U.S. already in recession, a Utah economist says

The United States has been in a recession since December, although Utah's economy has not yet reached that point, according to Jeff Thredgold, an economist and consultant for Zions Bank.

Thredgold spoke Wednesday to 120 investors at an event for the Chartered Financial Analyst Society of Salt Lake. He recalled the 1987 recession, in which the stock market crashed, and the 1997 recession, which began in Asia and spread to the rest of the world.

The U.S. economy, as it has in the past, will also recover from the recession that began in 2007, he said.

"It may run from December to July or August," he said. "But more important, we do this every 10 years."

Utah's economy is suffering from too many houses for sale at high prices, Thredgold said. The state has as many as 2,600 homes for sale for $500,000 or more.

"Homebuilders are much more willing to cut prices to clear inventory than existing homeowners are," Thredgold said.

For houses $300,000 and below, the market is still good, he said, but for homes priced $300,000-$600,000, the situation is "kind of marginal" because would-be homeowners now face greater difficulties in getting large loans, Thredgold said.

Robert Mellman, an economist and vice president of J.P. Morgan Chase and Co., told the group Wednesday that the current recession is "mild," rather than a "hard recession." Mild recessions occurred in 1991 and 2001, and a hard recession occurred in the early 1980s.

For Mellman, the most important measure of a recession is the unemployment rate. The national unemployment rate was 4.8 percent in February, according to the U.S. Bureau of Labor Statistics. Utah's unemployment rate in February was 3 percent, the Utah Department of Workforce Services reported Tuesday.

From 1980-82, the national unemployment rate was above 10 percent and did not decrease for about 2 1/2 years. In the more recent, mild recessions, unemployment has risen to about 7 percent but sustained those rates only about a year or so, Mellman said.

Unemployment has been in housing construction and the mortgage industry, as well as in the auto industry, because getting credit has been tough and fuel prices are high, he said.

"It looks like it's spilling to other industries," Mellman said. "What is happening is firms are deciding they don't want to hire anyone. When people do lose jobs, it's hard to find another one."

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E-mail: lhancock@desnews.com