December 2017 marked 10 years since the Great Recession
first cast its long shadow across the American economy. The recession
officially lasted 18 months, but its consequences can still be seen across the
country without having to look very hard. We have not had another recession
since.
Utah was hit hard at the time, losing a larger share of jobs
than the national average; but, we were fortunate to be one of the most
resilient states in terms of economic rebound. There are plenty of states where
the Great Recession continues to weigh upon them. Employment levels in 14
states are still not back to their pre-recession peak, and another 29 states
have only grown 5.0 percent or less. As the working-age population has grown by
more than 5.0 percent, the job gains nationally have not been enough to fully
employ working-age labor.
Utah lost 7.0 percent employment during the recession. Since
that low, employment has recovered by 18 percent. That is the second best
rebound in the nation. From Utah’s pre-recession employment peak to now, Utah’s
employment has increased by 9.5 percent, third best in the nation. Yet, Utah’s
job growth has not been enough to absorb all of the labor force growth during
that time. Utah’s unemployment rate is low, but the percent of the working-age
population in the labor force is several percentage points below the
pre-recession norm — telling us that potential labor is still not as fully
engaged with the job market as before the recession.
As a whole, Utah has had a notable recession rebound, but
those gains have not been shared equally across all regions. Just like the
national profile, some areas have bounced back strong while others are still
lagging behind. The state’s metropolitan areas have grown well, but many of
Utah’s rural areas cannot say the same. Nine counties have employment levels
below their pre-recession peaks.
In this issue of Local Insights, we profile Utah’s regional
and county economies in light of the 10-year span since the Great Recession.
Wasatch Front North
The Wasatch Front North (Davis, Morgan and Weber counties) is
often viewed as a single region. The reality is they each have distinct
economies and experienced differing recessionary impacts and recoveries. For
instance, Davis County is tied closely to Hill Air Force Base (AFB) and U.S.
defense spending. This helps to stabilize the region. Morgan County is a
growing bedroom community, but most new construction halted during the
recession. Weber County has a vibrant and diversifying economy, but lacks a
significant recession-resilient core to soften the severity of economic downturns.
Davis County
Davis County experienced a mild contraction during the
recession in comparison to Utah’s other counties, losing only 4,000 jobs and
falling by 3.6 percent. The downturn was short-lived, too. Davis County started
expanding again at the beginning of 2010, and regained its pre-recession
employment by late 2011; a time when most other counties were just turning the
corner and starting to rebound.
There is no single sector that dominates Davis County’s
economy, but Hill Air Force Base functions as the primary engine for economic
growth and stability — accounting for about 10 percent of total county
employment (around 12,000 civilian employees). During recessions demand falls
for many nonessential goods and services, but government defense spending is
historically stable. During the recession, Hill AFB employment dipped slightly
for a few quarters and then picked up helping to prop up the local economy.
Defense contracts bring steady jobs and the people filling
those jobs bring their families to live in the area. This adds to health care
services and education demand. Both provide recession-resilient jobs. The health
and education sectors combined continued to grow during the recession, and have
provided the single most consistent employment growth since the recession’s end
— adding more than 8,000 new jobs to Davis County since 2007.
Retail trade is the next largest industry in Davis County. In
most local economies retail growth follows the lead of other “core” industries,
primarily serving the local population demand. Due to its location along a
major commuting artery and its targeted growth strategies, Davis County has
developed a retail industry that serves a significant number of consumers from
outside the county that brings money into the local economy. Retail trade
employment is typically sensitive to economic downturns, but in Davis County it
only dipped slightly and then came back strong — averaging more than 3.0
percent growth since 2011, and even adding additional retail space in areas
such as Station Park in Farmington.
Thanks to its diversity and recession-resilient core, the
Davis County recovery has been steady and shared across many sectors. Current
employment now sits at about 124,000 — nearly 25 percent higher than its
pre-recession count. Growth at Hill AFB and the related IT, engineering and
manufacturing jobs it spawns boosts the local economy’s vibrancy. Professional,
technical and scientific services have been expanding employment at a rate of
about 4.7 percent annually on average since 2010, adding relatively high paying
jobs that will only help to further stabilize the region in the next cyclical
downturn.
Weber County
At the beginning of 2008, Weber County’s employment was nearly
97,000. By 2011 that number had dropped to around 90,000 — a more than 7.0
percent decrease. Drawdowns of both goods and service industries contributed to
the decline. Auto parts and aerospace manufacturing jobs dropped sharply with
large layoffs at Autoliv and Williams International, among others. Business and
employment services jobs sagged as well, especially among telemarketing
establishments and temporary work agencies. The construction sector shed some
3,000 jobs over the time period — in both residential and non-residential
construction. Nearly every sector was affected negatively, except for education
and health care services, which tend to be relatively resilient to economic
downturns.
Weber County’s recession resilient industries are not quite
large enough to act as a buoy when the rest of the economy is struggling. The
IRS is the county’s single largest employer, and those federal jobs tend to be
stable even through recessions. But it still only accounts for about 6.0
percent of total employment. Weber State University is a major stabilizing
employer in the region, as well — as are the local hospitals (McKay Dee and
Ogden Regional). Education and medical care tend to be recession hardy, but even
those employers combined still only make up about 7.0 percent of county total
employment. Their share of the economy was not large enough to absorb other large
job losses and counteract the fall in overall consumer demand. Granted, without
these stabilizing industries the recession might have been much worse for Weber
County.
The recession hit Weber County hard, but it did not stay
down long. By early 2011, the economy was on the upswing and has grown at an
average annual rate of about 3.0 percent since. The pre-recession employment
peak of 97,000 was regained by 2014, and now the county sits at about 105,000.
The rebound has been driven by some of the previously prominent industries as
well as some new players. For example, auto parts manufacturing has added back
all the jobs lost during the recession plus 500 more (largely at Autoliv).
Pharmaceutical manufacturing (primarily Fresenius in Ogden) has doubled its
share of county total employment since 2008, adding more than 600 jobs over
that time. In addition, business support and temp work agencies have returned
to pre-recession levels. But the really interesting county newcomer is
non-store retailing. Prior to the recession online retailers were virtually
nonexistent in Weber County — but the arrival of Wayfair in 2011 changed that.
There are now nearly 1,000 jobs in the industry.
The rise of these new industries suggests that Weber County’s economy is further
diversifying — a valuable element to help protect against future industry-specific
downturns. But diversity is not the only factor that mitigates recessionary
impacts. Large recession-resilient employers (like the IRS) act as stabilizers,
but the IRS has been downsizing (more than 1,000 jobs since 2011) which will
reduce Weber County’s recession-resilient core.
Morgan County
Morgan County lost about 300 jobs — or roughly 15 percent of
its 2008 employment during the last recession. Pre-recession peak employment
was nearly 2,000, and by 2012 that had dropped to almost 1,700. Construction
was hardest hit, shedding upwards of 180 jobs and accounting for the majority
of job losses. Morgan County has a large and growing share of residents that
commute outside the county for work. New residents moving in were driving
strong residential construction demand prior to the recession — 105 new
residential units were permitted in 2007. Once the housing crisis hit, demand
plummeted. In 2009, only 20 units were permitted.
Most other industries were relatively insulated from the
recession. Browning, a sporting equipment manufacturer and wholesaler, and the
largest employer in the region, was able to hold employment steady. Holcim, a
concrete manufacture and the second largest employer, did the same. These core
industries’ stability helped to mitigate constructions job-loss effects as local
demand remained consistent and health care, education and retail all weathered
the storm relatively well.
Morgan County turned the corner at the end of 2012, and has
been growing at an average annual rate of 5.0 percent since. New growth in
health care and retail are driving the recovery. New single-family home
construction is on the rise but has yet to return to pre-recession levels. By
2015 the county had recovered to its pre-recession peak and is now sitting at more
than 2,200 jobs.
