Utah execs more upbeat about state's economy

After two years of growing pessimism about the economy, some Utah business leaders are saying that the worst of the recession may be over.

Optimism among executives about the futures of their companies increased in the opening three months of 2009 for the first time since the fourth quarter 2006, according to the bank's latest quarterly forecast of the economy, released Tuesday.

"It's the first time I've seen attitudes look more upbeat, to see hope for the future, rather than a steady decline," said Julie Olsen, an analyst for Dan Jones and Associates, the Salt Lake City market research firm that constructed the forecast for Zions.

Olsen said it's too soon to call the upswing the start of a recovery from the worst recession gripping Utah since the 1930s. But "at least during this quarter we are willing to say that the executives in this survey see [the economy] improving."

The level of optimism hardly compares to when Zions established its quarterly report in the second quarter 2006, when Utah's economy was booming. Back then 90 percent of the executives who took part were bullish on their businesses, compared with 65 percent today.

In hindsight, second quarter 2006 turned out to be the survey's high point. Except for small increases in the fourth quarters of 2006 and 2007, optimism fell steadily until the first quarter 2009, and business leaders hope the turnaround sticks.

"We have seen an uptick in demand, which is very good," said Dan England, chairman of Salt Lake City-based trucking giant C.R. England Inc. "We are not going to be too aggressive on our predictions, but we are hoping and thinking that things may be improving a little bit."

The Zions forecast is based on a survey of 337 executives from April 2 through April 30. Olsen said a "notable" number of executives believe their companies' "health" will improve in the second quarter ending June 30. Forty-four percent sense better times ahead, compared with just 22 percent in the last three months of 2008.

Similarly, more executives expect their companies to maintain or boost spending on capital projects and add employees during the quarter, she said. Fifty-seven percent of executives in the statewide survey anticipate spending as much or more on capital expenditures, compared with 41 percent in the fourth quarter.

The executives showed more inclination to hire additional workers in the second quarter. Twenty-six percent said their work forces would increase somewhat or greatly, up from 17 percent who in the first quarter said their payrolls probably would increase.

"What you have is some optimism that there are parameters to the recession," said Mark Knold senior economist at the state Department of Workforce Services.

"Before, it just felt like it was in a free fall, like nobody knew where it was going to go [or] what it would take to get their hands around it.

"What's changed now is there is a feeling that a bottom is somewhere close, and some of the indicators may have seen their deepest day," he said.

Knold doesn't think Utah is out of the woods, though. Initial claims for unemployment benefits are still hovering around 3,000 per week, three times greater than normal levels.

"I'd like to see them trending below 2,000" before calling a bottom to the labor market, he said.

By Paul Beebe
The Salt Lake Tribune
Updated: 05/26/2009 08:54:56 PM MDT