Like a timid swimmer watching for drop-offs on the pool bottom, Utah is cautiously inching its way through the recession.
And experts predict it will be mid-2010 before a modest upturn indicates happier economic times for the Beehive State.
Utah's recession will continue for another nine to 12 months before improving a bit in the second half of 2010, Jeff Thredgold, economic consultant for Zions Bank, predicted in its summer edition of "Insight," released Monday.
"I think we're pretty close to the bottom," Thredgold told the Deseret News. But tougher lending standards, the fact that mortgage credit is harder to get, a loss of confidence by both consumers and financial markets and major loss of jobs all argue against declaring the recession over this year, he added.
He said the recession shows those who say Utah isn't subject to outside economic forces are wrong. The state is about average in terms of being affected by recession. But positive signs of stabilization nationally also portend that, just as the national economy pulled Utah down, it "will pull us up." He is among the experts predicting the U.S. economy will experience modest growth by the end of this year. This recession, however, travels uncharted ground, experts say.
"This one is very different than others, and I think everyone is trying to figure out what will be the driver out of this recession," said Austin Sargent, an economist with the Utah Department of Workforce Services. "Everyone is holding back. Let's see what happens."
He said consumers are putting off buying things, bankers aren't loaning money if there's a chance they won't be repaid, and potential buyers want to know that housing prices or interest rates won't drop before they commit. Everyone's waiting.
"I think we're maybe bumping along the bottom," he added, which means the only way to go is up.
As for construction and real estate, Jim Wood, director of the Bureau of Economic and Business Research at the University of Utah, predicts the rest of the year and 2010 will "probably be a bit of a struggle."20 comments on this story
Housing contractions last about five years, typically. We're into the fourth, but this one brought more foreclosures than in the past. And the job market is the worst it has been, he said. To that can be added a global credit crisis, which hasn't been seen since the 1930s.
And while we're "closer to the bottom than we were a month ago" for homebuilding, Wood said, "there's no sign we've reached the bottom."
On the other hand, the more aggressive stimulus could help. That might be countered, though, by increasing interest rates, new home appraisal requirements that Wood says have become a "nightmare" and tighter lending guidelines.
"Those are pretty strong headwinds," to quick recovery, he said.