Using different words, national and state economists offered the same message Thursday in delivering the 2010 Economic Report to the Governor.
“A theme of emerging recovery” is how Juliette Tennert, chief economist in the Governor’s Office of Planning & Budget, characterized conditions in Utah.
Nationally, “the worst is over. We’ve hit bottom,” echoed David Wyss, chief economist for Standard & Poor’s, a 150-year-old financial-services company whose stock, bond and credit ratings are watched closely by the business community.
“We’re at the stage of the cycle where things are not getting worse,” he added, cautioning that there will be a slow recovery from “a terrible recession that could have been a lot worse. … But half a recovery is better than none. You take what you can get.”
Their comments were made to Gov. Gary Herbert and 350 business people at the downtown Salt Lake City Marriott during a breakfast meeting organized by the Salt Lake Chamber and the Wasatch Front Economic Forum.
Heading into his first budget session with the Legislature, the new governor said his top priority is to protect jobs that Utahns already have and to create opportunities for existing businesses to grow and for outside companies to come in.
He said Utah is better positioned than most states to accomplish those goals, but acknowledged: “I don’t want to minimize that people are hurting.”
Herbert also vowed to the business people that “we’ll do all we can to keep government off your back and out of your wallets.”
Tennert’s outlook projected that Utah’s unemployment rate will increase this year to 6.8 percent (it was 6.2 percent in November). But that will be moderated by increases in average pay, a slowdown in the decline of home prices and a return to positive growth in retail sales (2.2 percent) from 2009’s discouraging 8.3 percent drop.
While state revenues will have declined by $1 billion from 2008 to 2010, Tennert said the downward slides of income and sales taxes are both decelerating.
Similarities between Tennert’s state outlook and his own national prognosis could be expected, Standard & Poor’s Wyss said, noting the recession’s causes and effects had worldwide impact.
“Synchronized sinking” was his description of global reaction to the collapse of over-valued housing markets and the subsequent implosion of key financial institutions. The recovery rate in many countries will take even longer than in the United States, Wyss said, because their housing prices were even more inflated before the bottom fell out.
China is rebounding more quickly, however, thanks to massive stimulus spending implemented far more rapidly than is possible in the U.S. and other Western nations.
“In China, they find an unemployed guy, give him a shovel and tell him to build a road,” he said. “You can do that in a country where EISs [environmental-impact statements] are two words long and eminent domain amounts to knocking on a door and saying ‘Get out.’ ”
Wyss labeled fears of inflation as premature. He is more concerned about Congress meddling with the Federal Reserve Board’s monetary policies and the public’s ability to spend the country out of a recession, as it did in 1991 and 2002.
“There’s a new caution,” the economist said.
While Wyss is convinced the worst is past, he said the recession could be revived if fighting in the Middle East caused oil prices to spike, more major financial institutions collapse or a nation, such as Greece, goes into default.
By Mike Gorrell – sltrib.com
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