Utah's economy strong in first half

Utah's economy in the first half of 2006 was "possibly the strongest economy we've ever had," a Wells Fargo economist said Wednesday.

And, while Wells predicts some modest slowing during the latter part of the year, 2006 could still outpace 2005, according to Kelly K. Matthews, executive vice president and economist for Wells Fargo, which released its midyear report Wednesday.

"Just possibly, it's the strongest economy we've had, that I'm aware of," Matthews said. "While we are clearly going to have some slowing, the extent of that slowdown, at least for the second half of this year, is going to be very moderate. That being the case, it's possible that 2006, when we're all said and done, will be as good, if not better, than 2005 was."

Matthews used local data on population, employment, housing, retail sales and interest rates in his report — which seem to be fitting together rather nicely at the moment.

Using numbers from the Utah Population Estimates Committee, Matthews projects that Utah's population growth will reach 79,000 this year, which is about the same as last year and well ahead of the 1999-2004 period, when population gains averaged 54,600.

Those people will be looking for places to live, work and spend their money — which Utah should be able to accommodate, Matthews said.

"If we combine the number of people we have and the growth in jobs and how much housing is being constructed and how much money is being spent, we don't have any excesses or major problem areas appearing," Matthews said. "I've gone back and looked historically, and if we have the amount of jobs being created and the amount of people, we can absorb the amount of homes being built."

Single-family home building permits by year's end, projected to total 20,330, are expected to run about level to 2005's, while current mortgage rates of 6.8 percent are expected to end the year a bit higher than last year's 6.1 percent year-end figure, according to the Wells report.

Meanwhile, home price appreciation soared to 38.4 percent in St. George for the first quarter and was estimated between 15 percent and 20 percent statewide, Matthews reported. Though the St. George rates are not sustainable over the long term, Matthews said, "at least through the second half of this year, Utah can continue to pretty much maintain the same extraordinarily strong pace without getting into any major stresses and strains."