Kem C. Gardner Policy Institute economist warns Utah County: labor shortages, inflation and housing shortfalls threaten growth

Phil Dean, an economist with the Kem C. Gardner Policy Institute, told the Utah County Commission that the national and Utah economies have recovered strongly since the pandemic but face structural challenges including constrained labor supply, persistent inflation and an undersupply of housing.

Dean said federal fiscal support during the pandemic — including CARES Act programs, Paycheck Protection Program loans and ARPA funding — injected trillions into the U.S. economy, which helped avert a deeper collapse but has also fed higher incomes and elevated demand. ‘‘Those three waves together roughly equaled 25% of U.S. GDP,’’ he said, summarizing the scale of stimulus.

Why it matters: Dean told commissioners that Utah’s fundamentals remain strong but that local governments must be cautious about budgeting based on one-time revenues such as ARPA funds. He highlighted a near-record-low unemployment rate (about 1.9% statewide) and said labor shortages — amplified by baby-boomer retirements and shifting preferences among younger workers — are the ‘‘single biggest constraint’’ to further growth.

Dean outlined several policy-relevant takeaways for county officials. He said wages are the market price that will most influence labor force re-entry, and that counties should review workforce demographics and pay structures to retain and recruit employees. He also urged careful use of ARPA funds so that one-time revenues are not committed to ongoing programs.

On inflation and housing: Dean said inflation is unusually high in the Mountain region and that real wages have declined despite some nominal pay increases. For housing, he said demand remains strong and supply is far below needs; he cited a long-term projection that Utah needs roughly 250,000 additional housing units by the projected target year. ‘‘I’m convinced that high housing costs are the single greatest long-term risk to Utah’s economic prosperity,’’ he said.

Commissioner questions and responses: Commissioners asked about the county’s sales tax spike, the share attributable to stimulus checks and online sales, and the county-level labor participation rate. Dean said some share of recent sales tax growth is temporary and tied to stimulus and pandemic-era shifts to remote consumption, but he also identified persistent real income growth in the county. He repeated that online sales collections and some habit changes are likely to remain but that aggregate spending could shift between remote and in-store channels.

Next steps: Dean offered to share his slide presentation with county staff, and commissioners said they may request follow-up briefings as budgeting season approaches.

The commission’s Q&A with Dean lasted through a series of technical questions on labor participation, sales-tax drivers and the expected trajectory of the ‘‘sugar high’’ from excess household savings. The presentation and Q&A occupied the work session portion of the meeting and concluded prior to the regular agenda.