What drives Utah’s economy?

This article is part of The Salt Lake Tribune’s New to Utah series. For more articles on Utah’s food, culture, history, outdoors and more, sign up for the newsletter at https://www.sltrib.com/new-to-utah/.

From the wide mix of employers on the urban Wasatch Front to Summit County’s jobs in arts and recreation, from Beaver County’s focus on agriculture to mining work in Emery and Duchesne counties, Utah boasts one of the most diverse economies in the country.

And U.S. News & World Report has named Utah’s strong economy the best in the nation, as the state consistently ranks among the top for economic outlook, according to the Governor’s Office of Economic Opportunity.

Once dominated by mining, mineral extraction is now one of the smallest drivers. Utah’s economy today is a blend of new and old: technology and finance are big contributors, but so, too, are manufacturing and trade.

That diversity offered some some resilience against the pandemic, the state said, and allowed for a faster economic recovery.

So where does Utah’s money come from? These are its biggest players.

Financial services in, energy out

Utah’s top industries, ranked by the value of their finished goods and services in 2021, were financial activity and trade, transportation and utilities, according to the most recent annual Economic Report to the Governor from the University of Utah’s Gardner Policy Institute.

Professional and business services tied with manufacturing as the third biggest economic drivers of Utah’s gross domestic product, or GDP.

Mining, meanwhile, was one of the lowest contributors to the state’s GDP in 2021 at 2.4%. Agriculture, forestry, fishing and hunting contributed the least, at half a percent.

At your service

Utah has a service-oriented economy, according to the types of jobs it provides. A large majority of the state’s jobs — an estimated 82.7% — were “service producing,” as opposed to “goods producing,” in 2022.

So, even though manufacturing is one of the state’s biggest industries, it is estimated to provide roughly 153,000 jobs in 2023 — less than a percent of the state’s total workforce.

Most of the state’s biggest job producers are in service industries like education, health care and government.

What about tourism?

Utah’s national parks and recreation opportunities helped generate $2.1 billion in tax revenue in 2022, according to the state’s tourism office. But tourism as a whole is still a relatively small piece of Utah’s economic pie.

Leisure and hospitality jobs account for less than a percent of Utah’s workforce, according to the Gardner Institute report, though the amount of jobs in that sector has steadily increased each year since 2020. The hospitality industry contributed to 3% of the state’s GDP in 2021.

It was also one of the industries hit hardest by the pandemic, so it has faced one of the harder roads to recovery. But recovered it has, according to state metrics. The use of taxable services, which include accommodation, recreation and entertainment, grew by roughly 15% last year, to more than $26 billion.

Inflation and fears of a recession stymied visitation in 2022, the report says, though visitors to the state are spending are spending more on goods and services when they get here, and tourism-based tax revenue has steadily increased.

Back to an analog era?

Some of Utah’s most rapid growth over the past decade has been driven by its growing tech sector, incentivized, in part, by public financial support from the Governor’s Office of Economic Opportunity (GOEO).

But post-pandemic projections suggest technology is giving way to more “traditional” trades.

Information technology accounted for a third of Utah’s expansion and relocation projects — projects supported by GOEO — in the two years leading up to 2020, according to the Gardner report. But since then, the share of new technology projects have dropped, while manufacturing projects have risen. Manufacturing accounted for 46% of the state’s expansion projects last year.

“Information” as an industry, which, according to the state, includes anything from software and data publication to film, broadcast and publishing, has still grown more than manufacturing since the pandemic. But manufacturing accounts for more of the state’s jobs and the state’s GDP than information technology, according to the Gardner report.

Rural-urban gap

Utah’s economy is diverse as a whole, but economists say access to that diversity still depends on where in the state you live. Urban counties in the Wasatch Front, and Washington County in the south, have more industry and job opportunities. These are also the counties whose populations are growing the fastest, according to the Gardner report.

In rural counties like Duchesne, Emery and Beaver, which rely on more “specialized” economies and have smaller populations, “just a few large employers can have an outsized effect on the counties’ overall employment mix,” the report notes.

Diverse economies are not inherently more prosperous economies, the report says, but they are less vulnerable in the face of sudden industry shifts or shutdowns. And, it adds, they offer choice and opportunity that many rural Utahns still cannot access.

Shannon Sollitt is a Report for America corps member covering business accountability and sustainability for The Salt Lake Tribune. Your donation to match our RFA grant helps keep her writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.