A year later, it seems like a dream (nightmare at times) as the industry churns forward at a solid pace and with a collective sense of optimism that 2023 will be another profitable year. And forget about troubling economic signs on a national level. Time and time again, Utah has been buoyed by a “secret sauce” of positive factors (top five in economic growth, population growth, young average age) and this year again looks promising. 

Local economic prognosticators—including Robert Spendlove, Jim Wood, and Natalie Gochnour—believe Utah’s design and construction industry is poised for another strong year overall, albeit softer than 2022.

“The U.S. is the strongest economy in the world, and Utah continues to be the strongest economy in the nation,” said Robert Spendlove last November at a Utah Ready-Mix Concrete Association meeting. Spendlove, Sr. VP/Chief Economist for Zions Bank and District 49 Representative in the Utah State Legislature and Chair of Revenue and Taxation Committee, continued, “We’ll see business activity and revenues go down, but we’re well-positioned.” 

Despite two quarters of negative growth (-1.6% in Q1 and -0.6% in Q2) last year—one of the main indicators of a pending recession—the economy rebounded to post just under 3% growth in November 2022, capping off the year on a high note. Utah remains in the top five nationally in unemployment (2.1% average between the Wasatch Front and statewide), with a 3.7% jump in job growth, and continues to be among the best states for business development, overall economy, and quality of life.

“We’ve been below 3% [unemployment] for a long time—it’s almost like it’s normal,” said Gochnour, Director of the Kem C. Gardner Policy Institute at the University of Utah and Chief Economist for the Salt Lake Chamber. “Since 2000, Utah has annually ranked ahead of the national average [for job growth]. We have an amazing economy, diverse, growing, [and] stronger fundamentals than all states. That’s something we should take heart in. We’re the best state to head into (a recession).” 

“Are we going into a recession?” Jim Wood asked as he spoke to attendees of the American Concrete Institute (ACI) of Utah’s Economic Forecast luncheon on January 10. Wood, Ivory-Boyer Senior Fellow at the Kem C. Gardner Policy Institute and a long-time forecaster of non-residential permit authorized construction in Utah, believes the state will have low, steady economic growth.

Of all the groups of business leaders Wood and his team meet with—including the Utah State Legislature and Governor’s Office of Economic Opportunity—the consensus was a 2% growth rate. 

“I was more optimistic than that,” said Wood, who predicts that 2024 will see a marginal decline to 1% growth. “We have a very unique situation in terms of employment growth and unemployment rate. That’s why I’m optimistic that we won’t see [significant] job loss.”

Wood mentioned continuing work at the Salt Lake International Airport, a new downtown hospital by Intermountain Healthcare that will anchor 10 acres on the site of the former Sears building, and a still-sizzling multi-family market highlighted by five dazzling downtown high-rise buildings as just a few examples that illustrate his bullish outlook. The multi-family market peaked at 40,000 residential units in 2021 (up 30%) and is predicted to hit 29,000 in 2023, a bit of a market correction. 

“In Salt Lake right now there are almost 5,200 units under construction,” said Wood, adding the city has increased its total number of rental units by 18,000 since 2010, to 55,000.  

Single-family market woes will throw some cold water on the overall industry as Wood said three of Utah’s top homebuilders “overbuilt” and are “pulling back” in 2023 in an effort to liquidate inventory. 

But unknowns remain, like the long-term effect of the government pumping $5 trillion into the economy via stimulus packages. Supply chain constraints, and how those impact schedules, delivery times, and budgets will also keep things in limbo. Then, of course, is the workforce.

Wood emphasized, “We have a skill shortage; it has driven prices up,” he said. “We haven’t had a labor shortage like this for decades.” 

Gochnour, in a meeting with members of the Associated General Contractors in November, rattled off a list of factors that determine economic headwinds and tailwinds, including inflation, interest rates, all-time high corporate profits, supply chain woes, housing volatility, and federal fiscal support programs that pumped more than trillions of dollars into the economy, forcing the Fed to raise rates, projected to hit 5.25% by March or April. 

“Construction is a leading sector,” she said. “Hang on to your employees. Even if you’re seeing some headwinds, it won’t be long-lived. Find a way to get through this high inflation, high interest rate environment. Come late summer, we’ll all feel better. It’s a gutsy thing to say because it could be long.”

She continued, “One of the reasons I’m more bullish on Utah is we’re an energy state,” checking off the oil, gas, and renewable energy industries. “By and large, you’ll see our state doing more oil and gas exploration. The pressure for renewables will continue on their trajectory.” Utah has diverse options going forward including geothermal, solar, wind, coal, oil, and natural gas. “We have a strong portfolio of (energy) assets.” 

Spendlove said the current economic climate and possibility of an actual recession is tough to read both nationally and locally. “Professional economists who do this every day don’t know. The difficulty in understanding the economy is unprecedented.” He pointed to the pandemic primarily and the “ripple effects” it has caused. From December 2021 to September 2022 the U.S. GDP expanded by 7%, with a growth of 2.6% from September-December. 

“Workforce development is number one in our mind,” said Troy Thompson, AGC of Utah Chair, at the opening session of the AGC of Utah’s 101st Convention on January 20, listing primary goals for the year. “We’re down 1.5 million construction workers prior to the big recession and we’ve never made that up. Training for craft people is [critical] We’re committed as a board and staff on workforce services.” Specific items include workforce development, education and training, apprenticeship/craft training, advocacy and government relations, and networking activities. 

Representatives from the Utah Department of Workforce Services ran a breakout session during AGC’s convention, highlighting its program and overall clout, with a staff of 2,100 people committed to hiring people across the state, including rural communities. Getting prospective employees into a construction apprenticeship program is vital to securing committed, long-term workers. 

Melisa Stark, Commissioner of Apprenticeship for DWS, said “With apprenticeships, it’s a strategy for recruitment for current employees. If you invest in employees, they will invest in you,” she said. “It affects compensation, culture, [and] retention. 93% of apprentices remain with employers after completion of an apprenticeship program.”

Thompson added that more than 40% of the currently employed workforce is looking for opportunities beyond their present job. It’s up to individual firms to work together to get the word out that construction is a top-shelf industry with copious benefits. 

“It’s hard to get good people into the construction industry,” he said. “We have a lot of work ahead of us to recruit young people. We’re proud of our workforce services and our partnership with the state. We’ve got to get into high school and junior high [schools]. We have to work together on solving this problem.” 

The single-family housing market is expected to soften, despite modest declines in home prices. The multi-family market remains strong, with dozens of apartment projects continuing to sprout up from Ogden to Provo. Gochnour listed several factors that keep Utah insulated from negative outside economic forces. 

Utah has a demographic cushion, given it was the fastest-growing state from 2010-20. That underbelly of growth feeds all businesses in Utah’s diverse economy. According to Gochnour, Utah is one of a handful of states that has an economic structure similar to the U.S. “It makes us have less wild swings, we have industries that keep us stable,” she said, listing energy, life sciences, agriculture, warehouse/distribution, healthcare, tech, tourism. 

She also highlighted that Utah’s leadership is respected, and the state is well-known outside its boundaries as one where problems are quickly solved, and trust remains high. Utah also has a peaceable election environment with a high level of trust in public institutions. “Social capital is really high,” she added. “We end up with balanced budgets, a surplus of funds, and an ability to get through economic challenges. It’s the best state to do business.”