Scott G Winterton, Deseret News
A sudden and severe correction in the stock market is being seen as a harbinger of an economic slowdown, which changes the context of the budget discussion on Utah’s Capitol Hill.

The stock market has gone through a volatile period, which might make investors jittery. However, there is little reason for Utah lawmakers to over-react as they prepare for the 2019 legislative session.

Gov. Gary Herbert’s proposed budget remains a solid blueprint for next year's spending. Be prudent, invest in needed initiatives and give some of the state’s surplus funds back in the form of a tax decrease.

Some are bound to argue for the need to put much more in rainy day funds at the expense of education or other worthy pursuits. That would not be wise. Despite market swings, the economy appears to be sound.

Among the positive data points are forecasts for GDP growth between 2 and 3 percent, tame levels of inflation, low unemployment, rising wages and elevated consumer confidence. As such, there is reason to suspect the equities markets are currently behaving in a way that’s disconnected from most economic indicators.

Prudent budgeting, however, requires a keen eye toward signs of trouble on the horizon. Utah has long been noted for its fiscal pragmatism. We expect lawmakers to remain cautious, keeping in mind that a slowdown, or even a recession, may occur as a result of exogenous circumstances.

" We expect lawmakers to remain cautious, keeping in mind that a slowdown, or even a recession, may occur as a result of exogenous circumstances. "

Certainly, there is enough political volatility in Washington to warrant concern. The ongoing shutdown of much of the federal government raises the specter of more gridlock. Trade disputes with China and Europe could result in economic drag. Those who see recent turnover in the Trump administration as a sign of instability will add that to the list of worries. If any factors rise to a level that infects public confidence in the markets and the economy, businesses may stop investing, consumers could stop spending and talk of a recession could turn into self-fulfilling prophecy.

Nonetheless, Utah coffers at this moment are flush with money, and there are legitimate reasons to healthily invest those funds in schools, infrastructure and environmental initiatives, as Herbert’s proposed budget calls for.

In lean times, leaders should be wary of overspending even on necessary items, and in times when extra money is at hand, the state should spend wisely and surgically. The governor's proposed increases in the state's weighted pupil unit, as well as in clean-air programs, are all practical and legitimate uses for surpluses that lawmakers should take up.

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Perhaps some at the Capitol will argue the need to be more circumspect in light of a possible slowdown, but the state’s current rainy-day fund, now approaching the $600 million level, is an adequate hedge against a slowdown in the coming year or two.

Predicting the exact arrival of a major swing in the economy is more art than science. This is a period of political disagreement and discontent on a national level that could end up derailing a decade-long cycle of growth. But using surplus to invest in schools and the environment would further economic growth. Whatever storms may be approaching, now is not the time to batten down the hatches and give caution priority over rational optimism.