Utah got 1990 off to a strong start with upbeat economic news from two quarters Friday.
The Utah District of the U.S. Bankruptcy Court announced that the number of bankruptcies in 1989 was up only 3 percent above the 1988 number. That rate of growth is a sharp decline from the double-digit growth of the past five years.In addition, the state announced Friday that 32,800 jobs have been created in Utah during the past 12 months. The two announcements bode well for Utah's 1990 economy, said Jeff Thredgold, chief economist for KeyCorp, parent company of Key Bank.
Contrary to doomsayers' complaints, the jobs are not low-paying service jobs. Household incomes in Utah increased about 8 percent in 1989, said Kelly Mathews, vice president of First Security Bank.
From the beginning of 1985 to the end of 1988, the number of bankruptcies grew an average of 21 percent annually in Utah, making the Utah bankruptcy district one of the nation's fastest-growing districts for bankruptcies.
Of particular concern was the number of business bankruptcies. The Utah district ranked 13th out of the 94 districts in business bankruptcies during most of 1988 and early 1989, said Bill Stillgebauer, U.S. bankruptcy clerk. But by September 1989, Utah had dropped to 24th place.
Other figures affirm the healthy business climate here. Business failures were down 52 percent in the first nine months of 1989 compared to the same time period in 1988, Thredgold said.
Looking at bankruptcy figures, it is easy to peg the year in which things started going sour. In 1984, the number of bankruptcies increased only 4 percent over 1983. But in 1985, the number of bankruptcies jumped 26 percent over 1984. In 1986, bankruptcies grew at a rate of 28 percent. Growth slowed in 1987 to 18 percent and again in 1988 to 13 percent.
In 1989, the growth slowed a single digit for the first time in five years.
Utah's grim economy may not get all the blame for the five-year surge in bankruptcies.
"Some of the social stigma related to bankruptcies has lessened," Thredgold said. "I think that's one thing has led to the growth of Utah bankruptcies in the last five years. More people, right or wrong, tend to see bankruptcy as an acceptable means of getting out from under a burden of debt.
"At the same time, you've got a number of lawyers, and some law firms, who actively promote filing bankruptcy as a solution to problems. I don't think that's good. It's an easy way out that creates some longer-term problems for people. But some lawyers have an approach of getting as many people through the door as they can to generate fees."
Heavy promotion by lawyers and the diminishing stigma associated with bankruptcy blurred the actual impact the economy had on the spiraling bankruptcy rate, Thredgold said.
Despite the multiple factors, he is willing to make a guess on 1990 bankruptcies: "1989 is the best economic year in Utah in the last 10 years. I think when you look at bankruptcies a year from now, the numbers will have declined."
Such a decline would be the first in Utah in several decades.