Utah jobless rate at 5% — and rising

Utah's unemployment rate now exceeds 5 percent and continues to rise. Meanwhile, the state's job loss — a contraction of 2.1 percent — over the past year rivals anything seen here unrelated to war.

Utah's seasonally adjusted unemployment rate reached 5.1 percent in February — a 1.8 percentage point increase over February 2008, according to numbers released Tuesday by the U.S. Bureau of Labor Statistics and the Utah Department of Workforce Services. A full percentage point of that increase occurred in the last two months. The national rate was 8.1 percent in February.

About 26,000 jobs have been removed from the Utah economy in the past year, lowering total wage and salary employment to 1.2 million. While the 5.1 percent unemployment level is not a record, the job loss over a single year unrelated to war is a record, says Mark Knold, the department's chief economist.

And the pain hasn't yet reached its peak, he adds, predicting the economy is "not finished squeezing out the jobs that may have become unnecessary."

Still, Knold says a couple of indicators give him hope that the national economy has nearly bottomed out, including the fact the stock market sank to 6,500 and seems to be coming back. And home-sales activity nationwide has picked up a little, although he cautions it's "still very early to say. Is it sustainable or just little blips on the radar screen?"

While he believes these may be valid indicators, Knold also warns that Utah has been about a year behind the national flow in terms of housing news. So if the bottom of the U.S. housing market has been reached, Utah may not start to bounce back until this time next year.

Economists are unsure, as well, about whether the recovery will be V-shaped — a steep decline followed by hitting bottom and immediate climbing out — or U-shaped — slower stabilization near the bottom and a more gradual improvement.

The unemployment figure measures those actively seeking jobs and doesn't take into consideration the under-employed or people who have simply given up their searching, perhaps temporarily. Utah unemployment reached its post-World War II peak of 9.7 percent in 1983 because of the annual influx of baby boomers into the labor force.

Knold predicts unemployment in Utah will approach 7 percent, with strong numeric job losses, through at least June or July. The most optimistic prediction, he says, is that the bottom will be found in mid-summer, although he thinks autumn is more likely. And when the economy hits bottom, unemployment numbers can still go higher for a while, he says.

Knold has also revised upward an earlier job-loss prediction. He had said that in 2009 Utah might lose as many as 30,000 jobs; he now thinks 40,000 or even 50,000 is more likely. But by mid-summer, he says, there's reason to hope "the worst will be behind us."

E-mail: lois@desnews.com