Friday, February 2, 2018

Utah Grows to the 31st Largest State Economy

Mark Knold, Supervising Economist

Several runners are engaged in a race. They move along, jockeying for position when they all stumble into a ditch. Most runners crash hard; others don’t. One twists an ankle and struggles to return. Another badly bruises a shin and limps due to pain. Yet, another scuffs a knee, gets up quickly and surmounts his fellow runners. Such is the case with the Utah economy and the ditch we called the Great Recession.

This yarn was contrived to illustrate what happened to Utah’s economy from the Great Recession’s onset to now. Based upon employment across 10 years, Utah has grown from the 33rd largest state economy to the 31st. Utah has passed Nevada and Kansas with Iowa not far ahead.

Beginning in 2008, all state economies stumbled in the Great Recession. All lost jobs and endured economic bruises. States have their own economic nuances and exposures. These cause some to bruise more deeply than others. Utah scuffed its economic knee (rather noticeably), but got up quickly and resumed the race at a jolly pace.

Utah advanced past Nevada in 2009, a year in which Utah lost jobs. That means Nevada lost even more jobs. That’s an economic twisted ankle. It wasn’t until 2016 that Utah then moved past Kansas. Kansas resumed adding jobs in 2011, but a bruised shin meant its gains couldn’t keep pace ahead of Utah.

Only one other state, Tennessee, also advanced two positions, having moved from 18th to 16th. Movements can be predicated upon how numerically close state economies are to each other; the closer together the easier to move. But most states are closely bunched and thus had as much opportunity to gain as did Utah and Tennessee.

Starting 2018, Utah is about 110,000 jobs behind Iowa. Given Utah’s internal population growth and other expansionary economic characteristics, a further advancement to 30th position is inevitable. Assuming a Utah employment growth rate of 2.5 percent (this is actually below Utah’s average annual growth rate) and no growth in Iowa (not likely, but one needs to establish a comparative benchmark), it would take Utah three years to pass Iowa. Reality would probably say give it six or seven.

After that, watch out Oklahoma!

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