Is the economy in Utah doing good, or are we walking into a recession in 2023? These are valid questions and you can be excused for thinking the worst is coming our way.
If you ever turn on cable news then it would seem like everyone is shouting warning signs and saying we are doomed to have a recession.
Inflation was running out of control in 2022, and so the Federal Reserve quickly began to reverse course and begin raising interest rates. Let’s start with a quick lesson about what the Federal Reserve actually does and how they aren’t the ones tot set mortgage interest rates. When we hear the Federal Reserve say they are raising interest rates it means they are raising the interest rate a bank receives to borrow money from the government. When it costs banks more money to borrow from the government, the banks end up passing the cost on to us, the consumer. It affects everything from the interest rate on your credit card, the interest rate for a car, and yes those pesky mortgage interest rates.
Supply vs. Demand
The reason the Federal Reserve did this is to make the cost of borrowing money more expensive so people would stop buying things. If less people are buying items then the cost of that item becomes less expensive. Of course, we have all felt this in some way over the past year. The cost of everything has skyrocketed since the Covid-19 Pandemic. Luckily, we’re starting to see signs that the cost of products is no longer increasing and that should continue to help tame inflation.
So now that things are out of whack – things cost more money, it’s more expensive to get a car and home loan – does it mean that everything is going to crash and we’re headed into a recession?
The good news for Utah is that experts from the Kem C. Gardner Policy Institute at the David Eccles School of Business at the University of Utah are saying they don’t expect a recession to hit Utah. The chart below shows continued strong employment in the state.
It’s not all rosy news however. Utah continues to have a robust economy, available jobs, and very low unemployment. Yet, growth is expected to slow in 2023. Utah will still see about 35,000 new jobs in 2023 according to the Utah Workforce services, which would be about a 2% gain. According to Dr. James Woods at the Kem C. Gardner Policy Institute, “expect slower job growth, but a recession is unlikely”.
Bottom Line
Utah’s economy is one of the strongest in the nation and we can thank our bilingual population! In 2017 I had the opportunity to sit on the executive committee of the Utah Global Forum. The Utah Global Forum is focused on attracting foreign business into the state, while also helping Utah companies expand internationally. The big takeaway from hearing from these international companies was that Utah is an extremely attractive state to foreign business, because we have such a large bilingual population. The ability to communicate in a businesses home language will continue to attract business and expansion inside Utah.
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