Utah's third best economic year of the 1980s will be 1989, behind 1985 and 1988, says Thayne Robson, director of the University of Utah Bureau of Economic and Business Research.
He said 1988 was healthy because of events such as Kennecott and Geneva Steel getting back into production, which can't be repeated in 1989.Robson, speaking Thursday at a monthly Utah Department of Community and Economic Development update meeting in the State Capitol, said he expects the high-technology industry to improve next year, the service industry to continue its growth, exports to foreign countries to increase slightly and manufacturing to show a modest growth.
Only in the construction industry, where things have been in bad shape for several years, will there be little or no growth, Robson said - but at least it won't get any worse.
He also expects the state's recreation and tourism industry to grow. Because the ski resorts have received some snow, it's almost certain the ski industry will have a good year.
In 1988, Utah had a net growth of more than 16,000 jobs, but in 1989, the figure likely will be near 14,000, mainly because the Kennecott and Geneva situations won't be duplicated.
Robson said the federal monetary policy under President-elect Bush will have a big impact on the state because many Utah industries depend on defense spending. And if interest rates increase again, as they did last week, it could hurt the entire Rocky Mountain Region next year, he said.
It is difficult, he said, for forecasters to determine how much revenue will be available next year because of oft-changed tax laws. "Why don't we leave the tax laws alone for a time so government and business can determine exactly how much money they will have to spend?" he asked.
Robson said 1988 was much better than forecasters believed a year ago when they said Utah would have an 11,000 net growth in jobs. The 16,000 new jobs in 1988 compared with 6,400 in 1987.
Job creation in the mining sector was slightly better in 1988, Robson said, mainly because of the revival of Kennecott, but offset by the loss of jobs in the uranium industry.
He said 1988 was the worst year since 1964 in the construction industry, when only 5,500 housing units were started. Most of those starts were along the Wasatch Front. He said construction of water-reclamation projects and roads helped the industry from sinking lower.
The service sector provided 10,000 of the new jobs, Robson said, which was twice the number expected. He said the growth in health care and services provided by attorneys, accountants and consultants provided much of the impetus in this area.
Speaking on the national economy, Robson said 1988 was the seventh year of a continuous recovery, but there are certain things lurking on the economic horizon that could cause some uncertainty about 1989. One of those is interest rates, which were raised last week by the Federal Reserve Board, and the possibility they will be raised again to prevent a too-rapid growth in the economy.
He said economists will continue telling Bush that some action must be taken so the country's economic base won't be eroded. He said the United States is in hock by $450 billion to foreign investors and that will increase to $500 billion in 1989, mainly because Americans are on a "debt binge."
Robson believes the gross national product will increase 2.5 percent in 1989 and inflation will increase 5 to 5.5 percent. But he believes there will be a $40 billion reduction in the national debt through "revenue enhancements" or lower government spending.