Utah Cities Economic Outlook!

2008 & 2009!

•  Doug Macdonald, Economic Consultant!

•  Neil Abercrombie, Policy Analyst!

•  October 14, 2008!

For Most Cities, it feels like a Recession

Source: Andrew Gledhill, Economy.com, NY Times, October 5, 2008

• Key Driver #1:

• Construction will dampen 2007 and early 2008 taxable sales

Utah Construction Permit Values

In millions of dollars

0

1000

2000

3000

4000

5000

6000

1960 1970 1980 1990 2000 2010

Residential

Nonresidential

Remodels

$2.2 B in 2008 est.

• Residential Construction decelerating

($ Millions) Utah SL County

2000 $2,139.5 $544.7

2001 2,352.7 628.3

2002 2,492.0 653.4

2003 3,023.4 899.0

2004 3,553.0 918.7

2005 4,662.5 1,174.4

2006 4,955.5 1,087.3

2007 3904.6 820.7

2008q1 528.3 83.2

2008q2 400.7 130.8

($ Millions) Utah SL County

2001 10.0% 15.3%

2002 5.9% 4.0%

2003 21.3% 37.6%

2004 17.5% 2.2%

2005 31.2% 27.8%

2006 6.3% -7.4%

2007 -21.2% -24.5%

2008 q1 -54.4% -61.5%

2008 q2 -60.4% -49.7%

•  Salt Lake County’s 45% drop in residential construction permit values will take 4% to 5% off taxable sales growth in 2008

• Key driver #1: Residential Construction (quarterly detail)

• Key driver #1: Construction - Nonresidential

This slide was presented to the Council in October 2007

• Still, Utah Unemployment Claims, a leading indicator for the six-month job outlook, has jumped 73% in the last three months, closing in on levels experienced in the 2001-03 recession

Source: www. jobs.utah.gov

July 2008 job growth down to 0.5% (Expect Job growth to average 0% in 2008 and decline over next 6 months)

1% Local Tax Distribution, June-August (2nd Qtr Sales)

6.1%

-2.8%

0.1%

-2.3%

-4.7%

-8.3%

-19.2%

-5.3%

2.1%

6.8%

-12.0%

-3.9%

-1.5%

-25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0%

Bountiful

Layton

Lehi

Logan

Ogden

Orem

Park City

Provo

Salt Lake City

Sandy

South Jordan

St. George

West Valley

Percent change from prior year

• From double-digit gains in ’05 and ‘06, 4th Quarter 2007 taxable sales in Salt Lake County slowed down abruptly to just under 1% growth. The recent U.S. financial turmoil will extend negative performances over the next three quarters.

Statewide -4.3%

1% Local Sales Distribution for Sept. 2008 (July Sales)

0.8%

0.6%

-0.7%

-2.8%

-2.8%

-3.3%

-3.5%

-1.3%

1.5%

-7.1%

11.2%

-7.7%

-3.6%

-10.0% -5.0% 0.0% 5.0% 10.0% 15.0%

Bountiful

Layton

Lehi

Logan

Ogden

Orem

Park City

Provo

Salt Lake City

Sandy

South Jordan

St. George

West Valley

Percent change from prior year

• From double-digit gains in ’05 and ‘06, 4th Quarter 2007 taxable sales in Salt Lake County slowed down abruptly to just under 1% growth. The recent U.S. financial turmoil will extend negative performances over the next three quarters.

Statewide + 0.4%

• Revenue Outlook for 2008 and 2009

Key Economic Drivers

2008 Change from prior year

2009 Change from prior year

Salt Lake Co. Residential

Construction -46.8% -2.9%

Utah Non-farm Jobs

0.0 -0.9

Utah Average Wage

2.7 2.3

Utah Wages 2.7 1.4

Salt Lake County

Taxable Sales -5.0 -0.1

• Revenue Outlook for 2008 and 2009

Key Economic Drivers

2008 Change from prior year

2009 Change from prior year

Utah Residential Construction

-44.9% -3.0%

Utah Non-farm Jobs

0.0 -0.9

Utah Average Wage

2.7 2.3

Utah Wages 2.7 1.4

Utah

Taxable Sales -5.0 -0.1