Strong Utah economy in '06?

Utah's economy should continue to grow in 2006, although not with 2005's fervor, according to a report released this week.

But the recent spate of warm weather also has at least one economist wondering whether one of early 2006's economic question marks — the home heating bills expected to zing consumers in January — will be gentler than previously feared.

In a report prepared for Salt Lake-based real estate firm Commerce CRG by James Wood, director of the University of Utah's Bureau of Economic and Business Research, the forecast for Utah's economy in 2006 calls for slight slowing in most indicators and decline in three major categories. However, the report said, "While 2006 may not be quite as strong as 2005, it nevertheless will be a very solid year."

The consensus forecast — developed during the November meeting of the Utah revenue assumption committee — included economists from the private and public sectors, Wood said. Based on the information then available, Wood reported that:

• Non-agricultural employment is expected to increase slightly in 2006 — at a growth rate of 3.3 percent, compared to 3.5 percent in 2005.

• Average annual pay is expected to grow by 3.4 percent, compared to 3.8 percent in 2005.

• New migration is expected to total about 37,000 people in 2006, compared to 40,600 in 2005.

• Taxable retail sales are expected to grow 5.1 percent in 2006, compared to 8 percent in 2005.

"Basically, the judgment — and this is not a model that produces these numbers, it's a consensus forecast — is that for most indicators, we'll still see good solid growth. But not quite as heady as in 2005," Wood said.

But, he added, the consensus formed in November might be different from one arrived at today.

"I think since we met last, things have probably improved a little bit on the horizon," Wood said. "The energy prices have really come down. Prices (at the pump) have really come down. And then everyone was worried about the heating bills, and we've got 55 degree temperatures. So the energy side has improved, and that will help a bit."

John Owens, a land and retail agent at Commerce CRG, said two factors had special significance for commercial real estate in Utah.

"Two numbers, the new migration and jobs," Owens said. "Those are significant numbers in our minds, because for a number of years, after 1991, 1992, 1993, we had some decent migration but not much since then. But if you've got people coming into the state, and the jobs for them, it's a tremendous influence on real estate."

Though the 2006 forecast for new migration fails to meet the 40,600 new migrants in 2005, the report stated it nearly doubles the new migration of 18,400 in 2004.

"We've had record-breaking residential building, and to have people moving in tells you that that will keep that market stable," Owens said. "I think it bodes very well for continued, sustained strength in the real estate market. Our commercial real estate market is, and has been, quite strong for some time. But when you see these numbers, they're very encouraging."

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E-mail: jnii@desnews.com