Utah economists predict crawling recovery may just get to its feet by end of year, but offer no guarantees.

In the race to economic recovery, state economist Mark Knold sees Utah heading into 2010 in a tight relay with plenty of uncertainty ahead.

Federal stimulus money gave the state a much-needed boost in the last quarter of the sprint, but now it's time for the baton to be passed to the consumer. Will the hand off be clean, improving chances of the state bouncing back from the worst recession since the Great Depression? Or will the baton be dropped, leaving Utah's jobless and its cash-strapped businesses struggling to pick up the pieces and catch up?

Knold doesn't think the exchange will be perfect, but if it comes off smoothly, there might be reason for hope come year's end.

'The highest probability is a year of recovery and rebound,' the chief economist for the Utah Department of Workforce Services said. 'Of course, it will be less than stellar. It will be a slow recovery in the first half of the year. But by the time we get to the end of 2010, we may actually start having more jobs in November and December than we had this year [2009].'

Then again, prospects that a hand off might be fumbled, that consumers worried about staying employed might not spend the economy out of its doldrums, are significant enough that the notion of a protracted recovery cannot be ignored.

'There is a perspective that what is going on now is artificially strong, a byproduct of federal stimulus money making things happen,' Knold said. 'Once the stimulus is gone, is the consumer ready to grab [the recovery] and keep it going? If not, we will have a slowdown that creeps back into the economy and pushes it further back down the road into 2011.'

Both scenarios are laid out in forecasts given to the Governor's Office and legislative leaders heading into budget-crafting season. Knold thinks the gloomier scenario has only a 1-in-4 chance of materializing. He is forecasting that hiring conditions will improve about midyear.

Overall, he predicts there will be negative job growth of about 1.8 percent in 2010 but that the rate will reflect a change from minus 3 percent growth early in the year to zero percent by year's end.

'I'm not necessarily seeing any industries experiencing strong growth, joining the health care and government sectors in creating new jobs,' Knold said. 'They're just going to stop the bleeding. It will mostly be a moderation of the jobless percentage.'

So, will Utah workers feel better off come 2011?

The answer depends on several factors that impact personal finances, but overall the outlook is dicey.

Many employees (though not all) who took pay cuts this past year or lost employer matches to 401(k) retirement funds don't seem likely to get that money back even if the economy perks up -- a deficit compounded by expectations of higher health insurance premiums.

But retirement portfolios could show gains. Wells Fargo Bank economist Sterling Jenson is among those optimistic about what 2010 has in store for Wall Street.

'I'm pretty bullish on the stock market for this next year,' he said, predicting a 20 percent gain, leaving the Dow Jones Industrial Average at close to 12,500 by year's end (still off its peak of 14,100 in October 2007).

Home foreclosures will remain a problem, but for those able to sell properties, the big drop-off in values has started to taper off. Said Lerron Little, Utah Association of Realtors president: '2010 looks like we'll see some stabilization in pricing.'

Stabilization is good, but it might not be enough, said James Wood, director of the University of Utah's Bureau of Economic and Business Research. He cited the fortunes of the home-building industry, which probably have hit bottom but will not improve much in 2010.

'It's going to be a slow recovery,' he said. 'For most people, there's going to be a great amount of uncertainty and insecurity in 2010. It will be another year, at least, before we really feel better. If you are unemployed, underemployed or a discouraged worker, 2010 isn't going to feel any better than 2009.'

That's not a comforting outlook for construction workers. Their sector of the economy has been hardest hit. As of November, the industry had shed 29,600 jobs during the past two years.

Most of the losses came in residential construction, jobs that won't return until the large inventory of existing homes is removed from the sales market. That will take time because there is an eight-month inventory of unsold houses.

Short-term trouble

In the meantime, many commercial construction jobs tied to downtown Salt Lake's City Creek Center project are winding down. The next big project in line -- construction of the National Security Agency's $1.5 billion data-collection 'spy center' at Camp Williams -- might not begin until months after City Creek is completed That concerns Utah AFL-CIO union President Jim Judd.

'There's a potential for lag time that will put skilled workers on the bench,' he said. 'We're hopeful the governor and Legislature will continue with the tact of keeping skilled workers busy and working as we enter this recovery period. We hope the state will continue with its building projects, particularly transportation.'

Judd shares Knold's perspective that Utah's economic picture will brighten by 2011.

So does Tom Bingham, president of the Utah Manufacturing Association. But he thinks there's reason to be wary of overconfidence, particularly in a sector that has lost in the past year 10,700 jobs, almost 9 percent of its work force.

'People are still a little nervous, [wondering], 'Is this truly turning around or is it going to bounce up and then down again?'' Bingham said, describing the scenario Knold sees as less likely to occur.

Consequently, many manufacturers are proceeding cautiously, Bingham said. But with many businesses having used up their inventories in 2009 and needing replacement products, 'I'm seeking some fairly progressive folks saying this recession is going to turn around, and when it does, I need to be in position to step up and take some market share from those who didn't make it. So they're moving ahead, even though they are a little nervous about it.'

Bingham thinks Utah's outlook is enhanced by some industry sectors, such as production of medical devices, thriving despite the downturn. 'People still have [health concerns] when times are tough, probably even more,' Bingham said.

One of his main concerns is that many manufacturing jobs lost in the past year will not come back. 'Companies have applied lean manufacturing principles and learned to do it with fewer people,' he noted. 'Unless there is a huge increase in demand, they're not necessarily going to put all of those [laid-off] people back on.'

And that includes the hundreds of well-paid engineers and scientists who have lost or will be losing Alliant Techsystems jobs. But to Knold, as painful as those cuts are to individuals and northern Utah communities, the overall statewide impact is not as pronounced.

'Those jobs are unique. That's NASA [National Aeronautics and Space Administration] and the federal government saying, 'We're doing something else.' It just happens to be in this bad time,' Knold said. 'But it's not as if you and I, as consumers, decided not to buy a new rocket. It's not the same for the economy as consumers deciding not to buy a new television or a washer/dryer or a car.'

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