January 12, 2023 (Salt Lake City) – The Kem C. Gardner Policy Institute today presented the 35th Economic Report to the Governor to Utah Gov. Spencer Cox at the 2023 Economic Outlook & Public Policy Summit, hosted by the Salt Lake Chamber. The report has been the preeminent source for data and commentary on Utah’s economy for over three decades, with the latest edition noting Utah’s economic resiliency in 2022 while also highlighting an uncertain economic environment heading into 2023.
While economic challenges such as high inflation, rising interest rates, low consumer sentiment, and slowing construction and real estate markets remain, many economic buffers exist. Low unemployment, improving supply chains, and strong overall household, firm, and state and local government financial reserves combine to protect against economic challenges.
“Given recent trends, three economic scenarios seem plausible for 2023,” said Gardner Institute chief economist Phil Dean. “Wise decision-makers will prepare to respond to any of the three scenarios by following the indicators, making mid-course corrections, and applying vigilance and caution while still pursuing opportunities.”
The Economic Report presents three visible economic scenarios for the coming year:
- Scenario 1: Continuing Growth – Inflation recedes, interest rate hikes stabilize, historically high financial reserves and low debt levels prop up consumer spending, employers work to retain employees considering recent hiring challenges, and international geopolitical and supply chain challenges stabilize, combining to create 2023 real GDP growth in the 2% to 4% range (similar to 2022 Q3 and Q4).
- Scenario 2: Shallow Recession – High inflation comes down slowly, continued rapid interest rate hikes drive down consumer and firm demand for large capital acquisitions, sizable construction slowdowns and layoffs extend broadly into other sectors, continued international challenges remain disruptive similar to 2022, resulting in a relatively short (two to three quarters) and mild -1% to 1% change in 2023 real GDP.
- Scenario 3: Decelerating Growth – Inflation moderates somewhat, interest rate hikes continue but slow down, household financial buffers only partially offset broader economic challenges, including layoffs in interest-rate-sensitive sectors such as construction, resulting in 2023 real GDP growth in the 0% to 2% range.
The Utah Economic Council prepares the Economic Report to the Governor under the direction of the University of Utah’s David Eccles School of Business and Governor’s Office of Management and Budget.
The Economic Report to the Governor and Summary Highlights are now available online.