Analyst says the economic forecast bleak

Utah and the rest of the nation are in for a bit more hardship before their economic fortunes begin to turn around, according to a national analyst.

Speaking to an audience of commercial real estate professionals on Friday at the Cottonwoods Corporate Center, Jim Costello, director of investment strategy for Boston-based Torto Wheaton Research, said that the outlook for 2009 indicates more pain on the employment front and continued adversity in the real estate sector.

"This year in particular, we think that the monthly job losses we've been experiencing, we're going to continue to experience," he said. By next year, however, both Utah and the rest of the country may begin to achieve some job growth, said Costello, whose firm is owned by commercial real estate company CB Richard Ellis, who invited Costello to speak on the state of the national and local economy.

Costello said that the technology and retail sectors would likely be the first to see growth as the economy stabilizes and starts to improve in 2010.

"In the long run, the sector I really like is technology because it's the one sector that is still an area where the U.S. has a competitive advantage worldwide," he told the Deseret News in an interview after his presentation. He noted that the United States would remain "weak" in that sector until consumer consumption grows and helps build psychological confidence in the national economy.

Costello said that the vacancy rates for commercial property across the country would likely increase to "all-time highs" in 2009, due mostly to overbuilding that has resulted in excess capacity in the current contracting economic climate.

"The demand for space is far out of line compared to what's there to service that sector," he said. Utah would probably follow that trend in the commercial and industrial real estate sectors, he noted.

While Utah and the nation are in the midst of a profound economic struggle, history has shown that the situation will improve, he said.

"It is going to come back; it moves in sort of a cyclic pattern," Costello said. "As the rest of the economy recovers, the property market recovers."

E-MAIL: jlee@desnews.com