Based on the economic lull that occurred in the Atlanta area following the 1996 Summer Olympic Games, the Wasatch Front will probably go through the same situation following the 2002 Winter Games.
That assessment came from Mark Zandi, chief economist and co-founder of Regional Financial Associates Inc., who told members of the Wasatch Front Economic Forum this week that the lull won't last long.The infrastructure that Atlanta established to host the Games is still in place, and the city now has a worldwide reputation. The same thing should occur with the Wasatch Front, he said.
In presenting an economic outlook for Utah and the United States, Zandi said consumers are happy because inflation is low, unemployment is low, home sales are booming and wages are up. In addition, profits are up for most businesses, and the country is in one of the longest "good-time" periods in recent memory.
With the budget deficit gone this year and federal, state and local governments expecting a combined surplus of $100 billion, the stock market making a remarkable comeback after the recent Asian financial crisis and the dollar being strong, Zandi said there isn't a region in the United States where the economy is bad.
He said the economy can grow without inflation because of globalization of each nation's economy and deregulation of certain parts of the economy. Calling the current situation the "new economy," Zandi said it doesn't generate imbalances of previous down-turn periods.
The nation's economy has a good chance to get into the next century without any major downturns, and that will be the longest period for an "up" economy, Zandi said.
He said Utah is well-positioned to maintain a strong economy because Salt Lake City and Provo are considered high-tech centers and the high-tech industry is expected to continue to flourish. Zandi said 7 percent of Provo's workers are connected to high tech, while Salt Lake City's stand at 5 percent, trailing San Jose; Raleigh, N.C.; Austin, Texas; and Boston.
Because of the financial problems in Asia, Zandi expects exports to slow and possibly decline, but just as the financial debacle in Mexico several years ago worked itself out, the Asian situation in the end won't have that great an impact, he predicted.
He said the Asian crisis will end this year, and by the turn of the century the area once again will be a big contributor to the world economy, Zandi said.
On the negative side in Utah, Zandi feels office space (although it is in smaller blocks) is becoming overbuilt, the increasing number of hotels is causing occupancy rates to decline and the number of homes being built will gradually outpace the need since in-migration is declining.
If wages increase as companies try to find employees in a tight labor market, Zandi feels businesses will pass the difference on to consumers because most companies know they must maintain a certain profit margin to satisfy stock-holders.