Economists anticipate slow recovery

SALT LAKE CITY — The state and national economies are in recovery mode after one of the most severe recessions in decades. But don't expect an overnight improvement.

That was the opinion of two economists — Standard & Poor's chief economist David Wyss, and the demographic and economic analysis director Juliette Tennert Thursday morning at a gathering of some 300 government, nonprofit and business leaders.

The Wasatch Front Economic Forum and the Salt Lake Chamber brought the economists and Gov. Gary Herbert together to discuss the financial calamities in 2008 and 2009 and what may happen in 2010.

"Sometimes we think, why are things not better?" Herbert said. "Patience is something we're going to try to master, just a little bit."

Utahns' total personal incomes — which includes salaries, investment income and assistance such food stamps — dropped 1.3 percent between 2008 and 2009, from $87.4 billion to $86.3 billion, Tennert said. It's the first time since the Great Depression that they have dropped.

Nationally, total personal incomes dropped about 2.2 percent.

Total personal incomes are important because income is taxed. And income is used to buy goods and services, which are also taxed. Between the fiscal years of 2008 and 2010, state coffers will have lost $1 billion in tax revenue, Tennert said.

Historically sharp recoveries follow deep recessions.

In the recessions of 1991 and 2002, "Americans went out there and rescued the world economy pretty much single-handedly," Wyss said. "And we do it the good ol' American way: by living beyond our means."

The last recession, which many economists believe finished when the gross domestic product slightly grew in the third quarter of 2009, was deep but the recovery will be slow, Wyss said, because Americans have begun saving their incomes — saving is up 4 percent in the past year — and reducing debt — household debt has dropped over the past five quarters.

Thursday at Brigham Young University, economist R. Glenn Hubbard, dean of the Columbia University Graduate School of Business and a professor of finance and economics, said he believes GDP growth in 2010 will go up about 3.5 percent, which is better than it has been, but still lower than the traditional 6 percent growth following a recession.