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Info-tech outlook is bleak

Utah downturn could last at least 2 years

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Thayne Robson contended that he didn't like bringing bad news to the state Commission on Information Technology during the group's meeting Wednesday.

But Robson had a lot of it to tell.

The director of the University of Utah's Bureau of Economic and Business Research said the information technology sector, like the state's economy as a whole, is in a downturn that will last at least two more years.

"We've had such a wonderful story to tell for such a long time," Robson said. "If you talk to your neighborhood forecaster, he'll say we are going to avoid a recession. Don't you believe it."

One commissioner reminded Robson that he used to predict that Utah's economic bubble would pop only after the 2002 Winter Olympics. But now?

"If the bubble doesn't rise as high, it's not going to bust as much," he said.

The technology revolution has proven in the past few months that it is not recession-proof, he said. Large inventories and company delistings from NASDAQ are two symptoms of problems in the IT industry. The overall economy also has been full of poor corporate earnings and a high number of personal bankruptcies, he said.

"The outlook is extremely bright long-term, but in the short term, it's not so good. It is not a pretty picture at the moment," he said. "I don't expect any significant upturn in the economy this year, but in the long term, everybody is extremely optimistic."

Utah's overall short-term woes will be exacerbated by the end of a construction boom, highlighted by Interstate 15 rebuilding, TRAX construction and hotel development. Their conclusion will mean the disappearance of 15,000 construction jobs, he said.

"We're not going to get 25,000 jobs in the Utah economy this year. I'd be surprised if we get 20,000," Robson said.

He described Utah as "a remarkable state" in the 1970s and 1980s as new and rapidly growing technology companies established themselves. But they have since been sold or downsized. In the 1990s, many companies were acquired by larger firms with headquarters outside Utah.

The current tech revolution has followed the same pattern of boom and bust as tech bursts in the past that were brought on by electric power, the telegraph, railroads and the automobile, he said. "We watched great speculation running up equity values, and we've been watching them crash . . . . We created $4 trillion worth of wealth, and we wiped it out."

As for the Olympics, they will suffer as companies cut back on entertainment spending, he said. One national sponsor — he declined to identify which one — has cut $20 million it planned to spend on the Games.

Emphasizing education in math, science and technology will help prepare Utahns for the new economy changes, "but it will be at least two years before we may see improvement in the fortunes of the IT industry," he said.

"We'll get out of this problem. But in the meantime, a lot of firms will go under and there will be a lot of pain and suffering from layoffs, but I've got a great feeling about the long-term economy."


E-MAIL: bwallace@desnews.com