This is what ‘bottom’ feels like
April 9, 2010
When the recession began changing American commerce and lifestyles in fall 2008, people were hoping to find the bottom. Most economic experts agree Utah and the nation are now there, but it’s nothing to celebrate.
The March report from the Utah Department of Workforce Services’ senior economist Mark Knold said the state’s unemployment rate is now 7.1 percent. In February, there were 2.3 percent (or 27,700) fewer jobs than the year before.
For the first time in several months, Summit County’s rate is less than the state average at 7 percent.
The net flow of people into and out of jobs is still negative (more people losing work than finding it) but it is supposed to equalize later this year, he said.
The number of companies hiring temporary workers increased in 2009, which Knold called, "an important step in an economic recovery."
"There is also building evidence that the job market is starting to slowly awake, and that the employer community is beginning to again look for workers with which to expand their business output," he wrote in the report.
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Construction was still losing jobs as of last February, but that rate has slowed enough to lose its status as the worst industry to work in. Manufacturing had the worst job losses from Feb. 2009 to Feb. 2010.
Federal-government agencies, health care and higher education continued to report job growth as of February. The Utah leisure and travel industry lost an estimated 5,400 during the 12 months preceding February.
According to the most recent edition of Jim Wood’s Utah’s Economy, published monthly by Commercial Real Estate Solutions, Summit and Wasatch counties were two of the top three Utah counties for percentages of jobs lost. That data compared the second quarter of 2009 with the previous year.
During that time span, Wasatch led the state with 10.7 percent of jobs lost, with Summit in third place at 9.7 percent. To put those numbers in context, Summit lost 1,870 jobs to Salt Lake County’s 30,811.
But with 171 (or 80 percent) more residential-construction projects in 2009 than the year before, Summit County also led the state in new starts.
However, "all indicators point to another year of increasing foreclosures," Wood wrote. The state’s rate is only 23rd highest in the nation, but is at the highest levels ever reported for Utah, he said.
Speaking of the nation, economic futurist Jeff Thredgold in his most recent edition of The Tea Leaf said the U.S. Department of Commerce’s second revision to fourth-quarter growth put the country at its fastest growth in six years.
Growth is predicted to continue at about 3 percent, but "housing anxiety, soft commercial-real estate valuations, uncomfortably-high unemployment, and high anxiety about unprecedented $1 trillion annual budget deficits combine to limit growth opportunities," he said.
The Leverich Group, a Utah accounting firm, conducts a survey of over 100 construction companies and found that only 5 percent of construction companies say they are "thriving," 73 percent said they are "surviving" and 22 percent are "struggling."
Some good news is the Wasatch Front Consumer Price Index, a new service provided by Zions Bank and tabulated by the Cicero Group and Dan Jones & Associates, suggests inflation is under control.
"It is anticipated by many economists that households on the national level and along the Wasatch Front will experience relatively consistent prices during the next 12 months," said the Zions Bank press release.
One exception is gasoline. The price in Utah has risen, on average, almost 25 cents since last month and $1.11 since a year ago, according to the Web site UtahGasPrices.com. That’s higher than the national average. Prices are expected to reach $3 per gallon by Memorial Day.
Experts in the travel and ski industries express the same kind of caveat-loaded optimism.
SnowSports Industries America (SIA) recently announced results of a survey on winter recreation saying participation increased in every discipline during the 2008-2009 season. But the largest gains were in the most affordable sports: snowshoeing and cross-country skiing.
The U.S. Travel Association’s monthly U.S. Travel Outlook by Suzanne Cook reported in March that last season, "overall ski visits in the U.S. declined 5.2 percent, according to estimates by the National Ski Areas Association."
The March report from the Mountain Travel Research Program (MTRiP) said ski towns in the mountain region reported a .03 percent gain over last year.
Executive Director Ralf Garrison said, "This small increase is a big win because it indicates the reversal of a long term down cycle."
He likened it to Olympic athletes who win by .03 seconds. The difference may be small, but the significance is not.
"The year-over-year occupancy was up 2.7 percent in February. Average daily room rate was down 6.6 percent. Reservations for arrivals between February and July are up 12.7 percent compared to last year," the report said.
MTRiP surveys 201 property-management companies in 15 ski towns in Colorado, Utah, California and British Columbia.
The U.S. Travel Outlook also said some indicators suggest "consumers remain extremely pessimistic about business conditions, the job market and their own income prospects over the next six months, and this is likely to continue to curb spending."
Also that, "the Gallup’s weekly tracking of discretionary spending shows that consumers are actually spending at a ‘new-normal’ level, which is much lower than at the beginning of the recession in 2008."
That bodes poorly for the prospect of a full economic recovery and a return to pre-recession travel spending, Cook wrote.
The Traveler Sentiment Index said 7 percent fewer adults said they plan to take a "leisure trip" in the next six months than last year. Of those, 76 percent said they plan to spend the same amount or less than their last trip.
National Parks remain popular with some reporting their highest numbers ever in 2009.