Important Details
null

Consumer Confidence

The Zions Bank Utah Consumer Attitude Index increased 7.3 points to 111.5 in June. The U.S. Consumer Confidence Index increased 5.6 points to 98.0 in the same period.

Housing Market

In May, the CoreLogic® Home Price Index (HPI) for Utah, which measures home price appreciation, experienced a year-over-year increase of 7.5%. Nationally, the HPI increased 5.9% during the same period.

Inflation

The Zions Bank Utah Consumer Price Index increased 0.1% from April to May for a trailing 12-month inflation of 1.7%. In the same period, the U.S. CPI increased 0.4% for a trailing 12-month inflation of 1.0%.

Job Report

Utah’s unemployment rate increased 0.1 percentage point to 3.8% in May, and the national unemployment rate increased 0.2 percentage point to 4.9%.

August 2016

Printer Friendly

Subscribe to The Current



Submit

The latest employment, housing and other trends

See the Economic Snapshot

Randy Shumway January 2015

Utah Economic Outlook

Randy Shumway, Zions Bank Economic Advisor

“As trade flourishes among the world’s economic partners, companies in Utah and the United States will continue to grow.”

Increasingly inter-connected with the global economy, Utah is gaining recognition as a high-performing state within U.S. trade relationships. Utah’s diverse export market brings local prosperity as economies improve globally. International trade boosts Utah’s economy by providing jobs, sustaining businesses, and increasing foreign direct investment.

The diversity of Utah’s exports bodes well for long-term economic stability. Transforming Utah’s abundant natural resources into $5.5 billion in exported goods, the primary metal manufactures industry led the state in goods exported in 2015. At $2.1 billion, computer and electronic products was the second-largest export industry, followed by chemicals at $1.1 billion. Processed foods and transportation equipment came in fourth and fifth place.

Even though revenue from exports has declined over the last four years, the prevalence of foreign investment in Utah illustrates the value of international trade in the state’s economy. During times of recession, foreign consumers help make up for the lag in domestic consumption of Utah’s goods.

In 2015, just five export markets received fully 61.3 percent of Utah’s total exports. The United Kingdom is Utah’s largest export market, accounting for $3.0 billion in exports last year. With such a large portion of the state’s economy tied to the UK, Utah has a vested interest in how the Brexit process unfolds economically. The next largest export markets for Utah include Hong Kong ($1.9 billion), Canada ($1.5 billion), Mexico ($854 million), and China ($841 million). As economies in these and other countries grow, their demand for goods will increase. As demand rises, Utah will be able to sell more products, and invest in greater research and development.

Beyond providing revenue, international trade creates and sustains jobs. In 2013, trade supported nearly 375,000 jobs in Utah, which represents about 22 percent of total jobs. In fact, 20 percent of all manufacturing workers in Utah depended on exports for their jobs. In 2013, 35,600 Utahns were employed by affiliates of companies that were at least 50 percent foreign-owned.

Via exports and direct investment, international trade drives a significant portion of Utah’s economy. As trade flourishes among the world’s economic partners, companies in Utah and the United States will continue to grow.

Read more Read more
Brown and gray rocks in a quarry

Short-Term U.S. Outlook

Although experts don’t know how Brexit will affect the U.S. and world economies long term, the events of the past few weeks have demonstrated short-term market uncertainty and volatility. Right after the results were announced, stock markets dropped but then mostly stabilized several days later despite continued uncertainty. The market is likely to remain volatile until the United Kingdom and European Union develop a clear path for officially implementing Brexit.

The upward revision of first-quarter GDP growth for 2016 indicates that the U.S. economy did better than previously expected, although not as well as economists had hoped. The previous estimate showed GDP growth at a mere 0.8-percent pace. The upward revision was driven primarily by higher-than-expected exported goods and services, company spending on software, and research and development. Other aspects of GDP remained consistent with the previous estimate.

Consumer spending is a major contributor to GDP. Preliminary numbers from the second quarter show consumer spending holding steady, although economists had projected a higher rate in correlation with lower gasoline prices. Americans are buying cars at solid rates, and home sales reached a nine-year high in May. Real disposable income and overall household wealth have both increased, reinforcing consumer spending in recent months.

While the Federal Reserve may raise interest rates again this year, uncertainty about Brexit may delay this action until autumn. In order to raise interest rates, the Federal Reserve is awaiting confirmation of steady economic growth, sufficient job gains, and movement toward 2-percent inflation. At this point, inflation has stayed below 2 percent for a significant amount of time, and job gains are slowing. Although markets do not expect an interest rate hike soon, the Fed could potentially implement one in September if economic data turns more positive.

While the unemployment rate has steadily declined since the height of the recession, so has labor force participation. Although declining participation reflects both an aging population and an increased percentage of young people in school, it also indicates that many Americans may have just given up searching. Over the past several years, jobs have increased in healthcare, technology, and business services, but jobs in manufacturing have decreased. The changing makeup of the labor market economy favors highly-skilled labor over manual labor, widening the gap between upper-class and middle- to lower-class Americans.

Long-Term U.S. Outlook

Even before the Brexit vote, the International Monetary Fund (IMF) had revised its forecast for the U.S. economy this year to 2.2-percent growth—down from 2.4-percent growth in 2015 and down from April’s 2.4-percent 2016 growth forecast. Despite lowered expectations, the IMF believes the U.S. economy is in good shape. Goldman Sachs, Barclays, and Bank of America also lowered their forecasts following the Brexit vote, noting that stock market volatility and rising dollar value both hurt the U.S. economy in the long run. Forecast reductions have been minor, however, and they adjust for the volatility that will affect most economies throughout the world.

Read more Read more
National Consumer Price Index increased 0.4% Utah Consumer Price Index rose 0.1%

Wasatch Front Consumer Price Index

The Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.1 percent from April to May on a non-seasonally-adjusted basis. The index has increased 1.7 percent since this same time last year, which is very near the Federal Reserve’s national inflation target of 2 percent. The national Consumer Price Index increased 0.4 percent from April to May and increased 1.0 percent over the last year. Food at home, transportation, medical care, and education and communication prices decreased but were offset by rising prices for food away from home, housing, utilities, clothing, recreation, and other goods and services.

Prices of utilities jumped more than any other sector in May, up 4.3 percent from the previous month as water and electricity utilities switched to higher summer rates. In spite of these increases, water rates in Utah remain low relative to those of neighboring desert states. For example, an average household in Denver pays nearly twice as much as a Salt Lake household for water, sewer, and storm water services. Similarly, Utahns pay relatively less for electricity, as the average monthly residential electricity bill in Utah is $79 compared to the national average monthly bill of $107.

Prices for food away from home rose 0.7 percent from April to May, and have increased 7.4 percent since this time last year. Food away from home prices have been pushed up as labor costs rise and restaurants continue to invest in technology. Meanwhile, food at home prices remain relatively low: they decreased 0.2 percent this month, and have decreased 0.3 percent since this time last year.

Read more Read more
National Unemployment Rate increased to 4.9% Utah Unemployment Rate increased to 3.8%

Labor Market

The unemployment rate in Utah increased one-tenth of a percent from 3.7 percent in April to 3.8 percent in May. The state’s year-over-year growth in total employment decreased from 3.4 percent last month to 3.2 percent in May. Compared to a year ago, Utah has added 44,400 jobs to the economy, and the current employment level registers at 1,417,800. The United States’ unemployment rose two-tenths of a percentage point to 4.9 percent.

Eight of ten sectors measured posted net job increases this month; the natural resources and mining industry was the only sector that posted net job losses, and other services showed zero net change. The education and health services sector experienced the largest private sector employment increases this month. Utah County is enjoying particularly strong job growth, ranking second last year among the nation’s 343 largest counties. The number of jobs in Utah County grew by 6.6 percent during 2015—more than three times faster than the national average of 1.9 percent. Utah’s strong employment situation is also apparent in Salt Lake, Davis, and Weber Counties, which each saw job growth of 3.8, 3.7, and 3.1 percent in 2015, respectively.

Read more Read more
Utah Consumer Attitude Index down 4.8 points National Consumer Attitude Index increased 5.6 points

Utah Consumer Attitude Index

The Zions Bank Utah Consumer Attitude Index (CAI) rose 7.3 points to 111.5 in June. Increased confidence in both present and future economic situations drove this increase. The overall CAI currently sits 0.3 points lower than its level 12 months ago. In comparison, the national Consumer Confidence Index® increased 5.6 points from May to June and currently sits at 98.0.

The Present Situation Index, the sub-index of the CAI that measures how consumers feel about current economic conditions, has risen 7.9 points since last month and is 1.3 points higher than it was this time last year. Utahns believe the general business environment is more favorable compared to last month: 57 percent rate general business conditions in their area as good—up 4 percent from last month. Fifty percent of Utahns describe available jobs in their area as plentiful—up 2 percent since last month, and up 5 percent since last year. Although unemployment in Utah increased from 3.7 percent in April to 3.8 percent in May, this stems largely from rising wages.

Expectations for the next six months increased 6.9 points in June due to a more positive outlook on future business conditions and employment opportunities. Compared to May, more Utahns think business conditions in their area will be better in six months—up from 24 percent to 27 percent in June. The outlook for the labor market is also slightly more positive, as 27 percent of Utahns think there will be more jobs available in their area six months from now—a three-point increase since last month.

Read more Read more
Utah CoreLogic Home Price Index increased 7.5% National CoreLogic Home Price Index up 5.9%

Housing Market

Home prices rose slightly both across the nation and in Utah in May. Utah’s home prices increased 1.3 percent from April to May, and have grown 7.5 percent since May 2015 Nationally, home prices increased 1.3 percent month over month and 5.9 percent year over year. National home prices for single-family homes, including distressed sales, are forecasted to rise by 0.8 percent in June 2016, and by 5.3 percent by May 2017.

Although home prices remain 7.2 percent below peak values recorded in May 2006, the U.S. has experienced 52 consecutive months of year-over-year increases, including distressed sales, indicating progress toward full recovery. A new peak level in home prices is expected to be reached in September 2017. In Utah, home prices are forecasted to increase 0.8 percent this month and 5.3 percent in the next year. According to a recent Associated Press analysis, renter costs are growing, and owner costs are dropping, further incentivizing potential homebuyers to enter the market. Housing prices can be expected to continue to rise as inventories struggle to keep up with buyer demand.

Read more Read more
Shipping containers being stacked by a forklift in shipyard

Utah’s Commitment to International Trade

Utah’s import and export of goods and services with foreign partners provides tremendous economic benefit. Since international trade often relies heavily on state leaders’ ability to establish business connections and make it easy for foreign companies to do business in their state, Utah’s government institutions have developed public and private partnerships to boost international trade. Government entities provide Utah businesses with the diplomatic leverage necessary to identify opportunities and establish trade relationships with foreign partners.

The Utah Governor’s Office of Economic Development (GOED) promotes global trade through individual business consultations, mentoring, educational seminars, and in-country trade briefings during trade missions, among other services. International trade and diversity are key to Utah’s economy, and GOED prioritizes global market development to help Utah businesses secure international business contacts and more easily export goods and services.

GOED also runs foreign trade missions. In addition to receiving market briefings on the country they are visiting, companies that participate in trade missions participate in site visits and networking receptions, and one-on-one business matchmaking meetings with potential partners (buyers, agents, distributors, etc.) Past trade missions have been successful in helping companies increase sales and other opportunities.

Read more Read more
Hand holding a Social Security card

Smartly Sustain Social Security

President Franklin D. Roosevelt signed the Social Security act in 1935 to insure aging generations against disability, economic downturns, and declines in health that affect worker productivity. Today, more than 80 years later, Social Security helps lift nearly 15 million elderly Americans above the poverty line. However, it carries significant costs that are becoming increasingly difficult to sustain—in fact, Social Security’s reserves are projected to be depleted by 2034. This raises the unappetizing threat of looming tax hikes to fund a program that is already straining on government spending. Last year, Social Security accounted for nearly a trillion dollars in expenditures, or 24 percent of the federal budget and approximately 5 percent of the country’s GDP.

Economic pressures are partly to blame for these shortfalls, as our nation has yet to fully recover from the worst economic conditions since those that spurred Social Security’s inception. Even as our economy recovers, however, demographic trends pose a more enduring challenge: our working-age population is shrinking and the beneficiary population is growing and living longer.

Partisan solutions are predictable. The left argues for tax hikes while the right argues for benefit cuts. The reality is that the best approach is a targeted hybrid solution that focuses on addressing some of the root problems plaguing Social Security.

First, just as wages are often indexed to inflation, eligibility ages will need to be indexed to longevity for “life expectancy inflation.” As we live longer, we can also support ourselves without assistance later in life. Today, 12 percent of Americans are 65 or older, but this number is expected to grow to 23 percent by 2080. In this same time span, the working-age population is projected to shrink from 60 to 54 percent. Meanwhile, the average life expectancy is over 77 today, compared to 63 in the FDR era, so the average person today (let alone in the future) will receive benefits significantly longer than was originally planned. While attempting to raise the retirement age can spell political suicide, the voting public might accept age increases that are automatic and gradual.

Second, benefits should be curbed for upper class elderly, who tend to live longer than the poor and who have generated sufficient income during their working years to independently sustain retirement. This way, Social Security can provide a safety net for those without excess resources. A targeted system could account for earnings, life expectancy, and retirement savings, and provide benefits to lower earners without raising taxes to support those who don’t need payouts.

Third, we need to harness big data analytics to reduce fraud. In 2013, the Social Security Administration made almost $7 billion in improper payments, largely due to fraud. Now, the 80-year-old Social Security Administration is beginning to tap into the enormous amount of data it has on hand to ensure accurate benefit disbursement and to cut unnecessary costs.

Finally, we need to compartmentalize FICA benefit payouts, which include both Medicare and Social Security. Lumping the two together can result in wasteful payouts when retirees require health insurance benefits covered by Medicare, but don’t need the paychecks provided by Social Security. Furthermore, simply treating each program separately would reduce bureaucratic inefficiency and enable more nimble legislative actions for common-sense reform.

Often considered the “third rail of American politics,” the Social Security debate is so emotionally charged and controversial that many politicians avoid discussing the subject entirely. However, failing to act in a smart, forward-thinking, bipartisan manner will only put us further behind the demographic changes of our time. Social Security is an old dog, but it can and must learn a few new tricks to ensure sustainable care for the elderly.

Read more Read more

Consumer Confidence

The U.S. Consumer Confidence Index® increased 5.6 points to 98.0 in June. The Present Situation Index increased 5.1 points to 118.3, and the Expectations Index increased 6.0 points to 84.5.

Housing Market

In May, the CoreLogic® Home Price Index (HPI) for Idaho, which measures home price appreciation, experienced a year-over-year increase of 7.0%. Nationally, the HPI increased 5.9% during the same period.

Inflation

The U.S. Consumer Price Index increased 0.4% from April to May. Year over year, the index increased 1.0%, which is below the Federal Reserve’s target annual inflation pace of 2%.

Job Report

Idaho’s unemployment rate remained unchanged at 3.7% in May, and the national unemployment rate increased 0.2 percentage point to 4.9% in May.

August 2016

Printer Friendly

Subscribe to The Current



Submit

The latest employment, housing and other trends

See the Economic Snapshot

Randy Shumway January 2015

Idaho Economic Outlook

Randy Shumway, Zions Bank Economic Advisor

“International trade boosts Idaho’s economy by providing jobs, sustaining businesses, and increasing foreign direct investment.”

Every year, international trade boosts Idaho’s economy by providing jobs, sustaining businesses, and increasing foreign direct investment. While children in Idaho wear clothes that were made in Guatemala, play with toys made in China, and eat candy made in Germany, people around the world are using products that were made in Idaho—and I’m not just talking about potatoes.

Can you guess what industry led the state in exports last year? If you thought of agriculture, you’re out of luck. Naturally, Idaho’s domestic and global agricultural exports make up a vital component of its economy given the state’s relative population size and land use. However, the agriculture industry exported merely $237 million of goods in 2015 compared with $1.9 billion in goods sold by the top export industry. Guessed it yet? Computer and electronic products. Second runner up was processed foods at $569 million, followed by chemicals at $352 million.

The diversity of Idaho’s exports enhances the state’s long-term economic stability. The prevalence of foreign investment in Idaho illustrates the value of international trade in the state’s economy. During times of recession, foreign consumers help make up for the lag in domestic consumption of Idaho’s goods.

So where are all these goods going around the world? Canada is Idaho’s largest market, receiving $979 million in exports in 2015. In fact, Canadian trade made up 22.8 percent of total Idaho exports that year. The next largest export markets include China ($561 million), Taiwan ($529 million), Singapore ($414 million), and Japan ($290 million). All together, these five export markets received 64.6 percent of Idaho’s total exports in 2015. As economies in these and other countries grow, their demand for goods will increase. As demand rises, Idaho will be able to sell more products and invest in greater research and development.

Beyond providing revenue, international trade creates and sustains jobs. In 2013 alone, trade supported nearly 195,000 jobs in Idaho—approximately 22 percent of total jobs in the state. In fact, 18 percent of all manufacturing workers depend on exports for their jobs. A large number of jobs also depend on the presence of foreign companies in Idaho. In 2013, 13,900 people in Idaho were employed by affiliates of companies that were at least 50 percent foreign-owned.

As trade flourishes among the world’s economic partners, companies in Idaho and the United States will continue to grow.

Read more Read more
Woman shopping for laptops in a computer store

Short-term U.S. Outlook

Although experts don’t know how Brexit will affect the U.S. and world economies long term, the events of the past few weeks have demonstrated short-term market uncertainty and volatility. Right after the results were announced, stock markets dropped but then mostly stabilized several days later despite continued uncertainty. The market is likely to remain volatile until the United Kingdom and European Union develop a clear path for officially implementing Brexit.

The upward revision of first-quarter GDP growth for 2016 indicates that the U.S. economy did better than previously expected, although not as well as economists had hoped. The previous estimate showed GDP growth at a mere 0.8-percent pace. The upward revision was driven primarily by higher-than-expected exported goods and services, company spending on software, and research and development. Other aspects of GDP remained consistent with the previous estimate.

Consumer spending is a major contributor to GDP. Preliminary numbers from the second quarter show consumer spending holding steady, although economists had projected a higher rate in correlation with lower gasoline prices. Americans are buying cars at solid rates, and home sales reached a nine-year high in May. Real disposable income and overall household wealth have both increased, reinforcing consumer spending in recent months.

While the Federal Reserve may raise interest rates again this year, uncertainty about Brexit may delay this action until autumn. In order to raise interest rates, the Federal Reserve is awaiting confirmation of steady economic growth, sufficient job gains, and movement toward 2-percent inflation. At this point, inflation has stayed below 2 percent for a significant amount of time, and job gains are slowing. Although markets do not expect an interest rate hike soon, the Fed could potentially implement one in September if economic data turns more positive.

While the unemployment rate has steadily declined since the height of the recession, so has labor force participation. Although declining participation reflects both an aging population and an increased percentage of young people in school, it also indicates that many Americans may have just given up searching. Over the past several years, jobs have increased in healthcare, technology, and business services, but jobs in manufacturing have decreased. The changing makeup of the labor market economy favors highly-skilled labor over manual labor, widening the gap between upper-class and middle- to lower-class Americans.

Long-Term U.S. Outlook

Even before the Brexit vote, the International Monetary Fund (IMF) had revised its forecast for the U.S. economy this year to 2.2-percent growth—down from 2.4-percent growth in 2015 and down from April’s 2.4-percent 2016 growth forecast. Despite lowered expectations, the IMF believes the U.S. economy is in good shape. Goldman Sachs, Barclays, and Bank of America also lowered their forecasts following the Brexit vote, noting that stock market volatility and rising dollar value both hurt the U.S. economy in the long run. Forecast reductions have been minor, however, and they adjust for the volatility that will affect most economies throughout the world.

Read more Read more
National Consumer Price Index increased 0.4%

U.S. Consumer Price Index

The U.S. Consumer Price Index increased 0.4 percent in May on a non-seasonally-adjusted basis. Over the last 12 months, the all-items index rose 1.0 percent. The index for all items less food and energy, which excludes the two most volatile categories and is sometimes considered a more accurate measure of inflation, increased 0.2 percent in May. The shelter index rose 0.4 percent, and indexes for medical care, clothing, and education also increased. Other categories declined—including used cars and trucks, communications, airline fares, and new vehicles—but not enough to offset the increases.

The energy index increased 1.2 percent as gasoline rose 2.3 percent, and indexes for fuel oil and natural gas increased as well. If oil and gasoline prices remain relatively low, sustained transportation savings could be transferred to consumers via lower prices.

The food index fell 0.2 percent as all six major grocery store food group indexes declined, and food prices rose 0.7 percent above their May 2015 level. Food prices are tracked in terms of location: food at home, and food away from home or at restaurants. Prices for food away from home rose 0.2 percent in May, while prices for food at home decreased 0.5 percent from April to May. Looking ahead, the Economic Research Service of the U.S. Department of Agriculture expects prices to rise 0.5 to 1.5 percent in 2016, which would represent below-average increases. The forecast assumes normal weather conditions through the remainder of the year. Currently, drought in California is the largest wildcard that could affect prices for fruit, vegetables, dairy, and eggs.

Read more Read more
National Unemployment Rate increased to 4.9% Idaho Unemployment Rate remains at 3.7%

Labor Market

Idaho’s unemployment rate remained unchanged at 3.7 percent in May. Nonfarm payrolls declined by three-tenths of a percent this month, while the state’s seasonally-adjusted nonfarm jobs grew by 1,900, or 3.7 percent, compared to last year. Idaho’s nonfarm job growth currently ranks third-highest in the nation. The United States’ unemployment rose two-tenths of a percentage point to 4.9 percent.

Employment gains occurred in the construction, information, financial activities and other services sectors; however, these were offset by weaker-than-expected performance in manufacturing, wholesale trade, health care and social services, leisure and hospitality, and professional and business services. Although health care employment growth underperformed compared to expectations for this month, health care jobs account for more than 20 percent of Idaho’s “hard-to-fill” jobs. These are positions that are continuously posted for 90 days or more. With 4,400 hard-to-fill jobs in Idaho, opportunities are less scarce for job seekers than this month’s employment gains directly indicate.

Read more Read more
National Consumer Attitude Index increased 5.6 points

U.S. Consumer Confidence Index

The U.S. Consumer Confidence Index increased 5.6 points to 98.0 in June after declining in May. The increase represents higher confidence in the current situation as well as higher confidence in future economic conditions. While consumers were less negative about labor market conditions, they were also only slightly more positive, indicating that the economy is holding strong but not strengthening or declining.

The Present Situation Index increased 5.1 points from May to June and now stands at 118.3. Consumers stating that business conditions are good increased marginally from 26.1 percent in May to 26.9 percent in June. At the same time, those who believe business conditions are bad decreased from 21.4 percent to 17.7 percent. Opinions about the labor market were mixed. Consumers claiming jobs are plentiful declined slightly from 24.5 percent to 23.4 percent, but those claiming jobs are hard to get also declined from 24.5 percent to 23.3 percent.

Expectations for the next six months increased by a healthy margin—up from 78.5 in May to 84.5 in June. Consumers expect business and labor market conditions to improve over the next six months. Consumers expecting business conditions to improve increased from 15.0 percent to 16.8 percent, while those expecting business conditions to worsen decreased from 11.7 percent to 11.4 percent. Those anticipating more jobs in the next six months increased from 12.5 percent to 14.2 percent. More consumers also expect their incomes to increase over the next six months.

Read more Read more
Idaho CoreLogic Home Price Index increased 7.0% NNational CoreLogic Home Price Index up 5.9%

Housing Market

Home prices continued to rise slightly across the nation and in Idaho in May. Idaho’s home prices increased 0.5 percent from April to May, and have risen 7.0 percent since May 2015. Nationally, home prices increased 1.3 percent month over month and 5.9 percent year over year. National home prices for single-family homes, including distressed sales, are forecasted to rise by 0.8 percent in June 2016, and 5.3 percent by May 2017.

Although home prices remain 7.2 percent below peak values recorded in May 2006, the U.S. has experienced 52 consecutive months of year-over-year increases, including distressed sales—indicating progress toward full recovery. A new peak level in home prices is expected to be reached in September 2017. In Idaho, home prices are forecasted to increase 0.9 percent this month and 6.2 percent in the next year. In Idaho’s Treasure Valley, all housing price brackets under $700,000 have fewer than six months’ worth of inventory, cementing the area as a seller’s market. Although income and wage growth are relatively low in Idaho, the state benefits from strong employment numbers and a significant influx of out-of-state buyers.

Read more Read more
Shipping containers being stacked by a forklift in shipyard

Idaho’s Commitment to International Trade

Idaho’s import and export of goods and services with foreign partners provides tremendous economic benefit. Since international trade often relies heavily on state leaders’ ability to establish business connections and make it easy for foreign companies to do business in their state, Idaho’s government institutions have developed public and private partnerships to boost international trade. Government entities provide Idaho businesses with the diplomatic leverage necessary to identify opportunities and establish trade relationships with foreign partners.

The Idaho Department of Commerce runs trade shows to highlight Idaho companies and explain the steps they must take to attract foreign partners. The department also promotes global trade through one-on-one consultations and foreign trade missions.

Companies that participate in trade missions receive market briefings on the country they are visiting, individualized itineraries for each business or organization that is visited, and outstanding networking opportunities. Past trade missions have been successful in helping companies increase sales and other opportunities. Governor Otter’s next upcoming trade mission will visit China at the end of October.

Read more Read more
Hand holding a Social Security card

Smartly Sustain Social Security

President Franklin D. Roosevelt signed the Social Security act in 1935 to insure aging generations against disability, economic downturns, and declines in health that affect worker productivity. Today, more than 80 years later, Social Security helps lift nearly 15 million elderly Americans above the poverty line. However, it carries significant costs that are becoming increasingly difficult to sustain—in fact, Social Security’s reserves are projected to be depleted by 2034. This raises the unappetizing threat of looming tax hikes to fund a program that is already straining on government spending. Last year, Social Security accounted for nearly a trillion dollars in expenditures, or 24 percent of the federal budget and approximately 5 percent of the country’s GDP.

Economic pressures are partly to blame for these shortfalls, as our nation has yet to fully recover from the worst economic conditions since those that spurred Social Security’s inception. Even as our economy recovers, however, demographic trends pose a more enduring challenge: our working-age population is shrinking and the beneficiary population is growing and living longer.

Partisan solutions are predictable. The left argues for tax hikes while the right argues for benefit cuts. The reality is that the best approach is a targeted hybrid solution that focuses on addressing some of the root problems plaguing Social Security.

First, just as wages are often indexed to inflation, eligibility ages will need to be indexed to longevity for “life expectancy inflation.” As we live longer, we can also support ourselves without assistance later in life. Today, 12 percent of Americans are 65 or older, but this number is expected to grow to 23 percent by 2080. In this same time span, the working-age population is projected to shrink from 60 to 54 percent. Meanwhile, the average life expectancy is over 77 today, compared to 63 in the FDR era, so the average person today (let alone in the future) will receive benefits significantly longer than was originally planned. While attempting to raise the retirement age can spell political suicide, the voting public might accept age increases that are automatic and gradual.

Second, benefits should be curbed for upper class elderly, who tend to live longer than the poor and who have generated sufficient income during their working years to independently sustain retirement. This way, Social Security can provide a safety net for those without excess resources. A targeted system could account for earnings, life expectancy, and retirement savings, and provide benefits to lower earners without raising taxes to support those who don’t need payouts.

Third, we need to harness big data analytics to reduce fraud. In 2013, the Social Security Administration made almost $7 billion in improper payments, largely due to fraud. Now, the 80-year-old Social Security Administration is beginning to tap into the enormous amount of data it has on hand to ensure accurate benefit disbursement and to cut unnecessary costs.

Finally, we need to compartmentalize FICA benefit payouts, which include both Medicare and Social Security. Lumping the two together can result in wasteful payouts when retirees require health insurance benefits covered by Medicare, but don’t need the paychecks provided by Social Security. Furthermore, simply treating each program separately would reduce bureaucratic inefficiency and enable more nimble legislative actions for common-sense reform.

Often considered the “third rail of American politics,” the Social Security debate is so emotionally charged and controversial that many politicians avoid discussing the subject entirely. However, failing to act in a smart, forward-thinking, bipartisan manner will only put us further behind the demographic changes of our time. Social Security is an old dog, but it can and must learn a few new tricks to ensure sustainable care for the elderly.

Read more Read more

Rate this page:


Please don't submit personal information, including account numbers. For Customer Service, visit the Contact Us page.


SUBMIT

Thank you for your submission.

Feedback

Thank you for visiting our site today.

Please take a 2 to 3 minute survey and help us improve your online experience.

Survey Hide X
This page was last modified on Thu Aug 25 10:03:12 MDT 2016