Pub. 2 2019-2020 Issue 3

8 N atalie Gochnour, the Director of the Kem C. Gardner Policy Institute at the David Eccles School of Business, recently talked about Utah’s economy and COVID-19. The following article is a summary of her insights. The U.S., including Utah, is currently in the middle of a shutdown recession caused by COVID-19. There is considerable evidence to show that Utah has done better than other states: Utah’s unemployment rate (8.5%) is the second-lowest in the country. The national rate is 13.3%. Utah’s jobs have declined by 4.8% in Utah, but the country as a whole has lost 11.8% of its jobs. The numbers are troubling, but they are better than their national counterparts. Natalie credits Utah’s success to Governor Herbert’s plan, released March 24, 2020. She sees the pandemic as the equivalent of a body blow that has affected different industries anddifferent people severely and unevenly. Governor Herbert’s color-coded economic phases gave citizens of the state structure and hope. Although she says Governor Herbert is unwilling to shut down the economy again, he is willing to support local control over issues such as face cover- ings in Salt Lake County. She recommends that people followpublic health guidelines, including the use of face coverings. If Natalie had one piece of advice to give business owners or employees, it would be to wear some kind of face covering. She sees masks as the most effective tool we have to keep the economy function- ing while protecting public health. She cited a study that was released in the June 2020 issue of The Lancet. An article about the study made a compelling argu- ment that masks significantly reduce the risk of infection. In Natalie’s opinion, the worst of the pan- demic is over. Job loss peaked in April 2020, and she now expects a gradual recovery that will look more like a gradual Nike swoosh than a V-shape. She says recovery will not be complete until there is a vaccine, which she thinks is most likely to be available by Spring 2021. The state has written a two-year busi- ness plan that started in March 2020. Planning has included consideration of the following scenarios: • Best-case is a green newnormal and rapid access to a vaccine. • Hot spots and flare-ups could affect geo- graphic areas and specific industries. One of the difficulties currently facing the state is the uncertainty that exists. Natalie’s approach for uncertain situations is to come up with a plan that heads us in the right direction, and then use incom- ing information to create iterations of that plan. The Gardner Institute has, of course, already considered the effect of COVID-19 on the state in the short term; in the long run, she thinks that the pandemic will end, furloughed employees will return to their jobs, masks will go away and life will feel normal again. Utah is currently still a growth state. The rapid growth areas during the next 20 to 50 years are the “ring counties” surround- ing the urban counties, such as Summit, Wasatch, Juab and the southwest coun- ties. The biggest growth engine in the state is located in Utah County. It has Provo and land that is close to the city. She thinks it will be almost as large as Salt Lake County. The long-term structural changes she sees are the ones that affect Utah’s economic structure. People have been using global supply chains, but they can fall apart because they are unavoidably risky, unpredictable and brittle. Shorter supply chains are inher- ently more dependable, so she thinks “just in time”will change to“just in case.” Salt Lake City has huge supply chain advan- tages: in addition to being in the center of the country, there are enormous trans- portation assets such as the airport and freeway system. It is ideally situated as a global logistics hub, which means there will be a need for commercial real estate. At the same time, remote work could change the economics of that real estate. The pandemic will create a new normal for growth and prosperity, with winners and losers as some industries gain advan- tages and others are hurt as changes in purchasing patterns take place. For example, people are likely to invest more effort in home improvement, nesting and home security for a while. As the restau- rant and retail industries dropped, so did the sales tax revenue with them, but home improvement stores saw increases. For example, according to Staker Parson Materials & Construction, a lot of people have recently bought decorative rocks for the landscaping around their houses. Economically, businesses on the winning side have an obligation to help busi- nesses on the losing side. Tax money has helped with the paycheck protec- tion plan, and many people have bought takeout just to help restaurants. These efforts, including direct payments and funding to help symphonies, operas and museums, are important; when damage is severe, it can be tough to put programs NATALIE GOCHNOUR ON THE UTAH ECONOMY