarter employment is 28,000 jobs lower than the fourth quarter, and total payrolls decline by more than $600 million. It is a phenomenon that occurs like clockwork every year within the Utah economy.
The quick answer is the Trump tax law changes implemented in 2018. Those changes were labeled as the most sweeping U.S. tax overhaul in decades. For many wage earners, ones tax burden should be lower in 2018 than in 2017. Therefore, savvy wage earners found it advantageous to defer wage bonuses and payouts for 2017 to 2018. With most bonuses paid at the end of a calendar year, it is not much of a burden to wait an extra week or two to instead receive those bonuses in 2018.