Today, memories of that stubborn economic downturn are fading as Utah enters what could be one of the most prosperous periods in its history.

"There is a level of optimism here you just didn't see a couple of years ago," said David Irwin, a vice president for Salt Lake City home builder Hamlet Homes.

To understand just how far Utah's economy has come, all anyone has to do is look at the state's home-building industry, which in 2005 had its best year ever, he said.

"When the economy was bad, people were anxious and fearful," Irwin said. "They were hesitant to buy and would ask things like, 'What if I lose my job?' or, 'What happens if mortgage rates go up?' Now all people want to do is lock in at today's prices."

And with good reason. Home prices are climbing as Utah's red-hot economy adds jobs at one of the highest rates in the country.

Job growth - a key indicator of the state's economic health - climbed to 3.5 percent last year, much higher than the national rate of 1.4 percent. This year, job growth is expected to rise by an even higher margin, 4 percent, said Utah Department of Workforce Services economist Austin Sargent. "We were among the top five states last year in job growth, and all signs point to that continuing."

There are some negative factors that could slow Utah's booming economy this year, such as higher building material costs, rising interest rates and high energy costs.

But most agree that it would take a lot of things to go wrong, at the same time, to do any real damage to Utah right now - especially given the state's high rate of employment growth and the influx of people moving to the state.

In-migration - the difference between people moving to Utah and those moving away - reached 41,000 last year, the highest level since World War II, even beating out the influx of newcomers during Utah's economic boom years of the early- to mid-1990s. The projection for 2006 is another strong year - about 37,000.

A demand for homes: All those people need homes, fueling the residential construction industry.

In 2005, builders took out permits to build nearly 28,000 homes and rental units valued at $4.5 billion, a record, up from about 24,300 units valued at $3.6 billion in 2004. And 2006 could be just as good - or better, Wood said.

Strong demand for homes is pushing up prices for the first time in several years.

Utah's home-price appreciation, the worst nationwide just two years ago, ranks 22nd in the country, with an 11.4 percent increase in housing values in the year that ended Sept. 30, according to the Office of Federal Housing Enterprise Oversight. Utah's increase is less than 1 percentage below the national average of 12 percent.

Significant home-price increases undoubtedly will keep greater numbers of families out of the housing market and in rentals in the coming years, especially as interest rates increase over time as they are expected to do.

But scores of others will benefit as the equity in their homes increases.

Take Valerie Valencia. The mother of three children - ages 14, 9 and 6 - was living in an apartment in West Jordan when she decided early last year with the real estate market heating up and interest rates expected to rise that she needed to buy something as soon as possible.

"I was worried that I wouldn't be able to afford one if I waited," she said.

She was right. Valencia, who closed on her 2,200-square-foot West Jordan home in August, said a home similar to hers - but with fewer amenities - is on the market for $15,000 more than she paid.

Even with the home value increasing, Utah is still viewed nationally as an affordable - if not undervalued - real estate market.

Riding the bubble: That perception continues to drive out-of-state investment of all types. A number of investors, for example, are buying rental properties or homes they will fix up and sell. Others are turning to Utah for vacation homes.

Arizonans John and Michele Molenaar visited Park City after hearing it offered great values, compared with other resort towns. They closed on a townhouse in August.

"We get inquiries from Realtors all the time who want to know if we are interested in selling," John Molenaar said. "Prices are up quite a bit from where they were just a couple of years ago."

But Utahns need not worry so much about a housing "bubble." Residential real estate in Utah has been undervalued for so long, economists believe the state is at little risk of a housing price correction that threatens states such as Arizona and Nevada, which have experienced steep price increases in recent years.

Salt Lake City economist Jeff Thredgold, a Zions Bank consultant, said he wouldn't be surprised to see Utah home-price appreciation remain in the top 15 among all states in coming years. While housing prices in a number of other states might increase only 3 percent to 5 percent this year, Utah prices might jump 9 percent to 12 percent, he said.

Rising home values also are fueling consumer confidence, which translates into rising retail sales. Retailers, attracted to Utah's strong economy, are planning new stores, while others are poised to enter the state for the first time in 2006 and 2007.

Home furnishings giant IKEA is perhaps the biggest of those newcomers. The Swedish company this year will break ground on its first Utah location, on 40 acres on the northwest corner of Interstate 15 and Bangerter Highway. It expects to open in early 2007.

Additional retail development will undoubtedly create thousands of new jobs. But many other industry sectors - some paying above-average wages - are adding more positions, as well.

A demand for workers: Utah manufacturers, after several years of economic malaise, finally are ready to expand.

Although manufacturing and mining may never again enjoy the prominence of decades past when companies such as Geneva Steel and Kennecott dominated the economy, those industries saw a rebirth of sorts in 2005 and are expected to continue to expand this year.

"Last year we really turned the corner," said Tom Bingham of the Utah Manufacturers Association.

Manufacturers, who employ about 120,000 Utahns, are projected to add another 2,400 workers to their payrolls in 2006, for a 2 percent growth rate, according to the Utah Department of Workforce Services.

KraftMaid grabbed the limelight when it recently announced it would build a cabinet-making plant in the Salt Lake Valley. But Bingham noted that growth at existing Utah operations, including the Petersen Inc. fabricating shop, the Micron chip plant and Fairchild Semiconductor, will account for the bulk of the sector's future growth.

One downside to all this employment growth, however, is the challenge many Utah manufacturers - and companies in other industries as well - will face in finding qualified workers.

"Engineers, machinists and other technically trained workers are in high demand. Some of our fabricating and machine shops have reached the point where they're stealing workers from each other" by enhancing their wages and benefits, he said. "It a good position for workers to be in but not so good for the companies."

A number of other industries also are casting about for workers.

Spurred by high prices for precious and base metals, including gold and copper, Utah's mining and minerals recovery industry grew 52 percent in 2005. With high prices for oil and natural gas expected to continue, the industry will be looking to hire 15 percent more workers, or about 1,300 more bodies, in 2006.

"High energy prices have been good news for the economies of the Uintah Basin, but they're not that great for the rest of us," said Sargent of the Utah Department of Workforce Services.

Utah's high-technology industry, battered by the downturn and still shedding jobs as recently as two years ago, also is poised to add a host of high-paying positions.

"For several years companies had an abundance of talent to choose from. Now we're starting to see some shortages for the first time." said Richard Nelson, president and chief executive officer of the Utah Information Technology Association.

Threats on the horizon: Among the few clouds on the horizon for Utah's economy, high gasoline costs could be the most threatening. "That's the only big worry," economist Sargent said. "If fuel prices increase, it could temper our job growth and push us back to the 3.6 percent to 3.7 percent range, which still isn't too bad."

Fuel prices also could dampen the state's travel and tourism industry, which saw strong growth in 2005. They also threaten the airline industry.

Centered at Salt Lake City International Airport, the state's airline industry revolves around Delta Air Lines. Between July 2001 and July 2005, departures at the airport rose 7.5 percent, ranking Utah sixth out of the 50 states, Zions Bank economist Thredgold said.

The airline industry has struggled mightily with high operating costs in recent years and, more recently with unexpected high fuel costs, which helped nudge Delta into Chapter 11 bankruptcy.

"Fortunately for Utah, we have one of the lower-cost airports and, provided that fuel prices don't get out of hand, we should see some decent growth again in 2006," Thredgold said.

Ultimately, Utah's booming economy is well-situated to conquer most of the issues that could potentially derail growth, said James Wood, director of the Bureau of Business and Economic Research and the University of Utah.

Unless they get out of hand, growth-busting factors such as higher building material costs, higher interest rates and higher energy costs probably will have little effect on Utah's economy this year, he said.

"We are well positioned in most every way," Wood said. "It's going to be a prosperous year for Utah."