Utah inflation outpaces rest of U.S.

Economists offer their views on when situation might improve

We're paying less at the pump, but more at the grocery store, and watching our 401(k)s nosedive.

When will things get better? Several economists on Wednesday offered perspective, beginning with a look at inflation.

The overall cost of living along the Wasatch Front fell last month by 0.1 percent, thanks largely to falling gasoline prices that brought a 6.5 percent reduction in transportation costs, according to the Wells Fargo Consumer Price Index.

Still, local inflation is worse than the nation's, where the cost of living dropped 1 percent in October (non-seasonally adjusted numbers). In the past eight months, inflation is up 3.7 percent locally, but 2.3 percent nationally.

Local price drops were balanced by increases. Apartment dwellers saw a 1.4 percent rise in rents in October. Restaurant prices grew 2.4 percent, and clothing cost 3.9 percent more.

Grocery prices were up 1.7 percent in October, but they have jumped 9.8 percent in the past eight months. While food prices have been linked to gas prices (for trucking), they're not falling at the same pace.

Things are better here, though, for jobs. Unemployment nationally rose to 6.5 percent, but in Utah remained at 3.5 percent, despite the loss of 2,200 more construction jobs in October.

Meanwhile Wednesday, the Dow Jones industrial average closed at 7,997 following a 427-point drop. And Detroit's Big Three automakers' request for $25 billion in federal help appeared headed for defeat.

Which begs the question, will the economy overall get worse before it gets better?

ClearView Economics President Ken Mayland, who offered a 2009 economic forecast in a Wednesday event hosted by Key Bank, said a turnaround will show itself in a combination of ways, from lower personal savings rates (showing there's less fear) to the TED Spread, which indicates the health of the credit market, falling below 1 percentage point (it's gone from an unprecedented 6 to about 2 in recent weeks).

But just when that will happen remains a guess.

• The volatile stock market is "experiencing what we consider to be a bubble of pessimism," said Sterling Jenson, Wells Capital Management regional managing director of client services. The good news is, corporations' balance sheets are strong. And this is a good time for the disciplined to invest, he said.

"Go back to the basics of investment discipline ... that may be the big difference between winners and losers over the next few years," said Bruce McCain, senior vice president and chief strategist for Key Private Bank.

• Housing has good and bad signs. Decline is mostly behind us, Mayland said, looking at historical trends. But a new problem comes in non-residential structures. Spending on buildings is at a high, but so are vacancies.

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