by Sarah Ryther Francom

“Utah’s economy has slowed from about 70 mph to 25 mph, while the national economy is parked by the side of the road with a couple of flat tires.” said Jeff Thredgold, economic consultant to Zions Bank, during the bank’s recent Business Builder’s Breakfast. Last week Zions Bank released a report, written by Thredgold, discussing Utah’s economic situation.

According to the report, Utah’s economy is being negatively impacted by two primary factors: the nation’s fixation on U.S. economic weakness and home price declines. This has led to lower consumer confidence levels and softer spending, Thredgold says, but Utah’s economy remains relatively steady.

“Utah’s economy was the single strongest state economy in the country in the last two years as measured by growth and employment,” Thredgold says. “During the last 12 months, Utah’s economy has generated 25,000 additional net jobs at a growth rate of 2 percent.” While this growth is better than every other state (except Wyoming), it is a sharp decline when compared to last summer’s growth rate of 4.5 percent and the summer of 2006’s growth rate of 5.4 percent.

Though job creation is sluggish, Thredgold says that the state’s labor market remains largely intact. “Utah’s unemployment rate averaged 3.1 percent during 2008’s first four months, again ranking among the nation’s lowest,” he said.

According to the report, the most significant change in Utah’s economy has been the major slowing in new home construction. In fact, today’s residential construction levels are at the weakest rate since the 1990s, the report says. “The biggest problem is the housing market, which is true of most parts of the country. We got little carried away with home building and we have an excess of homes to sale,” Thredgold says. Because of the state’s excess supply of new homes, Thredgold predicts that new home construction will remain weak in 2009.

Though the nation’s economy, and Utah’s economy, has sharply slowed, Thredgold says that the Beehive State could benefit. “In a series of economic slowing, it’s a good time to look for opportunities to attract talent or other people from other parts of the country,” he says. “There are great challenges in periods of economic weakness, but great opportunities as well.”

According to Thredgold, Utah has an array of strengths that could attract outside companies. “[Utah has a] young workforce, rising population, strong work ethic, recreational opportunities, good airports and good infrastructure,” he says. “This combination of factors does play to our favor…My outlook for Utah continues to look good.”