Recovering Utah economy, moderate growth predicted
Financial analysts expect Utah's current economic slowdown to recover and experience modest growth next year.
Although the state's unemployment continues to hover near the 5 percent mark, the real savings rate registers at a higher level than at many times in last 30 years, indicates the fall edition of Insight - Economic News of Utah.
The quarterly publication features updates on current as well as projected economic and financial developments for Utah, the Intermountain region and the United States.
"Like its neighbors, Utah has experienced a painful recession over the past year," noted Jeff Thredgold, economic consultant to Zions Bank and author of Insight.
"However, we do expect the state's economy to return to slightly positive job growth next year as the U.S. and global economies strengthen. The state's longer term economic potential remains high," explained Thredgold.
Utah's statewide economic and interest rate highlights include:
After climbing quickly from a 3.5 percent average between 1995 and 2000, the state's unemployment rate averaged 4.4 percent last year.
The jobless rate climbed to 5.9 percent in March before declining to the 4.9 percent average of the last three months.
Statewide employment has decreased 1.9 percent for roughly 20,000 jobs during the last 12 months.
Utah's construction, manufacturing and trade sectors account for the majority of the decreasing employment opportunities.
In contrast, the state's economy added an average of 36,000 jobs annually between 1995 and 2000, posting a 7,000 increase in employment opportunities last year.
During the last 12 months, Utah's real estate resale sector has struggled due to a combination of U.S. and state recessions, the current period of net out-migration and the doubling of home prices during the 1990s, according to the consultant.
Dropping mortgage rates in Utah and across the nation represent one offsetting factor.
The mortgage rates currently register at the lowest level experienced by American consumers in 40 years.
The business climate in Utah has managed to remain competitive statewide, according to data compiled by state economic development officials and budget analysts.
In fact, Utah's "cost of doing business" is presently estimated at 97 percent of the United States average, continued the bank's economic consultant.
In addition, the estimated cost of living for consumers residing at locations throughout Utah continues to register below the national average.
In fact, the ACCRA cost of living index recently listed Cedar City at 90.6 percent of the national average, pointed out the financial consultant.
The ACCRA index ranked Logan and St. George at 93.7 percent of the national average, while economic analysts estimated the cost of living in Salt Lake City at 96 percent.
During the periods of extremely low interest rates, Carbon County residents, consumers and investors should focus on what counts, including the level of returns after inflation, recommended the financial consultant.
For example, Thredgold pointed out that an account or cash deposit paying 2 percent in 2002, versus roughly 1.5 percent inflation, is a positive real return of 0.5 percent, according to the bank's financial consultant.
The present real return is better than Utahns experienced in the past when savings accounts paid 5 percent interest, but inflation reaching a 6 percent, 7 percent, 8 percent or higher mark led to an actual decline in purchasing power of consumers.
Wage and salary increases during the last four years have averaged approximately 3.8 percent annually across the broad U.S. economy, including for employees in Utah.
The annual increases in income tend to pale versus typically larger raises witnessed nationwide in the past.
However, when compared to the average 2.2 percent rise in the consumer price index, the real wage increases represent the largest posted throughout the nation since the early 1970s, concluded the financial consultant.