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January 23, 2024 MWCRE Market Pulse

Posted by Jerad Giottonini on February 6, 2024
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        Red Sea Conflict Threatens Global Trade,
Southern California Ports See Increasing Activity   

  • Houthi rebels fired a missile at the U.S.-owned ship Gibraltar Eagle near Yemen in the Gulf of Aden, following a prior anti-ship missile attack on a U.S. destroyer in the Red Sea. The Houthis claimed responsibility for the attack, escalating tensions in the Red Sea affecting global shipping and the vital energy and cargo corridor linking Asia, the Middle East, and Europe.
  • Approximately 30% of worldwide container traffic and over 1 million barrels of crude oil per day typically pass through the Suez Canal, as reported by a global freight booking platform.
  • ​Jason Miller, a professor of supply-chain management at MSU, did some back-of-the-napkin calculations, stating: “The increases in container shipping prices brought on by the Red Sea crisis aren’t poised to significantly affect inflation felt by American consumers. Therefore, be cautious of any headlines that suggest otherwise.”

Southern California Ports Reclaim Market Share 

  • Southern California ports, specifically, Los Angeles and Long Beach, are experiencing a resurgence in U.S. import activity. The improved performance is attributed to better labor relations with dockworkers, a result of resolved contract talks last year, making Southern California ports more attractive to importers.
  • In September, October, and November, the ports in Southern California registered year-over-year growth in containerized imports ranging from 17% to 31%, as per port data. Meanwhile, imports declined at East Coast gateways like Georgia’s Port of Savannah and the Port of New York and New Jersey during the same period.
  • Disturbances at the Panama Canal and the Suez Canal, both serving East Coast and Gulf Coast ports, have prompted importers to redirect their goods through California to circumvent extended transit times and increased costs.
  • Importers favor the West Coast as the primary entry point for toys, clothes, furniture, and televisions from Asian factories due to its efficient ocean route from factory to port. The West Coast’s extensive network of warehouses, trucks, and rail operations facilitates the widespread distribution of goods across the country.
  • The existing agreement between East and Gulf Coast ports and the International Longshoremen’s Association expires in September of 2024. Inside Logistics reports that the ILA has instructed its members to ready themselves for a 2024 Strike. affirming their commitment to the set date and ruling out any extension of the current contract beyond that.
By James Ice
Utah Ranks Top for Economy but
Woman’s Equality Has Long Way to Go

  • U.S. News & World Report 2023 measured 71 metrics in eight categories, and Utah came out on top. However, according to a white paper produced by Utah State University has been named the worst state in the nation for women’s equality for the eighth consecutive year.
  • ​The report covers five realms: political and civic engagement, education, health and well-being, safety and security, and the workplace. Challenges in data tracking remain, including monitoring women’s progress in business and, especially, in corporate boards and executive positions.
  • Utah shows progress in female leadership in nonprofit organizations, with 57% of CEOs being women.
  • Violence and harassment are areas of concern, ranking Utah as the ninth worst for rape and sexual assault, with low reporting rates.
  • Access to high-quality, affordable childcare is a significant issue, with Utah ranking poorly in this aspect.
  • Childcare providers in Utah are among the lowest paid, leading to a market failure that requires government intervention.
  • Other areas of concern include challenges such as disparities in physical activity, poverty in single-mother households, and the diversion of energy away from education and leadership development persist.
By Saundra Fife
Tax Pact: Bipartisan Boost for Growth & Families 
 
  • Senior lawmakers announced a $78 billion tax agreement to support working families, boost growth, and strengthen communities. It addresses priorities for both parties, including expanding the child tax credit and providing tax breaks for businesses.
  • The plan enhances the child tax credit by increasing the refundable portion, eliminating penalties for larger families, allowing income lookback, adjusting for inflation, and extending the credit for three years. It aims to lift 400,000 children above the poverty line and make 3 million more children less poor. 
  • The agreement promotes innovation and competitiveness, particularly for businesses, by allowing them to immediately deduct the cost of certain research and development investments through 100% bonus depreciation. This provision aims to stimulate economic growth and encourage businesses to invest in R&D.
  • The plan offers disaster tax relief, increases low-income housing supply, cuts red tape for small businesses, and eliminates fraud and waste by ending the employee retention tax credit program.
  • While the deal needs legislative drafting and votes in the House and Senate, top tax writers are optimistic about a quick passage before this year’s tax filings.
By Dan Bradford
Utah, Voted Best State for Entrepreneurs

  • According to WalletHub, Utah is ranked as the best state for new business success.
  • The reasons, Utah excels in business-loan financing, with a 2.5% year-over-year employment growth, the largest in the country, beneficial and affordable employee benefits and companies incorporate new technology into business models to improve efficiency.
  • This top ranking coincides with the state’s top economy ranking in 2023 by the U.S. News & World Report. Washington was ranked 2nd and Idaho was ranked 3rd.
  • About one-fifth of startups don’t survive past year one, and nearly half never reach their fifth anniversary, according to the U.S. Bureau of Labor Statistics. Economic conditions, including high inflation and labor shortages, make staying afloat even more challenging.
  • According to Neighborly Financing, 2024 has a promising outlook for starting a business, fueled by remote work growth and demand for side gigs and home-based hustles.
By Jerad Giottonini
2024 Utah Economic Report 

  • The Kem C. Gardner Policy institute presented the 36th Economic Report to Utah Governor Spencer Cox at the 2024 Economic Outlook & Public Policy Summit on January 17th, which was hosted by the Salt Lake Chamber.
  • The report highlighted the continued resilience of the U.S. economy in 2023, albeit with projected slower growth in 2024. Despite challenges in the financial sector in 2023 and prevalent expectations of a recession, the economy grew through all four quarters thanks to the on-going strength of the labor market (despite softening in some sectors) and continued durability of the U.S. consumer.
  • Strong economic performance in Utah continued in 2023, although there was some attenuating towards the end of 2023. Labor force participation was at its highest since 2010 and the highest in the U.S. Utah experienced job growth in tourism, public construction, oil and gas extraction and health care, while the interest-rate sensitive industries of construction, banking, finance and tech struggled.
  • Utah’s housing affordability is presenting a significant challenge to economic growth, as retaining and attracting workers at current wage levels is increasingly challenging for employers given the mismatch between wages and home prices. Utah currently has one of the strongest middle classes in the country, but if housing affordability isn’t addressed, housing costs are likely to provide strong headwinds to future economic growth.
  • The Utah Economic Council projects continued economic growth in 2024, although decelerating from 2023 with numerous uncertainties ahead: inflation, interest rates, labor markets, household wealth, federal debt and deficit, geopolitical events, consumer sentiment and an election cycle, to name a few.
By Rich Lachowsky

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