Guest post by Dale Gunther
If anything is true about history, it is that it repeats itself. And just like the Great Depression in the ‘30s and the 10 economic downturns since then, this recession will come to an end.
I’ve seen this cycle many times and was reminded of it as I recently reviewed old Bank of American Fork documents from the ‘30s and ‘40s. Back in 1933 at the height of the Depression, the bank’s total assets were $274,000. Bank examiners classified $199,000—73 percent—of those assets (mainly loans) as substandard. A decade later, Bank of American Fork’s assets had grown to $1.7 million and only $29,000, or 1.7 percent, of which were substandard.
This is a testimonial to the reality of the economic and business cycles that repeat themselves time and time again. It also provides a real-life perspective that encourages us to keep a positive attitude and work with faith in our future.
I believe we have much to be encouraged by, particularly in Utah. This is evidenced by a recent article in Forbes that, for the second consecutive year, declared Utah as the Best State for Business and Careers. It is the only state that ranks among the top 15 states in each of the six main categories ranked: business costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life.
Some of the highlights from the article show that:
— Utah’s energy costs are 31 percent below the national average.
— Utah’s employment growth has averaged 0.6 percent for the past five years, compared to the national job growth average of negative 0.6 percent since 2005.
— National unemployment is at 8.6 percent compared to Utah’s at 7 percent.
— Utah’s job growth is projected by Moody’s to be 2.4 percent annually through 2015, which is sixth best in the country.
— Utah’s 5-percent corporate tax rate is well below that of western neighbors Arizona, Idaho and New Mexico.
— Utah ranks sixth in a new Tax Foundation study that looks at the tax burden on business in each state across different industries.
— Overall business costs in Utah are 10 percent below the national average, resulting in recent or forthcoming expansions or relocations of companies including Procter & Gamble, ITT, Home Depot, Boeing, Goldman Sachs, Adobe Systems, eBay, Electronic Arts and Oracle.
— Utah’s population growth is one of the fastest in the country, providing a burgeoning workforce.
I would say we Utahns have a lot to be proud of.
But it’s not just us. While Utah is taking the lead, the entire U.S. economy grew by 2.5 percent in the third quarter after growth of just 0.9 percent in the first half of the year. Thanksgiving weekend saw the number of shoppers increase, each spending an average of $398, up from $365 last year. This helped retailers earn a record $52.4 billion, up 16 percent from $45 billion last year, according to a survey by the National Retail Federation.
Further, many economists are revising upwards their GDP forecasts by as much as half a percentage point—a significant increase. In November, builder confidence rose to its highest level in 17 months as measured by the National Association of Home Builders/Wells Fargo housing market index, and in October, building permits climbed 11 percent.
The Restaurant Performance Index shows people are eating out more. Stocks are performing better, too: 76 percent of S&P 500 stocks reported higher earnings per share compared to Q3 2010, and 69 percent topped earnings estimates.
All of these positive economic indicators show America is finally on the mend. What better Christmas gift can we ask for?
Dale Gunther is vice chairman of the board of People’s Utah Bancorp, the holding company for Bank of American Fork , which is an Equal Housing Lender and Member FDIC. At the start of his 16-year tenure as CEO at Bank of American Fork, the bank had two branches and $80 million in assets; it now has 13 offices and more than $880 million in assets. Dale has served as chairman of the Utah Bankers Association and currently serves as an American Fork city councilman. This article should not be considered legal or investment advice. Seek legal and investment advice from your own qualified professional.