Economist: Utah poised for economic comeback

Summit » Conference crowd told signs point to improving national, state conditions.

By Tom Harvey, The Salt Lake Tribune
Updated:03/30/2009 01:37:05 PM MDT

Though challenges remain, the nation's recession shows signs of bottoming out, while Utah's economy is poised by the end of the year to see a return of high rates of growth, an economist told the Governor's Utah Economic Summit today.

Kelly Matthews, executive vice president and economist for Wells Fargo, gave an optimistic forecast on the state of the economy at the opening session of the Salt Lake City conference.

"Utah's economy is following a path that can return the state to its prior level of prosperity," Matthews told 1,200 or people who attended the summit at the Grand America hotel.

Gov. Jon Huntsman Jr. was scheduled to address the gathering later in the day.

Matthews said he believes the threat of deflation, or falling prices the lead to a downward in the national economy, has passed. He cited recent profits in the banking/financial industry, consumer and housing demand showing signs of leveling off instead of dropping steeply and recent moves by the Federal Reserve that drove down long-term interest rates, especially mortgage rates.

"The deflationary meltdown of the past six months I believe has passed," Matthews said.

The economist also pointed to areas of the Utah economy that he believes portend a "return to the days of glory and economic prosperity."

Utah has not been as damaged by the bursting of the housing bubble as other states, and the state budget -- thanks to federal stimulus money -- is in relatively good shape, Matthews said. Although the state's unemployment rate will continue to rise through the first half of this year, a combination of factors will jump-start the housing market. Utah's internal growth will continue to produce new households that demand housing, which also will be aided by low interest rates and state and federal incentives.

Added to a 10 percent decline in housing prices, those factors have made Utah houses more affordable, he asserted. "I believe that the conditions are such that many people will decide it's time to buy a house."

Also this morning, Ed Catmull, the president and CEO of Walt Disney and Pixar Animation Studios, delivered a keynote address, speaking on the challenges of managing talented teams of people.

tharvey@sltrib.com