Economist optimistic about Utah

Utah is seeing obvious economic troubles because of the national recession, but a couple of state economic officials believe Utah is weathering the storm better than most other states and is positioned to prosper when it passes.

Mark Knold, chief economist for the Utah Department of Workforce Services, and Jason Perry, executive director of the Governor's Office of Economic Development, were optimistic Tuesday in discussing Utah's economy with the House Workforce Services and Community and Economic Development Committee.

"I still am very much positive on the long-term aspects of Utah," Knold said. "I still wouldn't want to be anywhere else other than here basically, even in this downturn. But it is a strong one."

Knold said Utah's population growth eventually will boost demand for products and services and help pull the state out of the downturn.

"We're anticipating that we'll still have population growth going forward — maybe not as strong as the last few or the middle years of this decade — but the point is that at some point in 2011 or 2012, we're going to be back to that pent-up demand shooting out the other side of the strong economic growth and housing activity and so on," he said.

When the economy recovers, "the demographics of this state are such that when the economics are right that that (housing) inventory will be absorbed rather quickly and we'll be back to building homes again," he said.

Knold is predicting Utah's unemployment rate could top out at 7 percent.

A report this past week from economic consulting firm Moody's Economy.com said Utah will lose 31,016 — or 2.5 percent — of its jobs in 2009. In only 13 states is the projection the same or worse.

Utah's current 4.3 percent unemployment rate is testament to "just how tight our labor market was" and Utah's "powerful momentum" entering the downturn, Knold said.

"We're in the heart of the downturn right now," he said.

He expects job losses will stop by the second half of this year. The current recession differs from others in the past, in part because Utah will experience two consecutive years of job losses and in part because Congress is considering an economic-stimulus package, he said.

"This is going to be something that's going to slide across quite a few quarters of the calendar year," Knold said. "We'll look back on this one and see that this one will go down as the benchmark going forward."