Utah Economic Outlook

Randy ShumwayUtah has a thriving economy that continues to grow at a relatively steady pace despite the ongoing economic challenges confronting much of the rest of the world.

But what would happen if Utah experienced disaster on the home front? Is our economy and infrastructure strong enough to handle external shocks to our system?

With the recent flooding in Texas, earthquakes in Australia, and onslaught of the ZIKA virus in South America, we are reminded that disaster can strike in myriad places and ways. In particular, Utah is at risk for economic disruption due to the threat of several different types of natural disasters: earthquakes, wildfires, floods, storms, etc. Fortunately, Utah has a specific emergency preparedness campaign managed by the Division of Homeland Security, Be Ready Utah, dedicated to helping residents and municipalities prepare for disaster.

Due to its capacity to destroy buildings, roads, infrastructure, and access to utilities, a large earthquake in Utah would create a very high degree of physical disruption to personal and business life. The most recent major earthquake along the Wasatch fault line occurred 350 years ago, and the fault is expected to slip again in the next 50 years. Federal loss-estimation software operated by the Utah Division of Emergency Management estimates that if a 7.0-magnitude earthquake struck Salt Lake County, approximately 86,000 people would lose their homes, and the region’s main water distribution arteries would likely be severed because the Salt Lake County main water line crosses the fault line 19 times.

To provide relief in the event of a disaster, the American Red Cross has 19 local paid staff in Utah and nearly 1,000 volunteers in addition to partner organizations it could call upon. Healthcare teams in Utah have disaster preparedness consultants who have put together plans to maximize bed availability through extended care facilities.

In terms of physical preparation at a high level, Utah is in good hands. However, it is also important to prepare for a technological disaster, which could have devastating effects on Utah’s economy. For example, cyberattacks on financial institutions or on sensitive personal data would be a serious incident with negative economic impact. Over the last five years, Utah government computer systems went from experiencing 25,000 attempted cyberattacks every day to experiencing up to 300 million cyberattacks each day—a 10,000-fold increase. While cyberattacks are more specifically targeted against government computers, individuals can also be targeted.

Additionally, power outages or downed cell phone towers during business hours could cause billions of dollars of lost productivity and revenue. Loss of refrigeration could lead to spoiled inventory. Any critical facility without a generator could experience more severe consequences, such as loss of physical or digital security, and loss of health-related or other machine-related functionality. About a month ago, a two-hour power blackout affected Salt Lake City, West Valley City, and Magna. Fortunately, the power outage occurred around 11:00 PM, which meant its effects were minimal and easily contained. The duration of electric outages in Utah from 2008 to 2013 averaged 39.2 hours per year and affected 181,753 people. Most power outages are small and easily manageable, but it is important to be prepared in the case of lengthier outages.

To safeguard against potential loss from any type of disaster Utah could face in the coming years, it is essential to our economic vitality to have measures in place. Utah has statewide plans to mitigate disasters, but it is equally important for individuals and businesses to create their own plans to minimize the effects of exogenous shocks on our economic system.