"Utah is on the verge of a great economic expansion and I am looking forward to KeyCorp. being a part of it," that company's top official said Wednesday.
An expansion into the West by KeyCorp., including the recent purchase of Commercial Security Bank in Utah, has produced better than expected results, said Victor J. Riley Jr., president and chief executive officer of KeyCorp.Riley and Peter A. Farrell, executive vice president of Key Trust Co. and KeyCorp.'s chief economist, were in Salt Lake City to speak on the national and international economy during an invitation-only breakfast and to get better acquainted with business leaders.
Relating concerns of foreigners as noted in his world travels,
Riley said people are concerned about who will be the next American president. "The United States has been the world policeman and the economic engine that drives the free world, so they are concerned about the next president," he said.
Riley said trade barriers concern foreign businessmen and noted that the last time (1930) high trade barriers were imposed by the United States the Great Depression quickly deepened. He said Americans need to realize how small the world has become.
In the United States, many people are concerned about high taxes. "I strongly feel that a quick way to halt six years of economic growth in this country is to increase taxes," Riley said.
He noted that drugs is a big problem for businesses, not only among employees but also with some executives, and the problem costs millions of dollars daily. The new president should have a strong stand against drugs, Riley said. In Malaysia, Riley said, drug pushers are executed within 48 hours and the country's drug problem is under control without spending billions of dollars.
One of the biggest problems facing the United States is a lack of trained employees, Riley said. Although there are people without jobs, their lack of training makes them unemployable.
That means American businesses should rely more heavily on senior citizens and, rather than give them Social Security at 62, increase the Social Security age to 65 and "keep them working instead of having them on the sidelines," Riley said.
Speaking about the national economy, Farrell said in the fourth quarter of 1987 the economy grew at 4.8 percent, but most of it was the buildup of inventory of unsold goods that could be a problem in the future.
He said that by allowing interest rates to come down, the Federal Reserve Board will prevent a reoccurrence of a 1981 recession when the prime interest rate was 21 percent. There were several factors existing in 1981 that caused the recession that don't exist now.
Farrell said it would be unusual for the Federal Reserve Board to raise the prime interest rate to a high level, and even though the gross national product at a 2 percent increase is lower than many people would like it, "it isn't bad when you consider the alternatives."
Speaking about the stock market, Farrell said that even though many investors lost money in last October's dramatic drop in prices, there are many who are waiting to get back into the market at better prices. So far in 1988 the stock market has done pretty well and the overall outlook for the economy is "not too bad.", Farrell said.
Also speaking in the Red Lion meeting was Jeff K. Thredgold, Key Bank of Utah's vice president and staff economist, who said although the number of jobs created in Utah in 1987 declined from previous years, Utah's job creation is higher than many surrounding states.
Even though Utah's unemployment rate has been lower than surrounding states, it has gone down because of the declining labor forces, which is the result of four consecutive years of an out-migration of workers, Thredgold said. The out-migration causes problems for the economy because of fewer people buying things and a lower demand for housing, which hurts the construction industry.