Top stories of 2008, #5: The Economy

The slumping economy topped headlines in 2008, and as it became clear the nation had slipped into a recession, so too did Utah.

In March, President Bush said, "I don't think we're headed to a recession, but no question we're in a slowdown."

But The National Bureau of Economic Research said we were in a recession at the time.

As the economy continued to sink, Utahns, like many businesses, began to cut back. There were at least 14,000 layoffs in the housing and construction sectors in Utah this year alone, and a $106 million West Jordan plant that opened its doors three years ago closed two days before Christmas.

As some lost jobs, others lost big on Wall Street. After Labor Day, the federal government seized control of mortgage companies Freddie Mac and Fannie Mae, who sold bad loans.

Mortgage analyst Al Bingham said, "We had all these investors buying these loans on the backside that were packaged to make them look like they were great investment opportunities, when in actuality there was so much layering of risk there."

Bingham said a lot of speculation on the housing market also led to the problem. "A lot of loan officers, a lot of builders, a lot of real estate agents, a lot of buyers were just doing whatever they could because they saw the run-up in prices."

Stock analysts didn't know how to react. Some like CNBC's Jim Cramer said everyone should take their money out of the stock market if they needed it within five years.

But local analysts like Ashworth & Empey Financial President Todd McChesney said that was a bad idea. "Once you move out, you've forever lost any gain that that market is going to have," he siad

The Wall Street Journal says the Dow Jones Industrial may have its worst return in 77 years.

Then, the economic rescue packages came out: $700 billion for banks, $13 billion for automakers. The Federal Reserve cut interest rates to between zero and .25 percent to encourage banks to give more loans, but Bingham says the loans aren't any easier to get.

Salt Lake Chamber Chief Operating Officer Natalie Gochnour said, "We started the year as one of the strongest performing economies in the country. By about springtime, the picture started to change quite dramatically; and by mid-summer, we were clearly on track for a major slowdown."

Now at a full stop, it seems even children now know families are facing tough times. "We used to get spoiled, but now my mom says we can't go out to dinner," Dylan Mueller said.

With consumer spending down, county and state budgets, in turn, took a hit. Gov. Jon Huntsman said, "We're also up against pretty unprecedented times."

So unprecedented, it seems, the governor announced across the board budget cuts for all state agencies. So far, the plan is to cut this year's state budget by another 7.5 percent; state agencies will face another 15 percent in cuts in the next fiscal year.

"We have a business community that's doing all the right things, a state legislature that's doing all the right things, and my guess is come late 2009 to early 2010, we'll be back in business," Gochnour said.

There is some good news on the economic front that came late in the year: eBay, Oracle, Duncan Aviation and Sephora, all name-brand companies, are adding jobs here and adding to Utah's economy.

Also, as the nation's unemployment rate hovers around 6.7 percent, Utah's comes in at a comparative low of 3.7 percent. "We have an unemployment rate in this that's far below the national average," Gochnour said. "People are still at work in our state."

But some people are looking for a second job just to get by. Joseph Nesbitt said, "I'm barely making it with rent [and] bills. My phone is getting turned off today."

Gochnour made the analogy that when the nation's economy was humming at around 55 miles per hour earlier this year, Utah was moving along at 85. She said by October it was as if we parked the car and put it in reverse.

E-mail: pnelson@ksl.com
E-mail: lprichard@ksl.com

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