Monday Report
Utah Economic Snapshot February 2nd, 2009


Public Policy Initiatives

Retail Notes:

Housing Notes:


  • Global Business Confidence
  • Sentiment remains darkly pessimistic across the globe. Businesses reported last week that their sales were as weak as they have been on record. Hiring intentions remain very poor and pricing power has collapsed, suggesting that deflation is increasingly likely. Those that work in government are most worried, followed by businesses in financial and business services. The global economic downturn continues to intensify.
  • FOMC Monetary Policy
  • The Federal Open Market Committee announced it is keeping the fed funds target rate in a range from 0% to 0.25% and expects to keep it there "for some time." The committee's statement said that the "economy has weakened further" from the FOMC's previous meeting in mid-December. The FOMC expects economic growth to resume later this year, "but the downside risks to that outlook are significant." The statement expressed some concern about possible deflation. The statement said that the central bank will "employ all available tools" to boost growth but does not mention any steps beyond those it has already taken. One FOMC member dissented, calling for the Fed to purchase Treasuries.
  • Conference Board Leading Indicators
  • The Conference Board index of leading indicators surprised to the upside in December, rising 0.3%. However, without a large increase in the real money supply, leading indicators would be far weaker. The Federal Reserve is expanding its balance sheet beyond what is needed to keep rates at zero, increasing the size of the monetary base and broader measures of money supply to a lesser extent. The index's weakening trend indicates that the slowdown will persist, but it also suggests that the economy is moving through the point of maximum decline.
  • The Conference Board Consumer Confidence
  • The Conference Board index of consumer confidence retreated slightly to another record low in January. The index fell to 37.7 from December's 38.6 (upwardly revised from 38). The expectations component was responsible for the bulk of the decline, falling to 43 from 44.2 (previously 43.8). The present situation fell to 29.9 from 30.2 (previously 29.4). Assessments of current labor market conditions remained very poor but improved slightly from December.
  • California Manufacturing Survey
  • California's manufacturing sector remains mired in recession. The composite index fell to 44.7 in the fourth quarter, down from 45.1 in the third quarter and well below the expansionary threshold of 50.
  • Durable Goods (Advance)
  • Durable goods orders fell 2.6% in December, following a 3.7% decline in November. This was a larger than expected decrease. New orders have fallen for five consecutive months now. Shipments fell 0.7%, following a 4.2% decline in November. Unfilled orders were down 1.3% over the month, and inventories rose 0.4%. Orders of core capital goods were down 2.8% over the month, reflecting ongoing weak business investment conditions.
  • Mass Layoffs
  • The number of layoffs involving at least 50 workers from a single establishment in December was 2,275, compared with 2,328 in November. The layoffs involved 226,117 workers, compared with 224,079 in November. All numbers are seasonally adjusted. Corporations are cutting payrolls to reduce expenses, as revenue growth is decelerating.
  • Jobless Claims
  • Initial jobless claims increased by 3,000 to 588,000 for the week ending January 24. This was in line with expectations. This latest data point suggests that the labor market continues to rapidly deteriorate.
  • Case-Shiller Monthly Home Price Indices
  • The descent of house prices slowed somewhat during the three months ending in November. Although house prices declined at the greatest year- ago rate on record in November, the rate of decline did not increase significantly from that recorded during October. The 10-city index declined 19.1% from a year ago, unchanged from the decline recorded in October. The 20-city index decreased by 18.2% from November 2007.
  • Existing-Home Sales
  • Existing-home sales ended last year on a surprisingly strong note. Home sales increased by 6.5% compared with November. This is the strongest one-month gain in sales since 2002. The months of inventory dropped sharply, from a peak of more than 11 months to 9.3, although seasonal factors may be behind the large improvement. Despite the cheerier sales figures, the housing market remains very weak, with only 4.74 million annualized units sold in December, the weakest pace since the late 1990s. November sales were revised downward slightly. The descent in the median house price accelerated in December to -15% y/y, likely a reflection of stepped-up foreclosure sales. For all of 2008, home sales were down by 13% and the median price declined by more than 9%.
  • New-Home Sales (C25)
  • The dismal housing market has taken a turn for the worse. Sales of new homes sank 14% m/m in December. At 331,000 annualized units, sales have sunk to a pace that goes back to 1963. Further, the Census Bureau revised downward the November sales data. Months of inventory soared to 13, a new record high, and the median sales price is down by 9%. Conditions appear dire.
  • MBA Mortgage Applications Survey
  • In the week ending January 25, the MBA market index fell 38.8% to 732.1. This was driven by a decrease in the refinance index, which fell 48% this week to close at 3,373.9. In step, the purchase index declined a mild 2.9% to finish at 294.3. These declines all occurred despite contract rates holding relatively steady.
  • Chain Store Sales
  • Chain store sales dropped 1.8% in the week ending January 24, continuing the erratic weekly pattern and downward trend as consumers remain very hesitant to spend. The year-ago decline shrank expanded to 2.4%, the largest decline in decades.
  • Oil and Gas Inventories
  • Crude oil inventories increased by 6.2 million barrels during the week ending January 23, according to the Energy Information Administration, far surpassing expectations of a 2.9 million barrel build. Gasoline inventories fell by 100,000 barrels, contrasting with expectations of a 2 million barrel build. Distillate inventories fell by 1 million barrels, in line with expectations. Refinery operating capacity fell to 82.8% from 83.3%, more than expected, from 85.2%. Total domestic petroleum demand rose considerably. This mixed report points to higher oil prices.
  • Weekly Natural Gas Storage Report
  • Working gas in underground storage decreased by 186 billion cubic feet during the week ending January 23. The consensus estimate was for a decline of 170 billion cubic feet.


  • Schlotzsky's Deli
  • Focus Brands, Inc. trades as Schlotzsky's Deli at 370 locations throughout 32 states nationwide and internationally.
  • The deli's occupy spaces of 2,800 sq.ft. in entertainment, power and strip centers.
  • Plans call for 40 openings throughout the central, Mid-Atlantic, midwestern and southwestern regions of the U.S. during the coming 18 months.
  • Typical leases run for terms of 10 years.
  • A vanilla shell and specific improvements are required.
  • Preferred demographics include a population of 50,000 within three miles earning $55,000 as the average household income.
  • Major competitors include Quiznos, Panera Bread and McAlisters Deli.
  • The company is franchising.
  • For more information, contact
    • Mark Whittle,
    • Focus Brands, Inc.,
    • 200 Glenridge Point Parkway,
    • Atlanta, GA 30342;
    • Web site:
  • Dairy Queen, DQ Grill & Chill and Orange Julius
  • American Dairy Queen trades as Dairy Queen, DQ Grill & Chill and Orange Julius at 5,893 locations nationwide and internationally.
  • The dessert shops/restaurants, offering burgers, ice cream, smoothies and fries, occupy spaces of 2,600 sq.ft. to 3,600 sq.ft. in freestanding locations.
  • Plans call for 50 openings nationwide during the coming 18 months.
  • Typical leases run 30 years.
  • Preferred cotenants include Target and Wal*Mart.
  • Preferred demographics include a population of 30,000 within three miles earning $35,000 as the minimum household income.
  • Major competitors include Burger King, Culvers, McDonald's, Steak & Shake and Wendy's.
  • A land area of 34,000 sq.ft. is required.
  • For more information, contact
    • American Dairy Queen,
    • PO Box 390286,
    • Minneapolis, MN 55439-0286;
    • 952-896-8604,
    • Web site:
  • Wendy's
  • Wendy's International, Inc. trades as Wendy's at 6,500 locations nationwide and internationally.
  • The fast food restaurants occupy spaces of 2,800 sq.ft. to 3,300 sq.ft. in freestanding locations, lifestyle, power and strip centers, in addition to urban/downtown areas.
  • Growth opportunities are sought nationwide during the coming 18 months.
  • Typical leases run 15 years with 15-year options.
  • Preferred demographics include a population of 20,000 within two miles.
  • A land area of one acre is required for freestanding locations.
  • For more information, contact
    • Kris Kaffenbarger,
    • Wendy's International, Inc.,
    • One Dave Thomas Boulevard,
    • Dublin, OH 43017


Capital Funds for Homeless Shelters!

Homeless Providers Grant and Per Diem Program

  • POSTED: 1/23/2009
  • FUNDING SOURCE: Dept. of Veterans Affairs
  • ELIGIBILITY: Nonprofit and public agencies, including states and local governments
  • $ AVAILABLE: $15,000,000
  • DEADLINE: 3/25/09
  • DESCRIPTION: Grants for capital improvements to housing for homeless persons.

Improve Transportation in Federal Parks!

  • Paul S. Sarbanes Transit in Parks Program
  • POSTED: 1/23/2009
  • FUNDING SOURCE: Dept. of Transportation
  • ELIGIBILITY: Federal land management agencies
  • $ AVAILABLE: $26,900,000
  • DEADLINE: 2/27/09
  • DESCRIPTION: Funds for capital and planning expenses for alternative transportation systems such as buses and trams in federally-managed parks and public lands.


  • General Growth seeks investment partner
  • Public Policy Initiatives
  • Housing in Crisis: When Will Metro Markets Recover?
  • Park Transportation & Homeless Shelter Grants
  • Economic Notes
  • This Weeks Leads

    • Employment Growth: -1.9% (-0.9%, -0.2%)
    • Employment Peaked September 2008: 1,261,050
    • Unemployment Rate:
      • December 4.3%
      • November 3.7%
      • October 3.5%
      • September 3.5%
      • August 3.7%
      • July 3.5%
      • June 3.3%
      • May 3.2%
      • April 3.1%
      • March 3.3%
      • February 3.0%
      • January 2008 3.0%
      • December 2007 2.9%
      • November2007 2.8%

      Source: Utah Dept of Workforce Services, 1/17/09

    Utah Economic Snapshot - First Six Months FY2009 YTD

    Utah State Government (Five & Four Months)

    • Sales and Use Taxes (Gen Gov't, Higher Education) -10.1% (-7.3%, -8.6%)
    • Individual Income Taxes (Public Education) -15.3% (-15.8%, -12.6%)
    • Corporate Franchise Taxes (Gen Gov't) -14.1% (+1.6%, +10.6%)
    • Motor Fuel Taxes (Transportation) -7.6% (-15.4%, - 11.4%)
    • Severance Taxes (Gen Gov't) +88.2% (+111.5%, +95.8%)

      Local Government

    • Sales and Use Taxes (includes food) -6.3% (- 5.6%, -4.4%)
    • Transient Room Tax -7.5% (-12.4%, -4.6%)
    • Tourism, Recreation, Cultural, Convention -5.3% (-4.8%, +4.0%)
    • Municipal Telecommunications License -11.6% (- 13.9%, -18.7%)
    • Emergency Services Phone Charge -10.6% (- 11.6%, -14.9%)
    • Public Transit -8.3% (-9.6%, -4.8%)


      Projected Growth & Actual (6 months - July - Dec)

    • Sales tax -9.0 % -10.1 % <= (-3% from loss of food)
    • Income tax -6.9% -15.3% <= (did they miss on their new withholding tables?)
    • Corporate tax -29.0% -14.1% (holding up better than I expected, should drop more)
    • Motor Fuel tax (B&C) -1.1% -7.6% (finally, the $4 price makes an impact on drivers)
    • Special Fuel taxes (B&C) 2.2% -7.0%

    Source: Utah State Tax Commission, TC-23 1/15/08

    Summary: Comments by Doug Macdonald, Former Tax Commission Chief Economist

  • Public Policy Initiatives
  • Public Policy Initiatives

    • OH - Strickland Offers Bold Plan for Schools. Saying that Ohio needs a 21st century system of public education, Gov. Ted Strickland unveiled what he called a "transformational" plan to change how schools are funded and run while not raising taxes in the next state budget. Strickland, who has staked his success as governor on reforming school funding, offered a six-point plan that would add $925 million to education funding in the next two years alone. "It is absolutely clear to me that simply tinkering with centuries-old education practices will not prepare Ohio's children for success in college, in the workplace, or in life. Therefore, today I present my plan to build our education system anew," Strickland said. adsec=politics&sid=101
    • OR - Opinion: Kulongoski Works to Repower Oregon. President Barack Obama wasted no time in removing a federal thorn in the side of state climate solutions. He directed the Environmental Protection Agency to review - and presumably reverse - its refusal to allow 15 states, including Oregon, to get cleaner cars. Automakers can deliver cleaner cars now, with existing technology, and save Oregonians a bundle on their fuel bills in the deal. Gov. Ted Kulongoski is stepping up to this challenge. He plans to "Repower Oregon" with a comprehensive strategy to improve energy efficiency, provide transportation choices, and turbocharge our new energy economy. At the core of this strategy, tying together all the pieces is a solid foundation - a real, no-nonsense commitment, with a firm timetable, for reducing global warming pollution and making Oregon more energy independent.
    • NJ - Corzine Awards Grants for Bikeway Projects. Berkeley and Wall townships will receive state grants to continue bikeway projects. The two Shore-area towns were among 19 municipalities across the state which shared in a $4.4 million pot of Department of Transportation municipal Bikeways grants announced by Commissioner Stephen Dilts. The grants will help municipalities work toward a goal of having 1,000 miles of dedicated bikeways throughout the state, Gov. Jon S. Corzine said in a statement. The state awarded approximately $1.5 million more in grants this year than in fiscal 2008, he said/
    • CO - Ritter Seeks to Expand Bioscience Sector. Gov Bill Ritter has released the "Colorado Bioscience Roadmap," a report that shows gains in employment and investment in an economic sector that the governor said has become a key driver toward economic recovery. The sector employs 18,000 Colorado workers spanning 920 establishments, an increase of 5.5 percent from 2003. The Bioscience Roadmap also outlines a plan for continued development of the industry, building on research and technology transfer from Colorado State University, the University of Colorado and other entities.
    • DE - Markell Requests 'Honest Assessment' of State Government. To tackle a historic budget challenge and deliver efficient and effective government services, Gov. Jack Markell launched what he called an 'honest assessment' of state government. The assessment is a series of initiatives that will examine how the government spends taxpayer dollars, how to effectively measure agencies' performance, how to identify innovation and how to best meet the significant challenges facing Delaware. "We are facing the largest budget shortfall in Delaware's history. There are no easy answers, but there are honest ones," Gov. Markell said. "We must be open about our challenges and honest about our efforts to solve them if we are going to tackle the budget crisis and get our economy moving again. We can and must take a systemic approach to making government more efficient, effective, responsive and responsible." government
    • MD - O'Malley Announces Legislation to Reduce Global Warming. Gov. Martin O'Malley, along with sponsors Senator Paul Pinsky and Delegate Kumar Barve, unveiled legislation to commit Maryland to reduce its greenhouse gas emissions 25 percent by the year 2020. "In the current economic climate, under the new Obama Administration, Maryland cannot afford to let this opportunity pass us by," said Governor Martin O'Malley. "For our prosperity, for our current and future generations, and for the health of our State, which is so vulnerable to rising sea levels, we must take action on climate change now - not later. Maryland can't afford to be left behind. We must commit to taking the actions necessary to protect our environment, our economy, and our citizens." governor-martin--pol
    • MI - Granholm Works to Expand Access to Unemployment Benefit Services. Gov. Jennifer M. Granholm said that in this time of severe economic challenge, the state is utilizing every available resource to ensure that Michigan citizens have expanded access to file claims, resolve problems, and get information on unemployment benefits in a timely manner. "We have pulled out all of the stops to help those who have been most affected by the recession," Granholm said. "We are using every resource we have to beef up the help at the employment agency to ensure that citizens have expanded access to file claims for unemployment benefits and do so in a timely manner." http://www.allamerican/access-unemployment-benefit
    • NJ - Corzine: Federal Stimulus Will Help Fund Education, Health Care. Gov. Jon Corzine said the Garden State could receive close to $4 billion in federal stimulus money over two years to help pay for education and health care. Corzine called the federal stimulus package being advanced in the House "quite substantial," but warned that it won't be a blank check. "We ought to take this time and make sure we're reforming government, so it's not just a bailout," Corzine said.,0,3562081 .story
    • OH - Strickland Eyes Reform of Education. Gov. Ted Strickland will argue that the days of "tweaking'' are over when it comes to addressing how Ohio should fund its schools. The Democratic governor is expected to use his third state-of-the-state address to propose what he characterizes as "transformational'' reforms to Ohio's education system, again seeking to inspire Ohioans to think ahead despite the state's worsening economic woes. "The state cannot afford not to do it,'' Mr. Strickland said. "I have said for quite a length of time that we cannot allow current circumstances to prevent us from taking the steps that are necessary to deal with education so that our kids get the education they need.'' 1/NEWS
    • WI - Doyle Creates Office for Aid. Gov. Jim Doyle signed an executive order creating a new office to advise officials on how to spend the potentially billions in federal stimulus money the state is expected to receive from President Barack Obama's administration in the coming months. The Office of Recovery and Reinvestment is designed to help the government spend the money quickly and wisely by identifying potential spending obstacles and working with schools and local governments. One of the goals is to jumpstart the economy through job growth in a variety of different sectors, including University of Wisconsin System projects. es_office.php

  • Retail Notes:
  • Home Depot to close Expo stores

    Home Depot is closing its 34 Expo Design Centers and will begin liquidating the stores today. "Exiting our Expo business is a difficult decision, particularly given the hard work and dedication of our associates in that business and the support of our loyal customers," Chairman and CEO Frank Blake said in a statement. "At the same time, it is a necessary decision that will strengthen our core Home Depot business." SCT Newswire (1/27) , The Atlanta Journal-Constitution (free registration) (1/26) , The Globe and Mail (Toronto)/The Associated Press (1/26)

    Target to limit new-store openings

    Target announced it will reduce planned store openings, close its Little Rock, Ark., distribution center and freeze salaries for senior management, among other cost-cutting measures. "We are clearly operating in an unprecedented economic environment that requires us to make some extremely difficult decisions to ensure Target remains competitive over the long term," President and CEO Gregg Steinhafel said. Los Angeles Times/The Associated Press (free registration) (1/28) , Financial Times (1/27)

    New Wal-Mart CEO to continue green push

    Incoming Wal-Mart CEO Mike Duke will continue to push the retailer to become greener. The agenda includes eliminating phosphates in detergent, reducing waste and encouraging suppliers to adopt more sustainable practices. Duke will succeed Lee Scott as the company's CEO on Sunday. Reuters (1/26)

    General Growth seeks partner for California development

    Struggling to avoid bankruptcy, the developer of the long-delayed Elk Grove Promenade shopping mall is looking for investors to help complete the project.

    Ailing General Growth Properties Inc. has hired commercial real estate firm Jones Lang LaSalle to find new capital for the Promenade, according to an offering brochure. The brochure says General Growth is looking for a partner "to recapitalize and participate in the completion" of the 1.1 million-square-foot mall.

    General Growth confirmed it's looking for investors. "We are actively marketing Elk Grove Promenade for a joint venture partner," said company spokeswoman Nicole Spreck.

    The mall is 80 percent done but construction was halted last fall. The opening date has been moved back three times, most recently to the fourth quarter of 2010. The mall is a victim of the weak economy and the collapse of the housing market, which has hit hard in Elk Grove.

    Based in Chicago, General Growth is in serious financial trouble because of billions in debt.

    Source: ICSC, January 2009

  • Housing Notes:
  • Housing in Crisis: When Will Metro Markets Recover?

    Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that housing is about to hit bottom. Housing in Crisis: When Will Metro Markets Recover?, a comprehensive new study, evaluates the near-term prospects for housing markets in a recessionary environment.

    Key Findings

    • House prices will stabilize by the second half of this year.
    • The national Case-Shiller house price index will decline by another 12% from the third quarter of last year for a total peak-to-trough decline of 30%.
    • By the end of this unprecedented downturn, house prices will have declined by double digits peak to trough in nearly 62% of the nation's 381 metro areas. In about 10% of metro areas, price declines will exceed 30%.

    Source:, January 2009

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