Utah's economy strengthened in the third quarter of 1988 and that improving growth trend should continue through the holiday season and into 1989, according to First Security Corp.'s quarterly economic newsletter, Insights.
Dr. Kelly K. Matthews, the corporation's chief economist who writes and edits Insights, said the state's index of leading economic indicators in September increased an inflation-adjusted 4.5 percent, which points to further economic expansion in the months ahead.The newsletter said job growth in Utah accelerated in the third quarter and by October non-agricultural employment reached 668,400, an increase of 20,400 or 3.1 percent, the highest growth in more than three years.
"Furthermore, October's 4.8 percent unemployment rate was generally unchanged from the previous three months, despite renewed growth in the labor force," Matthews said in the newsletter.
Total personal income in Utah in 1988 has strengthened impressively, increased an estimated 5.9 percent, compared to the 4.6 percent gain in 1987. The 1988 forecast for total personal income is $20.2 billion, an increase of $1,127 million over 1987.
Matthews said the construction industry seems to be stabilizing, which is a good sign when compared to the situation in recent months.
Retail sales in the fourth quarter in Utah are expected to make substantial gains over last year. Increases in employment and income, along with the $80 million tax rebate and a potential $44 million thrift settlement payment, should contribute to the expected growth, Matthews said.
Net sales tax collections in the second quarter increased 8.1 percent, compared to a 1.8 percent increase in the first quarter of 1988.
Focusing on the national economy, Matthews said the underlying growth momentum should continue despite a "late summer sputtering in investment and net exports, which are the primary engines of growth."
"Adjusted for the drought-induced distortions," the newsletter said, "the economy appears steady on a 23/4-3 percent growth track. The October employment data painted a uniformly strong picture of the economy going into the fourth quarter."
The newsletter said the rate of inflation appears stuck at 4.5 to 5 percent, at least through early 1989. "Against a background of soaring debt in all segments of the economy, a nearly full capacity utilization of both human and capital resources, rising food costs and higher wage rates have all contributed to the price concern," Matthews said.
"An apparently firm anti-inflationary commitment by the Federal Reserve, resulting in higher short-term interest rates and substantially reduced monetary growth has, however, helped contain the pace of price increases below 5 percent," the newsletter said.