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GREENS CAN ENTER CASE OVER ROADS IN JUAB
(Source: Patty Henetz, Salt Lake Tribune, 9/5/08)

Three conservation organizations will be allowed to intervene in a case in which Juab County and the state sued the federal government over who owns three roads in western Utah's Deep Creek Mountains.

U.S. District Judge Tena Campbell this week granted the Southern Utah Wilderness Alliance, the Sierra Club and The Wilderness Society the right to be defendants in the lawsuit in which the state and county seek ownership of the roads.

Campbell agreed with the conservationists' arguments that they cannot rely on federal land agencies to adequately represent their defense of wilderness in cases involving a Civil War-era law known as Revised Statute 2477.

"Conservationists now will have a seat at the table on these RS2477 claims," SUWA conservation director Heidi McIntosh said Thursday. "We will be in the courthouse instead of standing on the steps with the doors locked."

But the state doesn't believe the organizations should be allowed to intervene since they had no claim of ownership at all.

"We're disappointed in the ruling," said Assistant Utah Attorney General Roger Fairbanks.

Bureau of Land Management state office spokeswoman Mary Wilson declined to comment because the lawsuit remains active.

At issue is how federally designated wilderness-study areas ought to be managed so as to preserve the special qualities of beauty and remoteness that led the BLM to list them in the first place. Roads that cross wilderness or wilderness-quality lands have become flash points in an increasingly polarized dispute.

Key to wilderness status is whether the land is roadless, which does not mean literally unmarked. Rather, the BLM in its survey of potential wilderness tracts limited study areas to those where there were no "substantially noticeable" roads.

McIntosh said the BLM wouldn't have included Tom's Creek, Granite Canyon and Trout Creek canyon roads in wilderness-study areas had they been well-established. Further, she said, they are not part of the state's transportation highway network.

Fairbanks said SUWA was assigning a modern definition to a 19th-century highway statute. Back in 1866, he said, there were no paved roads.

"Highways were wagon trails," Fairbanks said. "These roads are part of Juab County's highway system."

The roads, he added, are definitely noticeable. Utah doesn't want to pave them, Fairbanks said.

But they should remain open to Snake Valley residents who have used them for generations to reach favorite camping or picnicking areas.

WHAT IS RS2477 ?
(Source: Salt Lake Tribune, 9/5/08)

Revised Statute 2477, part of an 1866 mining law, granted rights of way across public land until it was repealed by Congress in 1976. When that happened, existing rights of way were grandfathered in. The definition of "existing" was at the heart of a 2005 10th U.S. Circuit Court of Appeals ruling that said the U.S. Bureau of Land Management must defer to state law when assessing counties' road-ownership claims. Under Utah law, existing roads are those that had 10 years of continuous use and county maintenance before 1976. Continuous-use claims now must be decided road by road in federal court.

CLEANUP KEEPS KENNECOTT OFF SUPERFUND LIST
(Source: Patty Henetz, Salt Lake Tribune, 9/4/08)

After undertaking a $400 million-plus cleanup - with a promise to spend even more - Kennecott will see its south Salt Lake Valley groundwater plume escape Superfund status.

Federal and state environmental regulators formally announced the decision Wednesday.

Kennecott's South Zone area - stretching across parts of South Jordan and West Jordan to the Oquirrh Mountain foothills - was proposed for Superfund listing in 1994 due to contaminated groundwater and soil near the Bingham Canyon Mine.

But officials say the company now has met its obligations under a 13-year-old agreement with the U.S. Environmental Protection Agency and the Utah Department of Environmental Quality to avoid being forced to clean up the site on regulators' terms.

"By taking a cooperative approach to the cleanup under the [agreement], the work was performed more efficiently and cost effectively than if we had used the traditional Superfund process," Andrew Harding, president and CEO of Kennecott Utah Copper, said in a statement.

Kennecott officials said Wednesday the tainted areas were mostly historic mining sites and operations, many inherited when the company bought the property.

In 1991, under Rio Tinto ownership, Kennecott approached EPA and DEQ with an accelerated-cleanup plan. The three parties signed an accord in September 1995 under which the company agreed to complete numerous cleanup projects on the site. In exchange, EPA agreed to take no further action toward listing the site and to withdraw the Superfund proposal once the cleanup was completed.

Kennecott's efforts have included addressing and controlling sources of groundwater contamination and cleaning up the South Jordan evaporation ponds and old mining sites.

The company has spent more than $400 million to decontaminate the South and North zones and has signed a long-term legal deal with regulators to continue the work.

Kennecott's South site includes the Bingham Mining District in the Oquirrh foothills, about 25 miles southwest of Salt Lake City. Mining activities began there in the 1860s and continue to the present at the large Bingham Canyon open-pit mine. Historic mining operations produced lead, zinc, silver, copper and gold.

BLM SETS ENVIRONMENTAL RULES
FOR SHALE ENERGY
(Source: Christopher Smart, Salt Lake Tribune, 9/6/08)

Utah's Uinta Basin holds a lot of oil shale and some tar sands, but what it will take to turn that potential into petroleum remains a question with no easy answers or time frame.

But Utah Republican Sens. Orrin Hatch and Bob Bennett praised the federal Bureau of Land Management, which released a multiyear study Friday that sets environmental rules for development of oil shale and tar sands on 1.9 million acres in eastern Utah, western Colorado and southwestern Wyoming.

What is called the "Programmatic Environmental Impact Statement" (PEIS) was required under legislation Hatch attached to the 2005 Energy Policy Act.

"A lot of people have been armchair quarterbacking on the environmental aspects of oil-shale development," Hatch said in a news release. "Now we have the official word from the actual experts on how the environment can be protected during oil-shale development."

But while Utah Republicans champion oil shale as a key to the nation achieving energy independence, Colorado Democrats, who have succeeded in clamping a moratorium on oil-shale and tar-sands mining, say the technology to economically tap that resource is years away and may never be feasible.

Despite mounting political pressure to increase petroleum production, Sen. Ken Salazar, D-Colo., will work to extend the ban on oil-shale and tar-sand development set to expire at month's end.

"The BLM itself has said that we are still years away from even knowing whether oil-shale development will be possible on a commercial scale," Salazar said in a statement. "They also report that they have no idea how much power would be required or what effect commercial oil-shale development would have on Western water supplies."

Utah's Bennett criticized the congressional moratorium and praised the BLM's new plan.

"The only obstacle standing in the way of producing more American oil through this abundant resource is Congress," Bennett said in statement.

Even if lawmakers lift the moratorium, the BLM document doesn't appear ready to kick open the door for immediate mining of oil shale. Rather, it sets up a number of critical steps that industry would have to pass before moving forward with production.

"The BLM anticipates that the eventual development of the oil-shale and tar-sands resources would proceed in a phased approach," the agency said in its study.

Among other things, exploration companies would have to demonstrate they can produce oil from shale or tar sands economically and in a manner that would not upset socioeconomics in surrounding communities. Further, production would have to adhere to tenets outlined in the National Environmental Policy Act.

Such development would be barred in about 400,000 acres in the three-state area. Those lands include "wilderness study areas," "wild and scenic rivers" and "areas of critical environmental concern," among others.

In 2007, the RAND Corp., a nonprofit policy research institute, estimated the region held 800 billion barrels of recoverable oil. But the oil contained in the shale is kerogen, a waxy hydrocarbon that hasn't undergone the geologic pressure and heat necessary to create petroleum.

To extract the oil, the current technology requires strip mining and heating the rock to 1,000 degrees Fahrenheit. This process produces greenhouse gases and requires huge amounts of water. Even if the kerogen could be siphoned economically from the rock in commercial quantities, no U.S. oil refinery currently accepts it for processing.

Shell Oil Company is experimenting with technology that heats the ground to 700 degrees for several years so that oil shale can be extracted similar to conventional drilling. Whether that process works, company officials say, won't be known for years.

In an earlier interview, Hatch conceded that oil-shale mining would not lower gasoline prices in the near future.

– Patty Henetz contributed to this report.

GREENHOUSE GASES: UTAH BACKS REGIONAL 'CAP-AND-TRADE' PLAN
(Source: Robert Gehrke and Patty Henetz, Salt Lake Tribune, 9/24/08)

The Western Climate Initiative includes Arizona, California, Montana, New Mexico, Oregon, Utah and Washington and Canadian provinces British Columbia, Manitoba, Ontario and Quebec.

The group has advanced a plan to reduce global warming pollution by capping greenhouse gas emissions and allowing auctions or trades of credits allocated according to a monitored system. Each state and province will create its own path to the overall goal of reducing emissions to 2005 levels by 2020.

In Utah, a panel of interest groups will craft necessary policy for consideration by the 2010 Legislature.

All large utilities and industries that emit more than the equivalent of 25,000 metric tons of greenhouse gases must by federal law submit a report on their actual emissions by 2011.

The deadline for WCI member states and provinces to implement their cap-and-trade systems is 2012.

Utah is joining a regional push to cut greenhouse gas emissions that contribute to global warming through a carbon cap-and-trade program, Gov. Jon Huntsman Jr. announced Tuesday.

A proposal crafted through the Western Climate Initiative aims to reduce carbon dioxide and other gas emissions by 15 percent by 2020.

But the plan for now is just a framework, "the beginning of extensive discussions that will continue with our Legislature and stakeholders to ensure the design works for Utah," said Dianne Nielson, Huntsman's energy policy adviser.

Already, though, some state lawmakers worry that the initiative could hinder the state's economic growth.

"We want to protect the environment. We want to protect the air quality and do all those things . . . but we want to make sure that the coal industry and some of these that are important economic drivers for our state" are not harmed, said House Speaker Greg Curtis, R-Sandy, who was briefed on the program Monday.

As proposed, the Western Climate Initiative, which includes seven Western states and four Canadian provinces, will use emissions from 2010 as a baseline for cap-and-trade.

Beginning in 2012, each partner will be granted emission "allowances" that will move the state to the WCI's goal.

It then will be up to each state or province to decide how to distribute its allowance.

Carbon "offset" credits from uncapped sectors or entities that reduce emissions could be auctioned.

Nielson said that Utah's approach to greenhouse gas reductions would be spelled out in a bill to be written for the 2010 Legislature.

A task force - composed of lawmakers, executive branch representatives, industry, utilities, energy producers, consumer groups, environmental advocates, local government and others - would be assembled to nail down the details the bill would include, she said.

Under the WCI framework, emissions would be rigorously monitored. If a company, utility or some other entity doesn't have enough allowances to cover its emissions, it could lose some of its allowances as a penalty, forcing it either to buy more credits or cut its emissions.

When Huntsman enlisted the state in the Western Climate Initiative in 2007, some lawmakers were irritated that they weren't consulted first. A bill aimed at limiting the governor's power to enter into such agreements in the future passed the Legislature by an overwhelming margin last session, but Huntsman vetoed it and agreed to consult with legislative leaders before he commits the state to future partnerships.

Curtis said lawmakers want to know more about the cap-and-trade plan.

''I don't feel like we've been deeply consulted,'' said Curtis, who had a planned meeting on the proposal with the governor Monday, but it was replaced with discussion of the state's $272 million budget shortfall.

WCI proponents say that, in addition to reducing emissions, the plan would ease dependence on fossil fuels and spawn new "green" industries.

Utah Clean Energy executive director Sarah Wright said Utah's approach likely would be conservative because the state could achieve the "cap" part of the plan largely through an aggressive energy efficiency program Huntsman already has in place.

"It's not a sea change in the way we generate and use energy," Wright said. "We're not going to be closing down coal plants."

Nielson said the WCI wanted a cap-and-trade plan rather than a carbon tax, which would have been more expensive.

"We want it to be an affordable system," she said. "We're looking to be sure we have a diversified energy base, and that includes coal," she said.

Britt Weygandt, executive director of the Western Business Roundtable, a pro-industry group, said the organization is still examining the WCI plan. However, he said, a regional cap-and-trade system "would dramatically increase costs to consumers in the West of virtually everything we buy."

That's not how the Union of Concerned Scientists sees it. Christopher Bush, a UCS climate economist, said analyses conclude that region's economy would benefit from investments in global warming solutions.

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WALL STREET: CRUDE, METAL FUTURES TUMBLE
(Source: Combined News Services, 9/3/08)

NEW YORK - Investors are fleeing commodities in another huge exodus, reviving debate about whether the futures bubble has burst or is just going through a temporary contraction.

A steep drop in oil prices Tuesday started the latest selling wave, and gold, silver, copper and wheat also posted huge losses.

The broad decline led to a 270-point swing on the Dow, with the stocks of oil and metals companies sinking and dragging on the broader market. The Dow Jones Industrial Average, up more than 250 points early in the day, finished Tuesday down more than 26 points.

''All of these markets seem to be going hand in hand,'' said Darin Newsom, senior analyst at DTN in Omaha, who called the speed of the pullback ''startling.''

Crude tumbled $5.75 to settle at $109.71 a barrel on the New York Mercantile Exchange after it appeared that Hurricane Gustav struck only a glancing blow to the Gulf of Mexico's offshore energy infrastructure.

At one point, oil was down to about $105, the lowest trading level since April 4, just before oil began an unprecedented march above $147 per barrel.

The sell-off in oil in turn dragged virtually every major commodity sharply lower as hedge funds and other large institutional investors raced to dump positions.

Precious metals prices collapsed. Gold for December delivery fell as much as $40 an ounce on the Nymex before paring its losses to settle $24.70 lower at $810.50. In other Nymex trading, platinum prices lost $86.30, or 4.86 percent, to $1,403.50 an ounce, while silver shed 56.2 cents, or 3.6 percent, to $13.145 an ounce. Copper fell 11.4 cents, or 3.3 percent, to settle at $3.273 a pound.

The sell-off comes amid a flurry of bearish moves for commodities. A stronger dollar has eroded the appeal of commodities as a hedge against inflation, and a global economic slowdown is weakening demand for copper, lead, aluminum and other industrial metals.

But the declines will give consumers only limited relief; though gasoline prices have come down nationally (though more slowly in Utah) as crude falls, food prices at the grocery aisle have been slower to drop as food companies work through more expensive raw materials.

It's a stark turnaround from only a few months ago when prices for oil, gold and grains were touching record highs, driven up by weakness in the U.S. currency and seemingly relentless demand for raw materials.

Analysts are split over whether commodities are in the throes of a protracted decline or are simply hibernating before the next boom. Some market watchers say historic run-ups in oil, precious metals and agriculture prices in the first part of the year were mainly speculative-driven rallies that were detached from fundamental supply and demand.

In other economic news Tuesday, the Institute for Supply Management said its reading for the nation's manufacturers fell to 49.9 in August from 50 in July, signaling sluggish growth the rest of the year. A reading below 50 signals contraction, while a reading above 50 signals growth.

Separately, the Commerce Department said construction spending declined 0.6 percent in July, double the 0.3 percent decrease analysts had expected.

Housing activity fell for a 16th consecutive month, declining 2.3 percent to a seasonally adjusted annual rate of $357.8 billion. That was the lowest level since March 2001, the start of the last recession.

Nonresidential activity, which had been offsetting some of the weakness in the residential sector, also fell in July, dropping 0.7 percent to an annual rate of $416.8 billion. It was the first setback in that category since December.

FED HOLDS RATES, THEN BAILS OUT AIG
(Source: Combined News Services, 9/17/08)

NEW YORK - The Federal Reserve resisted a cut in interest rates and then announced it would provide up to $85 billion in an emergency, two-year loan to rescue insurance giant American International Group Inc.

In return, the government will get a 79.9 percent stake in AIG and the right to remove senior management.

The moves, along with a slight rebound on Wall Street, offered some respite after the chaos that shook the financial system Monday when investment house Lehman Brothers declared the largest bankruptcy in U.S. history and the Dow Jones industrials suffered its biggest point drop since the 2001 terrorist attacks.

The Fed said it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy.

The move was similar to government's seizure on Sept. 7 of mortgage giants Fannie Mae and Freddie Mac, where the Treasury Department said it was prepared to put up as much as $100 billion over time in each of the companies if needed to keep them from going broke.

Both moves were bound to raise questions about the use of taxpayer money to bail out private firms.

AIG is little known off Wall Street but does business with almost every financial institution in the world. It insures $88 billion worth of assets and plays an outsized role insuring mortgages and corporate loans, but even more threatening was its integral role in the murky world of hedge funds and credit derivatives.

All three major credit rating agencies had cut AIG's ratings at least two notches Monday night, and although the new ratings were still considered investment grade, they added pressure on AIG as it sought tens of billions of dollars to strengthen its balance sheet.

A collapse of AIG would force Wall Street to untangle the complex credit derivatives markets and send the market scrambling to figure out who owes what to whom - or even who owns what.

The White House said it backed the Fed's decision Tuesday. After meeting with Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke in a late-night briefing on Capitol Hill, Congressional leaders said they understood the need for the bailout.

The Fed stepped in hours after it decided, in its first unanimous vote this year, to keep the closely watched federal funds rate unchanged at 2 percent. At the same time, however, the Fed noted that strains on the market have ''increased significantly'' and said it was ready to act if needed.

Stocks slumped after the Fed announcement. The Dow initially dropped about 100 points but rallied to finish the day up 141, and back over 11,000.

As AIG teetered, central bankers around the globe scrambled to revive credit markets. The Fed injected $70 billion into the American financial system. The European Central Bank pumped one-day financing of nearly $100 billion into the 15-nation zone. The Bank of Japan added $24 billion, and England's central bank almost $36 billion.

Separately, Bank of America Corp., which in July bought battered Countrywide Financial Corp., began to work out how it would digest its $40 billion acquisition of Merrill Lynch after its shotgun wedding with the brokerage on Sunday.

In the wings, Goldman Sachs Group Inc., which began the year as one of five large investment banks and is now one of two, reported its worst profit drop since going public in 1999. Goldman's third-quarter profit dropped 71 percent to $810 million, while revenues plummeted 50 percent.

The only other investment bank left standing, Morgan Stanley, had better news. It reported solid quarterly profits - though down 7 percent from a year earlier - and surpassed Wall Street's expectations.

U.S. SEIZES CONTROL OF MORTGAGE GIANTS
(Source: Neil Irwin and Zachary A. Goldfarb, Washington Post Staff Writers, 9/8/08)

The government seized control of Fannie Mae and Freddie Mac yesterday in a dramatic bid to restore faith in the embattled mortgage giants and arrest a vicious cycle that has driven the nation's economy into a steep downturn.

Following weeks of round-the-clock planning, Treasury Secretary Henry M. Paulson Jr. announced the takeover to try to stabilize the deeply troubled housing and financial markets. Fannie Mae and Freddie Mac, with a combined 11,000 employees, have funded more than two-thirds of U.S. home loans in recent months, and doubts over their ability to continue doing so had threatened to immerse the economy into even more turmoil.

With home loans harder to come by, buyers have recently been unable to make purchases, causing the housing market to tank further, leaving banks and other lenders with huge losses. Those losses, in turn, have made loans even harder to get.

"Our economy will not recover until the bulk of this housing correction is behind us," Paulson said yesterday. "Fannie Mae and Freddie Mac are critical to turning the corner on housing."

There is no guarantee that the takeover will work, and it comes at a potentially massive cost to taxpayers. The government has pledged to inject money in the companies in any quarter in which they would otherwise be insolvent -- up to $100 billion in total for each company.

"This is a shareholder bailout financed by the U.S. taxpayers," said Armando Falcon Jr., formerly the chief regulator of Fannie Mae and Freddie Mac.

Paulson also announced a separate program in which the government will start buying securities backed by mortgages -- $5 billion worth, initially. That will, in effect, subsidize the purchase of homes by lowering the interest rate that buyers must pay for a mortgage.

Paulson said that both the potential investment in Fannie Mae and Freddie Mac and the planned purchase of mortgage-backed securities are designed to protect taxpayers. The government has received $1 billion worth of preferred stock in each company upfront in exchange for the guarantees, for example, and government officials said taxpayers have a good chance of profiting from the purchase of mortgage bonds.

The Treasury secretary also named new executives at Fannie and Freddie. Herbert M. Allison Jr., who most recently served as chairman and chief executive of TIAA-CREF -- the pension fund giant serving employees in the academic, medical, cultural and research fields -- will take over at Fannie. David M. Moffett, previously vice chairman and chief financial officer of U.S. Bancorp, will lead Freddie.

These are the latest -- and so far, most expensive -- efforts by the government to contain a financial crisis that began in the subprime mortgage market and has metastasized to encompass all types of debt markets. The International Monetary Fund has estimated the global losses will total nearly $1 trillion before the crisis ends.

The government should have done more - or did it do too much? Alan Greenspan encouraged a housing boom that was destined to collapse. The White House and Congress were lax in overseeing the captains of finance.

People bought homes they couldn't afford. Investors eagerly bought mortgage-backed securities they didn't understand. Human nature was a guiding force in markets that were first driven by greed and then shaken by fear.

It turns out there's lots of blame to go around for the spreading financial crisis. And political hay to be made. Financial markets around the world tumbled as the deepening U.S. financial crisis took its biggest casualties.

In rapid fire succession over the past three days: Investment bank Lehman Brothers Holdings filed for bankruptcy protection, and fellow longtime Wall Street institution Merrill Lynch agreed to peddle itself in a fire sale to Bank of America.

And the world's largest insurance company, American International Group Inc., faced possible restructuring. What had happened?

Some seeds of the current crisis were planted in the late 1990s, when Congress and President Clinton reshaped the financial landscape. They removed Depression-era barriers between commercial banks and investment firms and allowed the creation of financial behemoths where, years later, the risks of underwriting risky subprime mortgages were somewhat hidden.
A chief author of that law was Phil Gramm, then a Republican senator from Texas and until recently one of McCain's top economic advisers.

McCain voted for a Senate version of the bill but did not vote on the final package. Democratic vice presidential nominee Joe Biden voted against the Senate version but for the final compromise that was signed by Clinton.

Jim Leach, an Iowan who was chairman of the House Banking Committee when Congress enacted the overhaul, said he believes the current problems stem mostly from lawmakers' unwillingness to more closely regulate either the mortgage giants Fannie Mae and Freddie Mac or investment banks.

That has led to a proliferation of "new Wall Street instruments that came to be sliced and diced to the advantage of short-term profit-taking but long-term liabilities," Leach said in an interview. "Wall Street became better at sales than at financial judgment."
"Greater scrutiny should have been given" to investment banks and other financial firms that offered mortgages but without keeping adequate reserves to guard against bad loans, said David Jones, chief economist at DMJ Advisors, a Denver-based consulting firm. He also said Greenspan's Fed kept interest rates too low too long. "But that's water over the dam."

But despite now-widespread calls for stricter rules, "regulation will never solve the entire problem," Jones said.

"That's because the problem is basically human nature, which will always fluctuate between greed and fear, between euphoria and despair, between complacency and panic. That's always going to happen."

UTAH'S ECONOMIC UPS, DOWNS:
JOB GROWTH SLOWS, GAS PRICES FALL
(Source: Lesley Mitchell, Salt Lake Tribune, 9/17/08)

Utah released its worst jobs report in five years Tuesday, but an upbeat inflation report provided some hope to consumers battered by a sliding economy.

The Utah Department of Workforce Services said overall employment in the state crept up by only 0.3 percent in August over the same month last year. The lowest monthly employment growth rate since August 2003 translates into a gain of 3,260 new jobs over the past year, down substantially from a peak gain of 5.4 percent and 54,000 jobs in the year that ended June 2006. But against the backdrop of that sobering news, the monthly inflation report offered some relief as the slow decline in gasoline prices in Utah provided help to those squeezed by higher prices for food, rents, utilities and health care.

In fact, falling fuel costs meant that the consumer price index for the Wasatch Front rose only 0.1 percent from July to August, Wells Fargo & Co. reported Tuesday. That compares with an almost-unheard-of 1.1 percent increase from June to July. Nationally, consumer prices fell 0.1 percent last month after two months of large increases.

Just last month, Utahns were paying the third-highest gas prices in the country, significantly above the national average. On Tuesday, the average cost of a gallon of unleaded gasoline in the state was $3.78, down from $4.05 one month ago and a peak of $4.22 July 18, according to travel-services company AAA Utah. The national average is $3.85, with Utah now ranking in the middle among all states in terms of gasoline prices.

Utah motorists such as Mike Sorensen of Midvale have seen some sizable drops in just the past few days.

Sorensen said he paid $3.73 for regular unleaded three days ago, while the same station on Tuesday was charging $3.67.

But Sorensen, like a number of consumers, isn't cheering just yet. "I think pretty soon it's going to go right back up to $4 per gallon," he said gloomily.

Economist Kelly Matthews of Wells Fargo & Co. says pump prices could continue their slide if oil prices continue to fall from their peak of around $140 a barrel to around $91 a barrel on Tuesday.

Nationally and locally, food prices have yet to fall, but Matthews thinks grocery prices should ease as gasoline prices - and subsequently transportation costs - decrease.

"The big break for consumers now is in gasoline," he said. "Lower gasoline prices don't solve all our problems, but combined with lower mortgage rates, it's really good news."

The lingering question in the reports out Tuesday is how well Utah's economy will fare in coming months, and whether Utah's job growth and inflation will worsen.

Although a number of industry sectors continue to add jobs, they are doing so at a lesser rate than when the state's and nation's economies were booming. And the state's construction industry - along with related sectors such as finance - continue to shed jobs. The manufacturing sector isn't going so great, either, furthering an overall trend toward fewer manufacturing jobs nationally.

One bright spot is that commercial construction activity - thanks to such projects as the new skyscraper taking shape at 222 S. Main and the LDS Church's City Creek Center project - is helping make up for some of the loss in home-building activity. And when it comes to creating jobs Utah is doing better than the nation as a whole, which saw growth of negative 0.3 percent for August in contrast with Utah's positive 0.3 percent.

And Utah's unemployment rate, though up, was 3.7 percent in August, compared with the national rate of 6.1 percent.

Although Utah's employment outlook will continue to weaken, economist Mark Knold of the state's Workforce Services department said he isn't predicting widespread job losses similar to those that have hit other parts of the country.

"I believe our unemployment rate will remain below the national average. In Utah, I think the rest of the industries aside from construction, finance and manufacturing are going to stay pretty healthy."

FED REPORT: ECONOMY IS STUCK
IN SLOW-GROWTH RUT
(Source: Combined News Services, 9/4/08)

WASHINGTON - The country is stuck in a slow-growth rut, the Federal Reserve suggested.

Higher prices for energy, food and other things are pinching people and businesses - reasons enough for the economy to be Americans' top concern heading into the presidential elections.

The Fed's report on business conditions around the nation provided fresh evidence of the toll that housing, credit and financial problems are taking on the economy as a whole.

With problems expected to persist into next year, the next president - be it John McCain or Barack Obama - is likely to face many challenges.

Heading into the fall, "economic activity has been slow" in most of the Fed's 12 regions, according to the report. Businesses described the climate as "weak" or "soft" or "subdued."

A growing number of analysts believe the economy could be thrown into a tailspin later this year and early next year as consumers and businesses curtail their spending even more.

"Over the course of this summer it became clear that the economic headwinds have not subsided as hoped," Eric Rosengren, president of the Federal Reserve Bank of Boston, said in a speech Wednesday.

The Fed's report noted that consumers - major shapers of the economy - were cautious. Shoppers "concentrated on necessary items and retrenchment in discretionary spending," the Fed observed.

The Fed regions of Chicago, Dallas and San Francisco (which includes Utah), for instance, reported noticeable declines in spending on clothing, electronics and jewelry. Sales of furniture and household appliances were weak in most parts of the country - victims of the housing slump.

Auto sales, meanwhile, tumbled, according to company reports out Wednesday. Ford Motor Co.'s U.S. sales fell 26.5 percent in August. Sales at General Motors Corp. dropped 20.3 percent from a year ago. Toyota's sales sank 9.4 percent.

Wall Street had a mixed reaction to all the news. The Dow Jones industrial average gained 15.96 points to close at 11,532.88. Other stock indexes dipped.

Caught between dueling concerns of slow growth and inflation, the Fed is expected to leave a key interest rate alone at 2 percent when it meets next on Sept. 16 and probably through the rest of this year.
The Fed at its last two meetings didn't budge the rate out of concerns about inflation. Before that, though, the Fed had aggressively cut rates to shore up the economy.

With the Fed on hold, Democratic presidential nominee Obama has called for a second round of government stimulus, while his GOP rival McCain has favored free-trade and other business measures to spur the economy.

In a separate report, the Commerce department said orders placed iwth U.S. factories rose 1.3 percent in July as demand for commercial aircraft, hevay machinery and iron and steel all posted gains.

Factories have been helped by the drooping value of the dollar, which makes U.S.-made goods cheaper and more attractive to foreign buyers. That also has helped to boost overall export growth.

NEW HOME SALES FALL IN AUGUST
(Source: Associated Press, 9/25/08)

WASHINGTON (AP) -- Weekly jobless claims surged to the highest level in seven years, durable goods orders took a bigger-than-expected tumble and new home sales plunged to the slowest pace in 17 years, according to government data released.

The latest trifecta of bad news about the economy raised new worries about a possible recession and underscored the concerns that are driving Congress and the White House to reach agreement on an historic bailout of the financial system.

The Labor Department reported that jobless claims jumped by 32,000 to a seasonally adjusted 493,000 last week, the highest level since shortly after the Sept. 11, 2001 terrorist attacks and far above what economists had been expecting.

Labor Department analysts said that Hurricanes Ike and Gustav added about 50,000 claims, but even discounting the adverse impact from job disruptions in Louisiana and Texas, the four-week average for claims rose to 445,000, the highest it has been since November 2001, the month the last recession ended.

In a second report, the Commerce Department said that new orders to factories for big-ticket manufactured goods fell by 4.5 percent last month, led by a big drop in demand for airplanes but also reflecting weakness in everything from autos to primary metals and machinery.

The third weaker-than-expected report showed that new home sales plunged by 11.5 percent in August, a much bigger decline than the 1 percent dip that had been expected. It pushed sales down to a seasonally adjusted annual rate of 460,000, the slowest pace since January 1991.

JOBLESS RATE AT HIGHEST IN 5 YEARS
(Source: Jeannine Aversa, Associated Press, 9/6/08)

WASHINGTON – The nation's unemployment rate bolted above the psychologically important 6 percent level last month for the first time in five years – and it's likely to go even higher, possibly throwing the economy into a tailspin as Americans pick a new president.

A blizzard of pink slips propelled the jobless rate from 5.7 percent in July to 6.1 percent in August, the Labor Department reported yesterday. Such a sharp increase is usually a strong recession warning, and it dashed investors' hopes for a late-year recovery.

Worried about the economy and their own business prospects, employers cut payrolls by 84,000 in August, marking the eighth straight month of losses.

So far this year, 605,000 jobs have vanished. The economy needs to generate more than 100,000 new jobs a month for employment to remain stable.

Richard Yamarone, economist at Argus Research, feared that the jobless rate would cause consumers and businesses to "move from a moderately concerned stage to outright fear" and reduce their spending even more.

A toxic trio of housing, credit and financial problems has shaken the economy, and the crisis shows no signs of letting up. It's the public's top worry, and many experts believe the situation will get worse before it gets better.

The unemployment increase means many companies will feel pressure to reduce their business investments – either in capital projects or hiring – for the rest of the year.

"Mix business caution with consumer exhaustion and you have a recipe for a real recession," said Terry Connelly, dean of Golden Gate University's Ageno School of Business.

The number of unemployed rose to 9.4 million in August, compared with 7.1 million a year ago. Economists predict more job losses ahead, pushing the unemployment rate to 7 percent by fall of 2009, according to some projections.

Against this backdrop, a growing number of analysts predict the economy will jolt into reverse in the final three months of this year and possibly in the first three months of next year, meeting a classic definition of a recession.

The economy shrank late last year and barely budged at the start of this year. Growth picked up in the spring, thanks to brisk exports and the government's tax rebates, which energized shoppers at home. But that rebound wasn't expected to last.

Slower growth overseas will probably cause exports to fall off just as Americans are cutting their spending and the benefits of the rebates disappear.

Job losses were widespread at factories – especially housing-related manufacturers and automakers – as well
as construction companies, retailers, mortgage brokers, real-estate firms, hotels and motels, and temporary-help firms, which are looked at as a barometer of demand for future hiring.