The national media may be painting a rosy picture about economic recovery, but local indicators are still negative and there is some evidence that consumer confidence is still low.
According to Ralf Garrison, director and senior analyst for Denver’s Mountain Travel Research Program, travelers need to perceive an improvement in national or personal finances to justify a vacation. Unfortunately, many indicators such as the housing and job markets are still down.
That’s certainly true in Utah, where James Wood, a University of Utah economist, reported last month that the state’s residential construction contracted by nearly half in 2008 the most severe on record.
New single-family home building permits were down almost 60 percent, breaking the previous record of 38 percent set in 1980, the report said.
It is estimated that 8.3 percent of all jobs were in construction in 2007. 2010, that is expected to be 5.5 percent.
By the end of 2010, the number of construction jobs in the state is expected to have fallen 37 percent from the beginning of 2007. That exceeds the job losses seen during the recessions of the early and mid 1980s.
The report also suggests that high mark was artificially created by easy mortgages and recovery won’t readily return to those levels. On the bright side, the decline in requests for building permits in Utah appears to be far lower than the national average.
That isn’t much consolation when considering that “The collapse of Utah’s housing bubble has wiped out at least $20 billion in residential real estate wealth, eliminated over 18,000 construction jobs, and forced several hundred homebuilders out of business,” the report said.
That’s bad news, but Park City Board of Realtors president Lincoln Calder recommends taking the loss of real estate value with a grain of salt. That’s paper wealth, not real wealth, he said. Homeowners in the Park City area live in their homes for several years. During that time the price can be expected to fluctuate. Just because selling prices are down now, doesn’t mean owners have actually lost wealth.
The loss of jobs is a real loss, however. According to the Utah Department of Workforce Services, Utah’s job count contracted by another 4.2 percent in July. Unemployment is now estimated to be about 6 percent; that number has steadily risen every month contributing to a 2.6 percentage-point increase over the past 12 months. About 82,400 Utahns were considered unemployed in July compared with 47,300 one year ago.
Although many factors make Summit County unique from the rest of the state, according to the department’s website, www.jobs.utah.gov, the county’s unemployment rate has been in the high five-percent range all summer.
That, and high housing prices, are forcing people in their 20s out of the area. According to an August report from the Bureau of Economic and Business Research at the U of U, the median age of the county is 33.3, compared to 27.1 in the state. Measuring population by age, residents 40 to 44 make up the largest group. It’s also, apparently, an unfavorable place to retire. Only 7.6 percent of residents are over age 60, compared with 11.3 in the state.
The rising unemployment rate can also be observed at The People’s Health Clinic. Nann Worel, executive director, said new-patient visits this year are up nearly 40 percent. Many of those had insurance, but lost their jobs or had hours cut enough that they no longer qualify for benefits.
Worel said the demographic contributing most to that upsurge is Caucasian males, which is particularly telling since they are traditionally the group least likely to seek out medical care. Unfortunately, many of them have chronic diseases like diabetes and can’t go without assistance any longer.
An indication that people nationally are still worried about the economy comes from Financial Finesse, a California company selling financial education programs that emailed The Park Record this month with a report. It said during second quarter of 2009, 82 percent of calls it received were asking for information on short-term financial issues. Only 18 percent were focused on long-term financial planning.
The number of people calling to ask how to take out retirement plan loans or hardship withdrawals nearly doubled during the first half of the year. Only three percent of calls were asking how to invest. The company is concluding that Americans are still stressed about personal finances and aren’t thinking long-term.
Garrison in his Aug. 19 Mountain Travel Research Program report said he also sees little indication that Americans are growing more optimistic.
“At best, signals are mixed and positive indicators remain an exception to the rule,” the report said.
Travel prices are 9.5 percent below 2008 levels, but travel-related businesses saw a nearly 1 percent decline in consumer spending in July and room rates continue to be down about 11 percent across the area examined.
Even though July was slightly better than the same time last year, the summer numbers have been down across the region, the report said.
In a telephone interview on Wednesday, Garrison said consumers are still seeing resort-town vacations as a luxury expense they can do without.
There was some indication during the first part of the year that Americans were tired of worrying about the economy and might return to normal spending habits.
“Overall, Homo Sapiens in general, and Americans in particular, do not dwell on any news, good or bad, for a long time,” he said. “It’s like a national attention deficit disorder.”
But the “doldrums” in 2009 were worse and longer than expected, he said. It’s proving optimists wrong.
Unless something happens to improve consumer confidence this fall, the coming ski season might be worse than last year.
Some outdoor retailers are already predicting it will be, according to the Outdoor Industry Association. An article in a recent newsletter said that sporting-goods retailers, especially those in the Southern states, are carrying fewer new skis and snowboards this winter.
Skiers from the South have to fly to resorts. If they go at all, they’re predicted to rent equipment when they arrive to avoid paying airline baggage fees.
Garrison said he thinks it’s safe to plan on fewer destination skiers again this year.
The good news, he said, is that resorts are prepared for a slow year this time. In the 2001-2002 season, the Sept. 11 attacks came out of nowhere. And last winter a recession was predicted, but no one could foresee how bad it would be. Even if this winter is worse, the resorts and their marketing departments will be ready. It also means they won’t have to rely on discounts to draw attention.
Also good news, the recession has been so bad, that it won’t take much for people to think things are getting better, Garrison said.
