Hammered
Serious economic weakness in Utah has continued in recent months, in line with similar, or even greater, economic pain among many of the state’s neighbors. Utah’s recession is expected to continue during the next 9-12 months before a modest upturn during 2010’s second half.

Many residents of the Beehive State had perhaps developed a mindset that the state’s economy was largely immune from what happens across the nation or around the globe. Such views were dashed during the past 18 months as Utah slipped into its most serious economic decline in decades.

Utah’s recessionary performance since early last year is matched by the majority of states, including every Western state but Alaska. Roughly 47 of 50 states have experienced anywhere from slight to severe declines in total employment during the most recent 12-month period.

Neighborly Pain
Utah’s unemployment rate has nearly doubled, averaging 5.2% in recent months versus the state’s 2.7% annual average during 2007. However, the 5.2% jobless rate still ranks among the six lowest rates in the nation, with only Iowa, Nebraska, North and South Dakota, and Wyoming recording lower rates in April 2009. The U.S. unemployment rate in May was 9.4%.

By comparison, New Mexico’s jobless rate in April was 5.8%, while Idaho’s unemployment rate was 7.0%. Colorado had a 7.4% jobless rate, with Arizona at 7.7% and Washington at 9.1%. Nevada’s jobless rate was a painful 10.6%, with California at 11.0% and Oregon at 12.0%. Utah’s jobless rate is expected to approach 6.2% during the next 6-12 months.

Gains and Losses
The Utah economy has lost roughly 40,000 net jobs during the past 12 months, a painful 3.2% decline. Nearly three of every four jobs lost during the past year have been in the construction and manufacturing sectors. Better news saw the natural resources sector add 1,700 jobs.

Service providing sectors lost nearly 13,000 jobs, with trade, transportation & utilities; leisure & hospitality; and professional & business services recording the greatest numerical declines. Government and education & health services added nearly 11,000 jobs collectively.

Lower Values
New home construction within Utah and among its neighbors remains extremely weak, with prices for existing homes continuing to decline. Foreclosed properties remain a drag on existing home values in all markets.

However, Utah home price declines appear relatively modest when viewed against much greater declines in Arizona, California, and Nevada, where prices in major cities within those states have fallen an average of 47% versus their highs in 2006 or 2007, according to the S&P/Case-Shiller 20-city index.

Winter Chill
A widely held view was that the winter sports industry was largely immune from economic weakness—that people would still ski despite recessionary periods. That view “bit the dust” during the past year, with a sharp decline in winter sports spending.

Denver-based Mountain Travel Research Program estimated that total lodging expenditures in 15 mountain destination communities in California, Colorado, Utah, and British Columbia fell 25 percent versus the prior year. Those resort communities with a greater share of local skiers, including many in Utah, did somewhat better.

Outside Mix
The economies of Utah and its neighbors have been damaged by national and global issues of recession, constrained financial flows, declining home values, and highly volatile stock prices. One
could also add to the mix high anxiety about massive levels of government spending, as well as low levels of consumer and corporate confidence.

However, the sharp rise in American stock prices of the past three months—by some measures the strongest three-month rally in 75 years—reflects an investor view that the worst is behind us. Numerous other signs of economic and financial stabilization are also emerging frequently.

Utah View
The state has been unable to escape the grip of the most severe economic and financial turbulence since the Great Depression. However, an end is in sight, with widely held expectations that the U.S. economy can move toward modest growth by the end of the year. A return to modest global growth by mid-2010 is also currently expected. Utah’s economy will take advantage of the expected stronger outside performance, with a likely return to positive growth in 2010, and enhanced economic growth in 2011.

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