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No Comments [ Add Comment ]Bearish outlook for Utah
By JEFF DEMOSSOGDEN -- While Utah has managed to avoid some of the financial excess that has decimated local economies around the nation, experts say all signs point to tough times on the home front in 2009.
Economists in the state are unanimously bearish in their outlook for this year, citing rising job losses, a glut of unsold homes on the market and a persistent lack of available credit from wary lenders.
Employment data and other indicators in recent months show that Utah has joined the rest of the nation in recession, said Jeff Thredgold, president of Thredgold Economic Associates in Clearfield and economic consultant to Zions Bank.
"We're clearly there, as are about 40 other states in the country right now, and it's totally impacted by what's going on at the national level," Thredgold said.
"To anybody who thinks the Utah economy is an island by itself, or is insulated from the outside, the last year makes it pretty clear that's not true."
He expects the current recession to last until at least the fourth quarter of this year, "and even when we get to recovery, it's not going to be very good.
"We'll still have a housing overhang, we'll still have lender anxiety, and confidence levels will probably not be where we'd like them to be. Some are saying this economy won't recover until the end of 2010."
Utah led the nation in employment growth in 2006 and 2007, but the state lost approximately 11,500 jobs from November 2007 through November 2008, according to the most recent tally from the Utah Department of Workforce Services.
From October to November alone, the statewide job-loss rate accelerated from 0.4 percent to 0.9 percent, a difference of more than 6,000 jobs.
Mark Knold, chief economist for DWS, said the current drop in employment numbers is the steepest since the dot-com recession in 2001.
"The economy is continuing to lose jobs, and the pace of those losses is picking up," Knold said.
He said Utah stands to lose 19,000 jobs or more this year, which would be the state's sharpest downturn in employment since 1954.
A weak housing market remains as the backdrop to a dreary overall economic picture.
Utah home prices didn't rise as dramatically as in markets such Las Vegas and Phoenix, "where housing is now a disaster," Thredgold said, "so we didn't need to correct quite as much as some of these other markets."
Still, due to overbuilding in residential real estate, "we were hit surprisingly hard in 2008," he said.
"In housing, we did get carried away, and we've paid the price."
He said the current recession was predictable in historical terms, but will probably last longer than any since the Great Depression.
"We'll do this again in 10 years, unfortunately. We just got really carried away this time, so the cleanup is really painful."
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