Unemployment is up and houses are selling for less, but the state's economy has not yet contracted, executives with Wells Fargo said Wednesday.
"Our contention is we're going to skirt the technical definition of a recession, which is two consecutive quarters of negative gross domestic product growth," said Sterling Jenson, regional managing director of Wells Capital Management.
Jenson preferred the term "fearsession," which he used to describe the general fear of a recession, accompanied with behaviors such as cuts in household spending and business inventory to save money.
Jenson and Kelly Matthews, executive vice president and economist for Wells Fargo, discussed the economy and made forecasts for 2008 during a news conference Wednesday morning.
Matthews believes that during the first half of 2008, non-agricultural employment will grow 2 percent. In the same period of 2007, jobs grew 4.6 percent.
In the second half of 2008, Matthews believes employment will grow 1.3 percent. In the same period in 2007, it grew 3.4 percent.
Unemployment still remains below 5 percent.
The number of building permits for single-family houses has decreased by nearly 75 percent in recent months. In January, 245 new houses were being built along the Wasatch Front. In January 2007, there were 936 and in January of 2006, there were 1,180.
"That will have an effect on the amount of residential construction jobs being created in our economy," Matthews said.
However, Matthews forecasts that statewide, 14,000 new houses will be built in 2008. The reason is that an estimated 30,000 new households will enter Utah this year, and job growth still remains positive.
"If we really believe we'll have a 3 percent population growth and we continue to have job growth ... we must increase the building," Matthews said.
But existing homes are selling for less than the owners believe they are worth. In the third quarter of 2007, the median sales price of a Salt Lake County home was $309,943. In the fourth quarter, it dropped to $286,250.
With lower prices and interest rates, houses should become more affordable, and the "overhang" of houses along the Wasatch Front will be eliminated, Matthews said.Jenson said the government's economic stimulus package, as well as interest rate cuts by Federal Reserve's Board of Governors, will aid recovery from the economic slump.