The Recovery Following the Great Recession
By Mark Knold, Supervising Economist and Lecia Parks Langston, Senior Economist
“The term 'business cycle' is imprecise. Economic fluctuations affect everyone, not just businesses, and they are, unlike astral cycles, anything but regular.” Kevin Hassett
Overview
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.
Central Utah and the Recovery
The five counties in Central Utah — Millard, Piute, Sanpete, Sevier and Wayne — each experienced the Great Recession and the ensuing recovery in their own way. However, in general, the area was slow to join the recovery job-creation party. Most counties participated in the pre-recession boom in only a minor fashion. Yet all suffered from the national downturn. Several counties in Central Utah have yet to regain their prerecession employment levels despite a national recovery of more than 100 months.
Sanpete County
Sanpete County was one of the few in the region to experience a surge of employment during the pre-bust boom. Employment peaked in 2008 at nearly 7,700 nonfarm jobs. Employment totals bottomed out in 2010, after an 11-percent, 800-job decline, then held steady through 2011. A surge in employment during 2012, collapsed in 2013. The county then experienced strong expansion until 2016, when job growth slowed somewhat. While Utah had regained its pre-recession employment level by 2013, Sanpete County took an additional three years to surpass its 2008 employment total.
The public sector (which includes Snow College, the regional prison and public education) has shown the largest employment gains in the expansion with manufacturing, private education/health/social services and professional businesses services contributing notably to recovery gains. On the other hand, trade and transportation lost ground.
As in most areas, joblessness measured at its highest rate after the recession ended. In 2010, Sanpete County’s unemployment rate topped out at 9.0 percent and has steadily declined as time progressed. Currently the rate is hovering around 4 percent.
Not surprisingly, average wage growth paused during the recession. While growth resumed in 2011, significant gains did not appear until the unemployment rate dropped sufficiently to put upward pressure on wages in 2015. Even so, wage growth has just barely kept up with inflation.
The county’s economic distress seems mirrored in the net out-migration of the area’s population between 2011 and 2014. The county returned to net in-migration in 2015 and 2016.
Gross taxable sales echoed employment’s performance with strong growth immediately following the recession and in recent years.
Sevier County
Overall, Sevier County’s business cycle employment swings proved less dramatic than the state and the nation. Of course, it still suffered with the downturn and its rate of growth has proved rather tepid during the recovery period. Sevier County showed its highest pre-bust employment in 2008 and its lowest recent job total in 2009. The 300-job, 4-percent decline was shorter and less traumatic than the contraction experienced by the state. However, in the upturn, the county struggled to maintain healthy growth. Even 100 months out in the national expansion, Sevier County has seen only moderate employment gains. While the state had regained its pre-recession employment high by 2013, Sevier County reached that milestone only in 2015.
The private education/health/social services industry has been one of the greatest contributors to the area’s post-recession expansion. In addition, mining, manufacturing and transportation have added notable numbers of new positions. In joblessness, Sevier County did follow the pack. As elsewhere, the county’s unemployment rate peaked in 2010 (8.3 percent) and has trended downward ever since. While average wages have increased slowly during recovery, significant gains did not occur until the jobless rate dropped below 5 percent as the labor market tightened.
Tepid employment growth undoubtedly factored into a spate of population out-migration. Sevier County has shown net in-migration in only two years since the recession began.
While gross taxable sales have generally expanded during the recovery time-frame, unusual business investment expenditures have overshadowed growth in the retail arena causing growth rates to fluctuate.
Millard County
Millard County’s moderate recovery was much like Millard County’s moderate “boom” — with the addition of a surge of construction-related employment. While the area’s employment took a hit during the recession, it did not participate to any great degree in the boom that preceded the bust. Job growth rates were moderate both before and after the downturn. Employment levels did surge and then ebb early in the recovery as the result of a large construction development. Otherwise, the county’s performance has been “pretty much as usual.” On an annual basis, Millard County lost about 120 jobs between 2008 and 2009 for a modest great-recession decline of 3.0 percent. The county was back to its pre-bust employment by 2014.
In the recovery period, professional/business services and private education/health/social services added the largest numbers of growth positions, although all goods-producing industries more than regained employment ground lost in the downturn.
Typically quite low, Millard County’s unemployment rate shot up to 6.2 percent in the year following the recession. However, joblessness remained lower in Millard County than in both the state and the nation. Currently, the area’s unemployment rate measures just above 3 percent, certainly in the range of full employment.
One factor that may contribute to the area’s relatively low jobless rate is a steady stream of out-migration before, during and after the great recession.
Millard County’s average monthly wage has steadily increased in the years following the recession and gains have managed to out-pace inflation.
Home permits do appear to be making a comeback in recent years — another sign of a stable economy.
Wayne County
For Wayne County the great recession was hard, but the loss of the county’s largest employer was harder. Wayne County’s nonfarm employment totals slipped by 4 percent (about 50 jobs) during the Great Recession — a comparatively modest decline. However, the loss of its largest employer (Aspen Health) in the ensuing years put a far greater drag on the Wayne County economy. Between 2010 and 2012, the county lost more than 160 jobs, for a 15-percent decline in nonfarm jobs. From that point on, jobs have generally increased, although employment totals still remain 90-plus positions below the 2000 peak.
Employment gains in the construction, trade and leisure/hospitality industries have begun to fill in the gap left by private health/social services losses.
Unlike most counties where joblessness reached its height in 2010, Wayne County’s unemployment rate peaked in 2012, again primarily the result of the loss the county’s largest employer. Rates have decreased somewhat since 2013 but remain higher than average due to the seasonal nature of the county’s tourism-dependent economy.
Average wages also took a hit when Aspen left the area, but have generally trended upwards since. Not surprisingly, net-outmigration has proved the norm since Aspen closed.
On the bright side, home building appears to be recovering and sales have trended higher since the recession ended.
Piute County
For Piute County, there’s been little recovery in the national expansion. Until 2017, Piute County had steadily lost employment since the recession began. Piute is a less-populated county, where many self-employed agricultural jobs are not counted in the nonfarm totals. In addition, large shares of Piute County residents commute elsewhere for employment. Because of these two characteristics, this county is in somewhat better economic shape than the jobs figures suggest.
Piute County’s pre-recession employment peak occurred in 2008. Between that point and 2016, the area lost 125 jobs, a decline of 35 percent of its nonfarm employment. It’s only been in recent months that Piute County has shown any notable employment gains. Thanks to 25 new jobs, it did top county rankings for nonfarm job growth rates in September 2017. Between 2008 and 2016, virtually every industry shared in the employment losses.
Like most counties in Central Utah, Piute County’s jobless rate peaked in 2010 (10.1 percent) and has showed steady declines since that point. However, the area’s jobless rates remain higher than both the state and national averages.
Average wages in Piute County have shown nominal gains since the national recession ended. However, the increases did not keep pace with inflation.
A steady spate of population out-migration in recent years certainly reflects the economic difficulties Piute County workers have faced.
