Economic woes easing but not gone for Utah County

Economic woes easing but not gone for Utah County

Heidi Toth - Daily Herald | Posted: Wednesday, December 16, 2009 12:40 am

PROVO -- Economic recovery is coming, agree people in the know. They also agree that recovery may be a long, slow process, a stark contrast to the economic freefall of a year ago.

A study released Tuesday by the Brookings Metropolitan Policy Program detailed the effects of the recession and the coming recovery on the Intermountain West. The numbers show that while the Provo-Orem area was hit hard, especially with the sharp decline in the construction industry, the effects could have been much worse.

As in, Provo could have been Las Vegas, a city still wallowing in foreclosures, high unemployment and depressed home values.

The bad news for Provo is in the real estate sector; home prices in September were down 8.3 percent from September 2008 and employment dropped 6.2 percent in the same time period, largely because of the construction industry, said Jonathan Rothwell, a senior research analyst. Almost 10 percent of employment in the area is in construction, compared to the U.S. average of 7.3 percent.

Overall, Provo-Orem was in the second-weakest quintile of 100 largest metro areas nationwide. The good news is that the unemployment rate only dropped 2.5 percent from September 2008 to September 2009, ranking Provo 23rd nationally, and employment was higher in Provo before the recession than any other city in the region except Las Vegas. Unemployment this fall was the lowest in the region and almost half, at 5.4 percent, of the national average of 9.5 percent. The gross municipal product is creeping up, meaning people are spending money, and the foreclosure rate is lower than any regional city except Ogden.

Part of that is a boost from the federal stimulus package, but part of it indicates economic growth. Unemployment rates should stop slipping soon, and growth will get moving.

"It's not clear how long it's going to take and how much growth is needed and whether or not that growth is sustainable, frankly," Rothwell said.

Provo's biggest benefit is the presence of BYU and UVU, which leads both to a more educated work force and education jobs that remain viable no matter how low the economy gets. Because so many people work in education or other necessary jobs that require special skills, more people remain employed.

"That's a big deal to a lot of businesses," said Steve Densley, president of the Utah Valley Chamber of Commerce.

He saw both the good signs -- building, businesses still wanting to move here, even the snow that drives people to shop locally -- and the worrisome factors -- fear of the Obama Administration's health care proposal, more tight-fisted consumers during the Christmas season and false positives from the stimulus. He remains cautiously optimistic about the next little while.

"The construction market pretty well leads us in and out of recessions," he said.

Heidi Toth can be reached at (801) 344-2556 or htoth@heraldextra.com.