Rip Roarin’!
Utah economic performance has been very impressive over the past 24 months. Powerful growth has been in line with most other states in the Rocky Mountain region, which easily leads the nation in economic vibrancy.

The Utah economy added nearly 53,000 net new jobs during the most recent 12-month period, a growth rate of 4.8%. While the state's job growth pace was slightly stronger during the boom years of 1993-96, averaging 5.6% annually, no prior period has ever seen a 50,000+ rise in employment over 12 months.

Healthy Neighbors
The powerful 4.8% net employment gain of the past 12 months ranks Utah fourth of the 50 states. Even as Utah data got stronger throughout 2005, a similar trend occurred in neighboring Arizona, Idaho, and Nevada (see chart below).

Quality Jobs
Utah's surge in employment has occurred in all 11 major sectors, with higher income jobs leading the way. The professional & business services sector added nearly 12,000 net new jobs during the past 12 months, while the construction sector added 9,000 new positions. Both sectors have higher average wages than the state norm.

The trade, transportation & utilities sector added more than 8,000 net new jobs. The education & health care sector added more than 5,000 new jobs, while the manufacturing, information, and financial activities sectors added a combined 9,000 jobs. The government sector added nearly 4,000 positions, while the high wage natural resource sector added 1,400 jobs. The typically lower wage leisure & hospitality and other services sectors added another 4,000 jobs.

To its credit, the Utah Legislature provided solid funding for the USTAR (Utah Science, Technology and Research) initiative. This program helps the state's research universities, working together with world class research teams, to target opportunities to increase and enhance the state's technology sector employment base. USTAR success could provide thousands of high quality jobs for years to come.

Tight & Tighter
Strong job growth is traditionally associated with tighter labor markets. This time around is no exception. The Utah unemployment rate fell sharply in recent months to its most recent level of 3.7%, the lowest in more than five years. By comparison, the Utah jobless rate averaged 5.7% in 2002 and 2003.

A tighter Utah labor market is making it difficult for hundreds of Utah employers to fill open positions. Many companies have advertised for new hires, only to find limited, if any, interest. A number of employers are offering signing bonuses to fill their needs. A return to the tight labor era of 1995-2000, when the state's jobless rate averaged 3.5%, seems in the cards.

Housing Gains
Strong Utah economic growth has led to rising home values. The National Association of Realtors reported a 13.6% rise in the median (half cost less, half cost more) existing American home during 2005. The study noted a 14.2% rise in the median Salt Lake City home.

The broader data of the Office of Federal Housing Enterprise Oversight noted an average U.S. home price rise of 12.95% during 2005. The average Utah home rose 13.36%, ranking 18th of the 50 states. As recently as yearend 2003, Utah ranked dead last.

The OFHEO study also includes price comparisons for the past five-year period. The average American home rose 57.68% over the past five years, but only 27.77% in Utah. By comparison, the average home price during the past five years rose by 89.39% in Arizona, 117.29% in California, 28.02% in Colorado, 49.55% in Idaho, and 103.64% in Nevada. Such a comparison suggests that homes in Utah and Colorado have greater upside potential than many other states.

Utah Outlook
Impressive Utah economic growth of the past 24 months should give way to slightly softer performance in 2006 and 2007. A reason? Labor scarcity will limit job gains. At the same time, well diversified growth bodes well for future performance.

The Big Three

No…not U.S. automakers…the three guaranteed American growth industries of the next 30-40 years, compliments of me and 78 million other Baby Boomers…financial planning…health care…leisure & recreation.

Financial Planning
Baby Boomers en masse have not saved aggressively enough for our Golden Years. Such a painful reality is one that, in my mind, will drive millions of Boomers to save more diligently in coming years.

Millions of Boomers will also shift more aggressive investment money from residential real estate back to stocks, as news and anecdotal evidence suggests that most of the surge in real estate prices on both coasts and in the nation's SW has run its course. This reality is one that drives my continuing view that the Dow will reach 12000 later this year.

More and more Boomers will acknowledge that they may not have the necessary skills to develop a sound investment program for the future. These anxieties will translate into greater use of investment experts, financial planners, trust departments, etc. In addition, the ongoing shift within corporate America from offering workers "defined benefit" programs to "defined contribution" programs puts the onus on workers more than before to manage their money…

…the wise among us will increasingly turn to experts

Health Care
Common sense would suggest that Boomers will play a major role in the expansion of health care services over the next 30-40 years. Such services will include the traditional combination of public and private sector health care providers, clinics, pharmacies, and hospitals.

In addition, you can add greater demand for plastic surgery of all types. Boomers will not go willingly into our senior years…we will fight it constantly…Vanity of the Boomers? Off the charts!

Rising demand for health care services by Boomers, our parents, and indigents, as well as those with and without health care insurance will strain the system as never before. While such a rise will be "good news" in regards to U.S. job creation, it will be "bad news" in terms of trimming overall productivity and optimizing utilization of resources.

As health care costs continue their unrelenting march higher, we are slowly, but surely, moving unavoidably in the direction of a government-sponsored, nationalized health care system…

…I find the thought truly scary

Leisure & Recreation
Travel, golf, cruising, hiking, spas, motor homes, second (and third) homes, etc.…

Boomers will redefine retirement, just as we redefined all other aspects of life. Stronger dedication to the first two growth industries discussed above will provide greater flexibility than ever before to enjoy life in our Golden Years.

Boomers will travel the world as no demographic group before them. The sharp rise in ownership of additional homes, timeshares, motor homes, etc. will continue.

One major change that is now underway and will escalate in coming years in a big way is the idea of bridging between full-time employment and retirement. Roughly 85% of Boomers say we never want to "retire," but instead engage in a process where we work fewer hours in our skills area. The reality today of tightening labor markets, combined with the slowest projected growth of the U.S. labor force in history over the next 20 years, will give older workers more bargaining clout than ever before.

Those companies and public sector employers who wish to remain viable and competitive will by necessity soon modify their approach to flexible hours and part-time employment…even for senior people within the organization…

…those that do not will simply cease to exist

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