A housing slump hits the Mountain West

Utah, normally immune to slumps, is feeling the effects, and a survey story in The New York Times sheds some interesting light on the changing Mountain West. In the past, the Rocky Mountain West's economy has been driven by commodity prices for oil and copper and gold, notoriously cyclical, and military spending, also fickle. More recently the economy has been dominated by real estate and construction, as well as recreation. The storybook West of ranching now plays only a small part; manufacturing never has been much of a factor. Another big part of the West's boom has been affluent retirees, who bring non-wage income to spend and have swelled the economies of places like Coeur d'Alene, Idaho and many other picturesque, once-backwater towns now undergoing "Aspenization." Bend, Oregon and Walla Walla, Washington are two classic examples. These new arrivals may be changing towns too fast and driving prices way beyond what locals can afford, but they do have an economic advantage: Retirees keep on spending during a downturn, since they are living off savings. But aside from Utah's southwest corner, the Beehive state hasn't been getting much of the retiree market. So now Utah is being clobbered by a decline in housing construction, with new-housing starts expected to fall 60 percent in this year. Still, Utah has some distinct advantages: a young, healthy population; high education levels; hard working citizens; a Mormon Church that spends a lot on development and is recession-proof; and high fertility rates that produce a giant wave of 20-somethings (a kind of delayed Baby Boom) that fuels the new-housing market and starts up a lot of new companies.