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Show First Security Bank)ffers Utah Economic Outlook 1,164, an increase of 4.5 percent above a year ago. The $121 million in Utah Housing Agency bonds sold in June, carrying a mortgage cost near 12 percent, will further increase home building build-ing activity in the months ahead. Nonresidential construction value for the first five months totaled $197.7 million mil-lion up 15.5 percent. Several large commercial projects, including the $400 million Triad Center, have been announced for downtown down-town Salt Lake City. Residential real estate sales in the Salt Lake multiple listing area totaled 2,116 properties for the first six months of 1982, a decline of 19.5 percent. Mortgage rates in the third quarter are expected to remain in the 16-.5-17 percent range. .The recent judicial decision, up ' holding the due-on-sale clause in mortgage contracts, con-tracts, may reduce the availability of mortgage -assumption sales at below current market interest rates. The International recession in raw material commodity prices continues to be felt in , Utah. Kennecott Minerals has reduced their work force by 1,950 employees at the Utah Copper division. Employment at U.S. Steel's Geneva works has been cut by 1,550 and output has been significantly reduced. The changing economics of the international energy . sources are also evident in Utah. Reduced gasoline demand and surplus OPEC production have softened petroleum prices and consequently conse-quently there are currently 44 active drilling rigs in Utah compared with 72 a year ago. On the positive side, however, the $550 million Trailblazer Pipeline will.be completed this fall to take natural gas from the Over-thrust Over-thrust Belt to the midwest and the east coast. Increased spending for national na-tional military preparedness will also provide new jobs in Utah's defense and aero-space aero-space industry. credit will put downward pressure on interest rates, but the huge federal deficit will maintain continued pressure pres-sure in money and capital markets. The Federal Reserve and its current monetary policy is caught somewhere in the middle. The central bank is very much aware of the fragile nature of the nation's corporate financial structure and that continued high interest rates are pushing many firms every closer to bankruptcy. A 9lA percent unemployment rate which may go still higher is also of deep concern to the Federal Reserve. The Fed remains convinced, con-vinced, however, that the growth of money and credit must be held within their target ranges if inflation is to be sustainably reduced. Business activity in Utah in the third quarter is expected . to remain generally flat at the recessionary-induced levels recorded during the past several months. The tourist industry and other components of the service sector are experiencing growth, but basic raw material industries have been seriously impacted by the national recession. The unemployement rate in Utah will probably remain The national economy moves into the third quarter bumping along the bottom of the recessionary trough according ac-cording to Jeffrey L. Thompson, Thomp-son, Assistant Vice President and Manager, Park City Office First Security Bank, quoting the First Security newsletter. The quarterly report, which will be published publish-ed this week, is edited by Dr. Kelly K.Matthews, vice president and chief economist econo-mist for First Security Corporation, regional bank holding company. Real Gross National Product Pro-duct is expected to increase in the third quarter, but the pace of recovery in economic activity will be modest. An ending of recession and an improved economic climate cli-mate in the second half of 1982 will require increased consumer spending and subsequent sub-sequent inventory investment invest-ment by business. The - consumer sector is quite liquid reflecting reduced indebtedness, real gains in income, high rates of return on savings and the 10 percent tax cut. Despite this impressive potential buying power, we expect spending plans-especially for bit-ticket durablesto remain m cautious. Mounting unem.-ployment, unem.-ployment, depreciated asset values and high interest rates will restrain consumer generally unchanged in the third quarter. In June, the jobless rate stood at 8.0 percent, the same as the previous month, but sharply above the 5.8 percent rate of a year ago. Currently, Utah's rate of unemployment is about 1.5 percentage points below the national average -- a differential that has been typical over the past several years. Nonagricultural employment employ-ment is anticipated to continue con-tinue at 1 percent year-over-year growth rate in the months ahead. In June, nonagricultural employment reached 565,600 -up 5,200 jobs or 0.9 percent above last year. Employment in the mining, construction and manufacturing sectors was 3,400 jobs below June of 1981. Consumer spending, as measured by retail sales tax collections, was up 10.9 percent for the first eleven months of fiscal 1982. In recent months, however, that rate of increase was much lower, approximately 3.5 percent. Reflecting the increased number of Western Wes-tern 'Airline flights, passenger passen-ger activity at the Salt Lake International Airport was up 47 percent in May. For the first five months of 1982, residential building permits totaled 2,929 (down 28 'percent), but' for the month of May. permits for 'now duvlliituViinits reached1 '.- v !-; " ' NYr' y i ' ' ....... .ut;vVwVvvVi;Kv.t-.vk-..i.v.ki.i i. purse stings throughout the second half of 1982. Many industrial segments ' throughout corporate America Amer-ica are experiencing a severe liquidity squeeze. Condnued high interest rates are aggravating debtservice requirements, re-quirements, while at the same time, many raw material mater-ial commodity prices have plunged so sharply that cash flow from sales is insufficient to meet the costs of production. The fundamental cause of this continuing liquidity squeeze which is imposing major structural pair upon the mining, construction, agricultural, manufacturing and thrift industries is the Congress of the United States and the huge prospective prospec-tive federal deficit looming over the credit markets. The Treasury is expected to borrow at least $90 billion of new money during the . second half of 1982, while the recent budget resolution has little meaning in terms of actual, reduced expenditures for fiscal 1983. Interest rates arc expected to vary near present levels during the third quarter. In the second quarter the prime lending rate remained unchanged un-changed at 16"2 percent, while Treasury Bills varied between 12 - 13 percent. In the, months ahead, the nw.iknevs ( rtf llu- economy vV 4.YYYY ' " Y ViJ w C |