Wells Fargo predicts small slump in Utah economy

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Jed Boal and Tom Callan reporting Listen to most economic forecasts and they all sound pretty grim. We hear a recession is coming, if it's not already here.

Economists at Wells Fargo today released their forecast of the economy for the remainder of the year. They believe the economy is slowing, not recessing, and the numbers suggest a recovery later in the year.

Good economic news has been hard to find nationwide. Gas prices set records, the dollar is weak abroad, home values are down, and people worry about their wallets. Current economic conditions are weak, but Wells Fargo economists dubbed it a "fearsession" and think we'll start to see recovery in the second half of this year.

Wells Fargo predicts small slump in Utah economy

"This fear level we've gone through, this credit crisis, has raised everybody's concern. But when you look at the economic statistics, we are yet to go into recession-type numbers," explained Sterling K. Jenson, of Wells Capital Management.

Job growth has slowed--a drop of more than 1 percent the second half of last year--and a forecast of even greater dips is predicted for the remainder of the year. "We will drop down to 1.3 percent," said Kelly Matthews, Wells Fargo economist.

But in 2001, 2002 and 2003, Utah saw no job growth. So, growth is slower than we're used to but not as bad as those years. "No, I would not describe that as a recession. We are still seeing very minimal change in people losing their jobs," Matthews said.

But we're still not creating as many, in part because residential construction is down. The economists expect housing will start to pick up in the second half of the year because of an anticipated 3 percent population growth. They also expect housing prices to fall more than 10 percent and stabilize the market.

"There's every reason to believe we can get through it. By a year from now, we'll be feeling a whole lot better about the situation," Matthews said.

The economists still characterize the Utah economy as tops in the nation. They also expect the economic stimulus package that will put money back in our pockets to have an impact on recovery.

E-mail: jboal@ksl.com
E-mail: tcallan@ksl.com