WEST POINT -- Jobs, consumer confidence and gas prices will have the greatest impact on the economic future, says Dr. Kelly Matthews, emeritus economist for Wells Fargo.
Matthews discussed economic trends and expectations for the coming year with a group of city officials and business leaders from Davis and Weber counties on Wednesday.
Matthews said the gross domestic product grew at an annual rate of 3.0 percent in 2011, and that number is expected to drop to about 2.3 percent in 2012, according to a Wells Fargo U.S. Economic Forecast. The biggest impact on those numbers, said Matthews, is jobs, consumer confidence and gas prices.
Last year showed positive growth in jobs, Matthews said. Utah's unemployment rate was at 7.3 percent in February 2011. The unemployment rate for February 2012 was 5.7 percent.
Matthews reminded those in attendance that this was positive news, but cautioned that the drop may have had more to do with people dropping out of the labor force than people actively finding new jobs.
In the last three months, 250,000 jobs were added monthly to the job market. That is up from the average of 133,000 jobs added per month in the last two years. This means more jobs are being created, said Matthews, who expected the unemployment rate to increase slightly as people have more confidence in finding a job and start looking again.
Matthews also discussed how consumer confidence started out stronger during the fourth quarter of 2011. This year retailers see consumers borrowing, also a positive sign of consumer confidence.
Matthews reminded everyone that we are in a global economy. Although the United States' demand for crude oil decreased, he said, it has increased in other countries, keeping the supply and demand for crude oil about the same.
He predicted that gasoline prices would increase to more than $4 a gallon in the next six months, due to investors hedging and speculating in the crude oil market. The data for March is not available yet to see how the increased gasoline prices affected current consumer spending, he said.
With gasoline prices increasing, Matthews said he believes consumer confidence will decrease and the economy will not be able to sustain the 250,000 new job growth seen during the last few months.
He believes that the Wells Fargo forecast of 150,000 new jobs is accurate.
To view the economic forecast, visit www.wellsfargo.com/downloads/pdf/com/research/common/economic-forecast.pdf.