Large Families Could Help Lift Utah's Economy

Jan 06, 2009 by Elizabeth Ziegler

(KCPW News) The recession in Utah will get worse before it rebounds in the second half of this year, according to Wells Fargo's 2009 economic forecast. Economist Kelly Matthews says Utah's large families are an important force that will eventually pull the state out of recession.

"That natural population increase has been a very important factor that is attracting businesses to come to Utah and establish their manufacturing or economic facilities," Matthews says. "And furthermore, it will be one of the factors that, I think, will begin to lead us out of this housing situation, because we simply have to have more homes being built."

Matthews says Utah's job losses have been mostly contained to the housing and construction industries. And even with a contraction in the housing market, he says the state has retained a relatively low unemployment rate. Last quarter it reached 3.8 percent, the highest it's been since 2005. And he expects it to continue to increase in the next six months to about 4.5 percent.

The nation's economy is also expected to rebound by the end of 2009. Jim Paulsen, an investment strategist for Wells Capital Management, says this economic crisis was caused by fear more than economic factors. And he says the trillions of dollars in economic stimulus packages from both the Bush and Obama administrations will eventually work. But when it does, he warns there could be some unintended consequences.

"This crisis to me is a little bit like when you're at the barbecue and you're responsible to cook the meat and you're trying to get your charcoal briquettes going and the damn things won't light. And you don't know what to do, but you just keep dumping lighter fluid. You know, what else can you do? They're waiting for the food, hell, dump some more lighter fluid on it," Paulsen says. "And then all of a sudden, what happens? Poof!"

But instead of singed eyebrows, Paulsen says the nation could find itself fighting inflation two to three years down the line.

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