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Utah Ranked First in Technology Concentration and Dynamism

The Milken Institute, a non-profit organization dedicated to improving the lives and economic conditions of populations all over the world, recently released its State Technology and Science index in which Utah claimed many top honors. Milken named Utah the most Technologically Concentrated and Dynamic state in the country, highest in net formation of high-tech establishments, and 8th overall for this year’s index.

“These high rankings from Milken reflect the incredible economic conditions in Utah,” said Jason Perry, Director of the Utah Governors Office of Economic Development. “The technology industry is an integral part of Utah’s strong and dynamic economy.”

In the area of technological concentration and dynamism, Utah was ranked on various criteria including: net formation of high-tech establishments per 10,000 businesses (1st), number of Inc. 500 companies per 10,000 business establishments (3rd), percent of establishments in high-tech North American Industry Classification System (NAICS) codes (3rd). In other areas such as Technology and Science workforce, Utah was ranked in the top three for many individual subcomponents.

"The new Milken Institute data underscores a long series of recent data points that illustrate the strength of the technology industries in Utah," said Richard R. Nelson, president and CEO of the Utah Technology Council (UTC) and chairman and CEO of the national Council of Regional Information Technology Associations (CRITA). "We are pleased to add this notable recognition from the Milken Institute to the tremendous list of recent honors our state has achieved."

According to this year’s report, “This updated 2008 edition builds upon the lessons learned and expands on the contributions of human capital formation and commercialization of intellectual property. We have examined a host of indicators to paint a comprehensive picture of how well states are performing in this highly competitive knowledge-based economy. Four years after releasing the previous State Technology and Science Index in 2004, we can evaluate how adept each state has been in dealing with the shifting nature of the intangible economy.”

Economic Spin - Why the Media Are Wrong About the Economy

The headlines are unavoidable. "Meltdown For Housing: Why The Worst Is Yet To Come," screamed the cover story of a recent national magazine with a portrait of a red house melting into oblivion. "The Great American Slowdown" shouted the headline of another magazine. "Buyer and Seller Beware," warned yet another.

As the national media focuses on what is wrong with America, Utah economist Jeff Thredgold isn't losing any sleep.

In fact, Thredgold, who runs his own consulting firm and serves as an economic advisor to Zions Bank, believes the divide between the media's take on the U.S. economy and the actual fundamentals has never been greater. America's economic opportunities, Thredgold maintains, abound as much now as ever before. /p>

"The national media has led millions of Americans to believe that the economy is merely limping along, creating few quality jobs, and on the brink of disaster," Thredgold writes in his latest book, EconAmerica: Why the American Economy is Alive and Well. "Such negativity dominates the economic writing found in the nation's bookstores. Books focusing on the demise of America; the coming debt crisis; the coming oil crisis; and the imminent dominance of China, Europe, or India are far too prevalent."

In an interview with Salt Lake REALTOR, Thredgold continues to gush optimism toward the U.S. and Utah economies despite soaring energy prices, a global credit crunch and lagging home sales.

For instance, Thredgold believes the national media have done what he calls a "terrible disservice" to the housing industry. "The national media story is, 'Why would you even think about buying a house right now when you know you can buy it cheaper in six months or 12 months,'" he said. "In Las Vegas, Miami or San Diego that may be true, but you can't make blanket statements about the whole housing economy."

Especially here in Salt Lake City, Thredgold said, which continues to outperform the troubled housing markets of Las Vegas, Los Angeles, Miami and Phoenix. "Our prices didn't run up as high as California, Arizona, Nevada and Florida," he said. "Those were the sexy places to build and buy real estate because the thinking used to be that there was going to be no end to rising home prices. Now, all four of those states are in a recession."

And while Salt Lake County has also taken a hit in home sales compared to last year, the Wasatch Front is doing great compared to other states, Thredgold said. In Las Vegas, for instance, home prices have fallen nearly 25 percent over the past year. And Thredgold said home prices in Vegas could tank another 10 percent to 20 percent before hitting bottom. In contrast, the median home price in Salt Lake County dropped 6 percent between last year's third and fourth quarters. Yet, between the fourth quarter of 2007 and this year's first quarter, the median price increased 2 percent. At 5.6 percent, Utah ranked No. 2 in the nation in house-price appreciation in the first quarter compared to year ago, according to the U.S. Office of Federal Housing Enterprise Oversight.

In addition, April's sales compared to January are up 52 percent, according to the Wasatch Front Regional Multiple Listing Service. In 2007, during the same four-month period in Salt Lake County, the up tick in sales was just 22 percent. In 2006, it was 38 percent.

Thredgold's optimism is shared by Forbes magazine, which in April ranked Salt Lake City as one of 10 "recession proof" cities in the U.S. "Though Salt Lake City's unemployment rate is rising, it's still among the lowest of the country's 50 largest cities," the Forbes article said. "A November 2007 report from the U.S. Conference of Mayors projected that Salt Lake City would be one of the few large cities in the country not to suffer a decline in gross metropolitan product from the mortgage crisis."

And despite talk of a national recession, Utah is still creating new jobs at a rate of 2 percent, more than six times the national job growth rate of 0.3 percent. In fact, at the end of the fourth quarter of 2007 the Wasatch Front had roughly 35,000 unfilled jobs with an average pay of $13.10 an hour, according to the Utah Department of Workforce Services. Many of those job vacancies included civil engineers, electricians, fire fighters and accounts clerks.

But the good economic news does not mean Utah won't escape the effects of a national housing downturn, according to Nigel Swaby, a Salt Lake mortgage broker. Swaby believes the worst is yet to come when it comes to falling home sales and foreclosures.

"We are no where close to bottom," Swaby said. "For the next year it's going to be pretty bad. I don't think people will get excited about real estate until there are significant discounts. We're just not there yet."

Swaby, who produces his own real estate blog, - www. slcrealestate.blogspot.com - said the Utah housing market has met its match. "It appears 100 percent financing is the kryptonite of Utah's housing market as well as the other remaining strong markets like those in the Pacific Northwest and North Carolina," one recent posting mentioned. "Over time, buyers, sellers and lenders will adapt. The high-flying easy lending of the past few years will probably never come back, but eventually things will even out."

Historically, Swaby added, Utah has always been high in foreclosures, bankruptcies and mortgage fraud. And he agrees with a Pew Charitable Trust report issued earlier this year which predicts that Utah foreclosures will jump to 4 percent over the next two years. Currently, Utah's foreclosures are less than 1 percent, according to the Mortgage Bankers Association. Nationally, the foreclosure rate is roughly 2 percent.

Thredgold disagrees with the Pew projections when it comes to future Utah foreclosures. But Thredgold is no Pollyanna either. Utah's housing market, he said, is struggling. And nationally the housing market is in a recession, but the problem remains a financing issue. In March, Thredgold, who was part of a USA Today survey of 50 national economists, agreed with most of his colleagues that the U.S. was in a recession or would enter one. But after stronger than expected GDP growth in this year's first quarter and fewer than expected job losses, Thredgold changed his mind.

"The discussion now is that we probably are not going to have a recession," Thredgold said. "Almost everybody expects growth to pick up in the second half of this year. Global financial stress is impacting Salt Lake City real estate mortgage lending. But in terms of the whole credit issue, the worst is probably behind us. We've seen many of the Wall Street banks and banks around the world write off tens of billions of dollars in sub prime loans, but we've also seen them attract capital from the Middle East and raise their own capital."

Thredgold's view is backed up by U.S. Treasury Secretary Henry Paulson, who in May said that the worst of the nation's credit crisis may have passed. And in a sign that the national media may have overplayed recession fears, the Wall Street Journal reported in a May 14th front page story that economists are "dialing back dire forecasts."

"A funny thing happened to the economy on its way to recession: It's taken a detour," the story said. "That, at least, is the view of a growing number of economists - including some who not long ago were saying a recession was all but inevitable."

Historically, Thredgold argues, U.S. economic growth over the past 25 years has occurred with only a modest period of economic decline. Th ere have been two mild recessions since World War II - one from 1990 to 1991and in 2000 to 2001. Yet the national media tells a consistent story of demise and failure.

"Even when we're adding jobs in the U.S. economy, the national media basically says that they are jobs at Burger King or McDonalds," Thredgold said. "They say we are losing all of our good jobs and replacing them with crummy jobs. That's not true." To make his case, Thredgold points out that the U.S. continues to be the dominant player in seven key industries: technology, telecommunications, transportation, financial services, energy, entertainment and bio-medicine.