Despite an initial military victory in Iraq, the U.S. economy continues its foot-dragging recovery. And risks remain that could send the nation into another recession, Wells Fargo Bank's top economist told Utahns Friday.

Amid a smattering of surprisingly-funny-for-an-economist jokes, Wells' chief economic officer Sung Won Sohn delivered sobering news to the bank's Utah-based private client services customers.

"Despite opposition from the French, and the Dixie Chicks, we won the war," he said with a smile, which vanished when he posed the inevitable question: now what?

Now, Sohn said, "We're looking at anemic, below-par, modest economic growth. There is no conviction that there will be a sustained economic rally, that the economy will continue to go up and up. Consumer confidence is still high, but below what it should be. Businesses are not confident.

"There are too many structural problems — structural problems that we had even before the war, that we still have."

Those problems include ballooning budget deficits, lingering hesitancy on the part of businesses to hire or invest, a shaky stock market and geopolitical unrest. Each carries its own risk, he said, and could send the nation back into recession. Consumers carried the economy on their backs through the last recession. But to bring about a strong recovery, businesses have to get in the game as well, Sohn said.

"Businesses are shell-shocked," he said, asserting that businesses and their executives were disproportionately affected by the plummeting stock market. "We've had one of the worst setbacks in the stock market, and economic history shows that once we experience a setback of that magnitude, it takes years and sometimes decades to get out of that depression."

Compared to the buy-and-build 1990s, Sohn said, businesses today are conserving cash and paying down debt. So what's next? Sohn anticipated the Fed will do whatever it can to stave off deflation. Government spending will result in an estimated $400 billion deficit this year. Mortgage rates will remain low. Businesses will near the point where there is no more cost-cutting to do.

Utah's economy today looks suspiciously like a Clint Eastwood movie, said Wells' Intermountain economist, Kelly K. Matthews.

"It's the good, the bad and the ugly," Matthews said. "There is some perplexity in the economy right now, and we're seeing some of that in our local environment."

The good part is that construction activity has increased 20 percent over the last year, he said. The job market is bad — the state has 14,000 fewer jobs than it had two years ago, continuing its negative year-over-year job performance.

And the ugly? Eroding real estate values, something that is happening in other parts of the country and may happen here.

"Our housing prices went up very fast earlier in the decade," outpacing the national average, Matthews said. "We've been struggling in the past few years just to hold on to value."

If the housing market collapses, Sohn agreed the effect would be devastating.

"The stock market crash is nothing compared to what would happen if the housing bubble were to burst," he said. "That would be a national catastrophe."