Utah's growth dilemma: Leading the nation, facing its challenges

SALT LAKE CITY — Despite local and national challenges, Utah continues to grow economically, albeit at a slower rate.

On Friday, the Kem C. Gardner Institute presented its 37th Economic Report to the Governor and more than 1,000 Utah business leaders and lawmakers at the 2025 Utah Economic Outlook & Public Policy Summit hosted by the Salt Lake Chamber.

"Yet again, despite dire predictions from some of higher interest rates forcing a hard landing, the remarkably resilient U.S. economy flew high in 2024 as post-pandemic economic normalization continued," Phil Dean, chief economist at the Gardner Institute and co-chair of the Utah Economic Council, said in a press release.

"Entering 2025, the economy faces price uncertainty on various fronts. Continued sticky inflation and a large federal deficit add pressure for interest rates to remain higher for longer. The potential for immigration limitations, tariff increases and increased energy production are other factors that could also impact prices in the coming year."

As Utah works to maintain its reputation as the top-ranked state nationwide for the fourth year in a row, the Gardner Institute highlighted its strengths and challenges in 2024, which it expects will continue in 2025.

During his address at The Grand America on Friday morning, Dean highlighted an often-overlooked factor in economic forecasting: the stock accumulated in the United States. He noted that experts frequently become so focused on the flow of spending and earnings that they neglect this critical aspect.

"The stock of wealth is at all-time highs. So here in 2024, total wealth in the U.S. increased by about 9% or $13 trillion," he said. (During the early stages of the pandemic, total wealth averaged at about $110 trillion.) "We're talking about 4½ years ago, and now it's sitting at $160 trillion across the entire (U.S.) economy, $50 trillion of wealth."

"Elon Musk has a fair bit of that, but he doesn't even have $1 trillion of all of that wealth."

Utah's 2024 economy in review

The state population grew by 1.5% last year, surpassing 3.5 million residents. According to the report, the increase in population in 2024 was due more to the high birth rate — usually higher than the national average — and less to immigration. Net migration also slowed in 2024 compared to previous years.

Still, it marked the 10th straight year that population growth surpassed 50,000.

"We continue to grow as a state," Dean said. "We're much more multicultural than we used to be as a state. Even though we're still the youngest state by far in the U.S., we are getting older as a state (and) that has some interesting implications."

"I always tell people, if you don't understand your demography, you don't understand your economy," he added. "If you understand that, it's going to give you a lot of insights into some of what you see happening out there."

Job growth rose by 1.7%, though it was well below its long-term 3.0% average, often exceeding the national rate.

U.S. unemployment increased from 2023 to 2024, reaching 4.0%, while unemployment in Utah also rose to 3.1%. Utah careers that experienced the most growth in 2024 were private education and health services (4.6%), construction (3.9%) and government jobs (3.7%).

While the Beehive State continues to attract thousands of new residents annually, the combination of below-average job growth and high housing costs could deter potential movers or kick current residents out of Utah's market.

Utah's home price index increased 3.4% from 2023 to 2024.

In 2024, home prices returned to near-record highs, even though they had dropped slightly in 2023. At the same time, mortgage rates stayed high, making it extremely difficult for new buyers to afford homes.

But as the report notes, there's a paradox in the Utah housing market.

Over 70% of households spend less than 30% of their income on housing. So, while new buyers and renters struggle with high costs, some long-term homeowners benefit from the high prices and don't feel the same urgency to support building new homes, which could help solve the affordability problem.

Utah's economy also saw its nominal gross domestic product surpass more than $300 billion for the first time, and "through three quarters of 2024, Utah's real GDP rate led the nation at 4.6%."

In 2024, the state reached an estimated all-time high in crude oil production (65 million barrels), significantly boosting its economy and energy independence. The Gardner Institute predicts production will increase by 11 million in 2026.

According to the report, "Incomes and total household wealth grew, supporting continued spending," suggesting that residents maintained their purchasing habits even in a financially challenging economic landscape.

Dean cautioned that delinquency spending did increase last year, which concerns him but does not alarm him.

"I think we're kind of in more normal business cycle adjustments," but if it continues in the next few years, "I'd be much more concerned than where I'm at right now, from a macroeconomic standpoint," he said.

Utah's taxable sales, which include spending on goods and services, remained strong in 2024 despite inflation and higher interest rates. The cumulative percent change in U.S. grocery prices increased by 26.3% from January 2020 to October 2024, compared to a pre-pandemic economy that experienced only a 0.4% increase from 2015 to 2020.

"Our economy is growing," Sophia DiCaro, executive director of the Governor's Office of Planning and Budget said in response to the economic report on Friday.

"We have the lowest poverty rate in the nation. We have strong wage growth, and that means that the purchasing power of our workforce has strengthened despite inflationary pressures. In other words, we're seeing signs of healthy growth, and we're seeing signs and stability as our economy moralizes from the effects of the pandemic, both on a state level and a personal level."

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