Using a current movie as an analogy, John Mitchell, chief economist for U.S. Bankcorp, said the nation's economy - and particularly Utah's economy - is "As Good As It Gets."
With inflation continuing to be in check, job growth looking good and interest rates remaining low, Mitchell said the nation's economic growth should continue into 1998 and could become the country's second longest period of prosperity in history.Speaking during the bank's second annual economic forecast Friday in the Marriott Hotel, Mitchell said there are no signs or indicators that usually show a slump in the economy. "They just aren't there."
Mitchell said the country has had 82 months of economic upturn, exceeded only by the prosperity of the 1960s and 1980s, and the way things are going 1998 might see some slowdown, but it still looks like a bright future. In answer to a question at the end of his presentation about when the recession will start, Mitchell said he can't tell.
He said the national economy is good because of low inflation rates, a steady growth in gross domestic product, more people than ever before being employed and consumers being content with the ways things are going.
Mitchell said that even though the trade deficit is $22 billion annually, that is a small blip on the economic screen in an $8 trillion economy. "This is an amazing period," he said.
To show there could be some problems, Mitchell used another movie analogy, this time with "Titanic."
He said recent financial troubles in Asia have led to a strong dollar, which means that American companies will have trouble selling their products abroad and foreign companies will be dumping items in the United States. "This makes for a tough competitive environment," Mitchell said.
Such a situation will result in lower profits in some instances and there will be some uncertainty about the Asian financial situation. Although it won't have an impact in 1998, Mitchell said the problem arising from the changeover with computer programs in 2000 is coming fast and must be considered.
"The longer we live in a low-inflation environment, the more our habits will change," Mitchell said, referring to the low unemployment rate and the fact that wages have increased when employers try to find workers. He expects the nation's inflation to be 2 percent.
Mitchell called interest rates boring because short-term rates have been constant for several years and 10- to 30-year interest rates have been between 6 percent and 7 percent for several years but dropped slightly in the latter portion of 1997. He expects the Federal Reserve Board to keep interest rates at nearly the same levels.
In Utah, the in-migration of people is slowing, the number of residential building permits is down and the number of jobs created is slowing - so the outlook for 1998 in the state is a good one, although it will be slower than in 1997.
Mitchell said he was impressed that Utah is addressing its infrastructure (I-15 road reconstruction) needs while other states are ignoring theirs.