Immigration, housing and tariffs awake uncertainty in Utah’s 2025 economic outlook
The state’s economy was better than the national average during 2024, but that growth may slow down this year
Spenser Heaps for Utah News Dispatch
The downtown Salt Lake City skyline is backdropped by fresh snow on the Wasatch Mountains on Monday, Jan. 15, 2024.Last year, Utah’s economy fared better than the national average. However, the state is bracing for a forecast of slower, but not stalling, economic activity in 2025.
That’s according to the 2025 Economic Report to the Governor by the Kem C. Gardner Policy Institute.
Phil Dean, chief economist at the Gardner Institute and co-chair of the Utah Economic Council, said in a news release that despite predictions of “higher interest rates forcing a hard landing,” the economy in the U.S. grew in 2024, as things start to get to normal levels after the COVID-19 pandemic. However, some policies may affect the country’s economic odds.
“Entering 2025, the economy faces price uncertainty on various fronts,” Dean said in a statement. “Continued sticky inflation and a large federal deficit add pressure for interest rates to remain higher for longer. The potential for immigration limitations, tariff increases, and increased energy production are other factors that could also impact prices in the coming year.”
How was 2024’s economy?
“Inflation moderated but stubbornly remained stuck above target,” the institute wrote in the report about the 2.7% nationwide inflation rate.
Short-term interest rates dropped in late 2024, though long-term rates increased. But, there was still some momentum in the country, with incomes and total household wealth growing, which supported continued spending. Utah’s average annual pay, for example, was estimated at $65,357, a 3.9% increase from 2023.
In Utah, jobs also grew by 1.7%, well below its long-term median of 3%, according to the report. Most job additions were in health care services and private education, construction and government. Only one major industry — trade, transportation and utilities — decreased this year.
There was also a bump in the state’s unemployment rate, reaching 3.1%, up from 2.6% in 2023. However, that number was still below the national 4% rate, the institute pointed out.
The state’s housing shortage continued, translating into higher home prices and other effects.
“Utah’s high housing costs likely impact slowing job growth rates, and more broadly impair Utah’s economic growth,” the economists wrote.
The state’s nominal gross domestic product (GDP) surpassed $300 billion for the first time in history, leading the nation through three quarters, as well.
2025 outlook uncertain amid immigration changes
The study forecasts that Utah’s labor market will experience slower-than-average growth in 2025. That’s because of “cooling national labor markets,” the state’s high housing costs, and federal policy decisions that could produce an impact in prices and supply of available labor — including immigration policy, which President-elect Donald Trump promised to overhaul in his mandate.
Economists predict a job growth rate of 1.5% to 2%, which is below the historical average.
There may also be an unemployment rate of 3.1% to 3.4%, However, wages are expected to increase by 2.8% to 3.5%, outpacing a projected inflation rate of 2.5%.
There are also other factors that may contribute to how much Utahns will spend this year.
“The outlook calls for positive growth across industries,” the institute wrote, “with an aging population driving higher demand in health care and social services, and expected lower interest rates spurring growth in professional and business services, construction, and financial services.”
Consumer sentiment, an index used to measure “how consumers view current and future economic conditions,” remains uncertain with a forecast of moderate economic growth. However, Utah will likely continue to outperform the national average because of the state’s growing economy, strong labor market, and diverse industries, according to the report.
There may also be lower interest rates easing the burden of housing payments and allowing consumers to have more disposable income. “However, uncertainties around future fiscal and immigration policies could create economic disruptions, potentially dampening consumer confidence,” the economists wrote.
Utah News Dispatch is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.
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