EU financial stability may affect Utah

SALT LAKE CITY — As long as the European Union can get its financial act together, Utahns can expect the local economy to slowly gain momentum this year and get stronger through 2011, one of Utah's leading economists said Friday.

"It's about time," said Jeff Thredgold, economic consultant to Zions Bank, in explaining his quarterly assessment of economic indicators, "Insight — Economic News of Utah and the Nation."

Although the worst recession since Herbert Hoover was U.S. president — more than 70,000 Utahns lost their jobs — will continue its ripple effect, growth is displacing contraction in Utah, Thredgold said, and the economy in general should recover and even be going strong again in 2012.

Recent history will have a hand in the course of the immediate future for some time to come, Thredgold said. In particular, the deficit spending and the budgetary cutbacks being imposed in Great Britain and elsewhere in the EU to get it and other deep-deficit countries in Europe back on track will have residual effects on Utah, he added.

Given the global speed-of-light nature of the modern economy, the financial deficits of the scale now being addressed in Europe might seem far away from here but can act like millstones even on individual states now managing to come up for air.

"The longest American recession in more than 70 years, combined with the first global recession since just after World War II, ultimately pulled all 50 states down with it," Thredgold said.

The lack of immunity from the proclivities of the global economy has been pronounced in the downside, but the same connection will apply to the upside, he added. "A return of U.S. and global economic growth during 2009's final half provided the opportunity for most states to slow their precipitous declines, while also providing the impetus for a return to eventual growth."

A number of Utah's neighbor states are also in transition toward renewed economic growth, so that same pattern appears to apply to the Intermountain region, he said.

Lurking in the still-murky side of things is unemployment. As Thredgold and other economists continually point out, no recovery is sustainable when job growth is next to nil. If people don't have jobs, they don't buy new things, and often they lose the things they have — homes, for example. Many economists are predicting a second wave of foreclosures and say the tax credit of $8,000 for new homebuyers that ended in April didn't give the market the boost needed to completely right itself.