Many of us look to our pre-COVID years with fondness. Things were cheaper. Gas consistently cost under $3 per gallon. We were more likely to eat out and spend more on weekends, and Utah families hadn’t yet encountered the 2021 home price hikes. In terms of affordability, everything was a little more rose-colored.

But even though things were more affordable before COVID, life wasn’t perfect. A 2018 Utah Foundation survey reported declining family quality of life, and feeling comfortable or being financially secure was “far and away the poorest performing measure among the personal quality of life questions.”

With that in mind – along with a 68% chance of a recession in the next 12 months – it’s important for policymakers to understand where Utah families have been over the last five years and where they are now. These facts should help frame the economic questions policymakers seek answers to in preparation for next year’s legislative session.

Then vs. now

Utah’s median household income increased from $71,414 in 2018 to $79,449 in 2021, an 11.3% increase (based on most recent census data). This was lower than the national median household income percent increase, which rose 12.6% in the same period.

While Utah’s growth in median household income is lower than the national average, Utah’s per capita income is also lower than the national average. In other words, Utah families have more mouths to feed than is typical elsewhere in the U.S., and rising living costs have made family life less affordable than before the pandemic.

Heather Crawford, a Pleasant Grove mother of three, said, “Everything is just adding up really, really quickly, and it’s just making things a lot more challenging than it typically is. Gas is out of control. Food is out of control.”

Unfortunately, Crawford’s story is typical of many Utah families. Utah’s rising household incomes have not kept pace with some living costs.

National average retail gas prices rose from under $3 during 2018 and 2019 to almost $5 in June 2022 – a 92.9% jump. Then, they fell to a December 2022 low of $3.21 per gallon and rose to $3.555 per gallon by May 2023.

It is reasonable to suggest that Utah incomes have not kept up with national increases in food prices either. From 2018 to 2022, food prices increased 20.4%, whereas Utah’s household median income only increased 11.1% from 2018 to 2021. While 2022 income data is not yet available, it seems unlikely that we will find that household incomes in Utah ballooned an additional 9 percentage points from where they were in 2021.

As for prices of goods and services as a whole (i.e., inflation), Utah families carried heavier burdens than the rest of the nation in recent years. Inflation rose higher in the Mountain West than in other U.S. regions in 2021. This equated to an estimated $500 rise in monthly household costs for states like Utah in January 2022, compared with a $380 increase for other areas around the nation.

Decreasing housing affordability has been another burden for Utah families. In 2018, buying a home was already tricky. Home median home sales prices in Utah’s two largest metropolitan areas were 20 percent higher than home prices in Boise, Las Vegas and Phoenix – Utah’s top commercial contenders. At that time, Salt Lake City’s home prices equated to 4.5 years of a household income instead of the real estate industry rule of thumb of 2.6 years of a household income.

In 2021, median home prices rose 30% year-over-year, and renters needed three times the minimum wage to afford housing in Utah, according to news reports. In 2022, Utah home prices far exceeded the national average – ranging from $488,300 to $588,800; the national average stood at $428,700. 

Now in 2023, up to 70% of renters are “cost-burdened” (i.e., spending more than 30% on rent and utilities) and a recent report showed that monthly eviction filings have started to rise back to pre-pandemic levels. The same report shared that housing prices have nearly doubled in the last five years, and commentators expect “a correction is due in 2023.”

The future is fickle

It is hard to predict the future, but economists and experts have commented on the nation’s and Utah’s forecasted financial standing. Since Americans are carrying the inflation burden better than expected, a Wall Street Journal survey of economists forecast the Federal Reserve will keep interest rates higher for longer and will make interest rate cuts in Q4 2023 or Q1 2024. As noted previously, the U.S. is projected to go into recession sometime in the next 12 months. Economists also forecast inflation rates will stay elevated longer than expected.

If a recession does come, Utah is expected to fare better than the nation. Looking ahead, some economists are hopeful, believing that Utah might be largely exempt from an upcoming recession because of its strong labor force.

But Utah’s overall ability to bear its financial burdens doesn’t make Utah families exempt from the burdens of a future recession. Costs are increasing, and how Utah families feel about their finances is comparable to the Great Recession.

Conclusion

In sum, Utah families’ incomes increased in recent years but seemed to lag behind increased costs of gas, food and housing. Housing affordability is a particular concern for families, with home prices nearly doubling in the last five years and a significant portion of renters now being financially burdened.

For legislators, it will be imperative to keep Utah families’ economic prospects in mind as they make their next public policy moves. Good economic and family policy are informed by the facts as well as sound principles. Understanding both will be critical to policies that benefit Utah families.