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SALT LAKE CITY -- Local economists at Wells Fargo believe we have probably endured the bottom of the recession. But while they are optimistic about the economy, there are still areas of concern, especially when it comes to employment and consumer demand.
On the plus side, when the Dow Jones Industrial average hit 10,000 Wednesday, that stoked investor enthusiasm for better times. The Blue Chip index is up 58 percent from its lows.
But we took the pulse of the people on the street and found that few are ready to celebrate.
"One has to be sensible and make sure that you remain optimistic," Rick Olsen told us.
While economists acknowledge a psychological lift, the Dow has hit 10,000 50 times in the last decade, headed in both directions.
Wells Fargo economists say what's more important is that money is flowing again and the global economy is rebounding.
"Investors are moving from 'will we have an economic recovery?' to 'how strong will the economic recovery be? And, how long will it last?'" says Chris Neddo, investment strategist for Wells Fargo.
Neddo says the fourth quarter may answer those questions.
"We think that the next stage will be a positive one, that equities will continue their advance fueled by growth and several specific growth drivers," he says.
Among those drivers:
- They see the federal stimulus now showing up in economic growth.
- An end to the corporate purge--the massive lay-offs and cutbacks--is in sight.
- They also expect improving economic confidence.
- They believe the housing and auto markets have bottomed.
- A weakening dollar makes U.S. goods cheaper overseas.
- Mortgage rates remain low.
But for Utahns who took a serious hit during the last 18 months, it's hard to imagine better times.
Michele Cerutti was unemployed for six months before landing a new job. Each time she filled out an application, she was among hundreds who wanted the position.
"I don't know that I've seen a giant upsurge or things changing for the better all that much," says Cerutti. "I still know tons of people who are unemployed."
Others say they believe the turn-around is under way, even though they will continue to watch their budgets and save.
"I think we see a lot of underemployment, and hopefully that will be one area that's changing. But I remain optimistic," Ray Anderson says.
The economists are too.
"We see the ingredients in place, or recipe in place, that would allow for improvement down the road on the job front," Neddo says.
Still, the economists look for actual demand for goods and services to spur economic growth. Wells Fargo economist Kelly K. Matthews says there is no evidence of inflation related to demand.
"This crude oil jump is, in my opinion, directly related to the dollar weakness, not demand for gasoline," Matthews says.
Inflation is 1.4 percent below last year, the dollar has declined, gold is up 30 percent, and crude oil is rising.
In the future, especially as confidence is still shaky among U.S. shoppers, Neddo believes it's the global consumer that will become more important to our recovery, especially from countries with high demand but low debt.
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Story compiled with contributions from Jed Boal and Becky Bruce.
