A Debit to The Economist for adding to the list of stories that try too hard to give good news on the economy. This time the press goes local in looking for a bright spot, explaining to us why “Utah’s economy is soaring above its neighbours.”
The trouble is that Utah’s economy isn’t soaring even in a relative sense. It’s limping along and going down at a slower pace only relative to subprime havens California, Arizona and Nevada.
Furthermore, the news is less that Utah tends to do better than the rest of the nation, which is a years-old story, and more that as Utah has become increasingly bound to the national economy, it has become more vulnerable to national swings—although even that news is not exactly new.
The magazine says:
So far Utah, a state best-known for Mormonism and pretty rocks, is looking unusually healthy.
Kind of a backhanded compliment. Nonetheless, our PR-warning meter is starting to send tentative bleeps to the Audit Control Center. What, we ask ourselves, is the news here?
The bleeping increases as we continue:
‘We’ve got a lot to be proud of,’ says Jon Huntsman, the governor. ‘Certainly more than our neighbors.’
Take that, Wyoming.
Unexamined self-analysis by a governor is not worth all that much—the guy’s paid to say things like this, when he can get away with it—and this bland boosterism certainly doesn’t merit lead-paragraph status.
But then The Economist ups even Huntsman’s evaluation of the situation when it opens its second paragraph with:
Indeed, Utah has more to be proud of than any other state in the West.
The article goes on to describe Utah’s second-lowest unemployment rate in the region (after Wyoming, which seems to have gotten some short shrift here). It also notes good marks from the Milken Institute for Salt Lake City and environs for “technology output and job and wage growth.” And the state’s “relatively healthy” housing market.
Some of The Economist’s explanations for Utah’s relative economic success are more problematic than others. It credits the Rocky Mountains (skiing!) and Mormons—who tend to marry early and not go binge drinking..
But still, we get the point that so far Utah hasn’t been as badly hit as many states.
The problem is that The Economist, in its enthusiasm for “the Mormon work ethic”—which is the headline on the piece—has left out the facts that don’t support its “soaring” economy argument.
For those, let’s look at the local press, which tells a different and far more complete story.
Here is the Deseret News on October 16:
The global economic meltdown is hitting Utah, whose strong economy has for a time somewhat sheltered residents and workers here from larger storms.
Utah’s economic activity, at the top of the nation in 2006 and 2007 in terms of job growth, is at its weakest pace in five years. The state’s economy is expected to continue along that path well into 2009, Jeff Thredgold, economic consultant to Zions Bank, said in the bank’s Autumn 2008 ‘Insight’ publication, released Wednesday.
And The Salt Lake Tribune gloomily reported on October 22:
There’s bad news … and then there’s worse news.
The nation’s economic slump already has cost Salt Lake County millions in tax dollars. Now economists are talking recession for the state’s most-populous county.
The county’s economic outlook remained decidedly dreary Tuesday as officials received word that 2008 tax revenues likely would slip $10.9 million below last year’s projections and that a ‘recessionary economy’ almost certainly lies ahead for 2009.
Next year ‘will definitely be an even more challenging year,’ Auditor Jeff Hatch warned in a letter that comes a week before [Salt Lake County Mayor Peter] Corroon presents his 2009 budget. ‘Utah has been somewhat insulated from the national downturn, but we expect that Utah will more closely follow the national recessionary economy next year.’
And The Salt Lake Tribune passed along some alarming foreclosure figures on October 24:
Owners of 1,746 properties in Utah received some type of foreclosure-related filing in September, up nearly 114 percent from the same month in 2007, said RealtyTrac, a company that tracks the foreclosure market nationally….
In the report, Utah was ranked 13th nationally in foreclosure filings in September, with one in every 516 households receiving such a filing, compared with one in every 475 nationally.
This sheds a different light on The Economist’s information that:
In August [Utah’s] foreclosure rate was lower than the national average.
How much does “lower than the national average” really mean?
After all, while the September figures confirm that continued status, a rank of thirteenth nationwide isn’t all that great. Look at RealtyTrac’s September data yourself for state-by-state comparisons.
Vermont, to take a stellar example, had 6 properties with foreclosure filings in the month, or one in every 51,593 households. That is great. And Utah’s neighbor Wyoming, which as noted earlier had a slightly lower September unemployment rate than Utah, also had a lower foreclosure-filings rate: one in every 2,718 households, or 88 total.
This said, we don’t deny that Utah is looking better than much of the nation on a variety of fronts. Many states would love Utah’s job growth, as small as it is. But as important as the good news is, the bad news is equally so. Yes, Utah is still creating jobs, but the trend is down down down.
Here is Utah’s Standard-Examiner on October 15:
Job growth is grinding to a halt in Utah, weighed down by a prolonged slump in new home construction and uncertainty about the future of the national economy.
From October 2007 through September this year, the state added about 1,800 jobs for an annual growth rate of 0.1 percent, the Department of Workforce Services reported Tuesday.
September’s growth was the slowest in more than five years, and marked the 14th consecutive month of declining job growth in the state.
Ultimately, the story of Utah’s growing links to the national economy—which, as we noted above, The New York Times covered several months ago—is the more interesting and, as is clear from the local press, relevant one. That story looks to the future with far more insight than does The Economist, which, for all of its pretense to prediction, is essentially backward-oriented on this one.
So, we end on one more bulletin from the local press. The Salt Lake Tribune on September 22 wrote:
Economic hard times have left lawmakers with a $272.4 million hole to plug in the state budget and tough decisions when they gather in special session later this week.
Budget officials from the governor’s office and the Legislature concluded Monday that Utah’s economy has faltered even more than expected, and they would need to carve even more than the $200 million shortfall that they had projected last week.
The story changes quickly. The Economist needs to keep up.