J A N U A R Y 1 9 9 8 W I N T E R 1998 99 OUTLOOK This is reprinted from the Economic Outlook 1998-99 Luncheon, a talk presented to Tucson community leaders on December 12, 1997, at the Westin La Paloma. Marshall J. Vest Forecasting Project Director “ If you see a rabbit, and no one’s chasing him, times ain’t too bad.” – An Arizona cowboy’s commentary on the economy Is this a New Economy, or have we been here before? The current business expansion in the United States can best be described as remarkable. It began in April of 1991, almost seven years ago, which makes this the third longest expansion in the past fifty years. Even more important than its longevity is the fact that inflation is lower today than when the expansion began. It’s not supposed to happen that way! Typically, as an expansion “grows long in the tooth” and factors of production approach full utilization, factor prices accelerate. Year to date through October, consumer prices have increased by 1.8%, the lowest since 1986. In the third quarter, the price index for GDP increased at an annual rate of only 1.4%! The absence of accelerating inflation has led to talk of a “new economy” or “new paradigm.” This New Era view holds that we have entered a brave new world characterized by stronger growth and perpetually benign inflation. That’s real growth of three percent – or even four – rather than two percent, coupled with stable prices. Proponents argue that fundamental structural changes in the economy have broken the classic boom-bust inflation cycle. Here are their arguments: • Globalization of Business Capitalism is spreading around the world with the fall of Communism. Free markets and freer trade foster increased competition. That limits domestic producers’ ability to increase prices for their products, and foreign capacity alleviates supply constraints at home. • Revolution in Information Technology The information age has produced an explosion of entrepreneurial activity as new industries and companies are spawned. During the past few years, information tech- I S S U E nology has accounted for nearly a third of the nation’s economic growth. Developments in information technology are boosting productivity, reducing costs, cutting inventories and changing the way companies do business with one another. Putting a computer on everyone’s desk has allowed Corporate America to reengineer and eliminate a cadre of middle managers. The resulting boost in productivity and lowering of costs allows companies to boost profits without raising prices. • Labor Market Conditions Declining unionization and a reduction in the number of employees covered by cost of living adjustment clauses reduces the amount of commodity price shocks that become imbedded in wages. The labor force has grown rapidly in the past few years as labor force participation rates, especially for men, have risen. Also, an ever-increasing number of employees are part-timers who can work more hours if conditions warrant, and since the labor market is more elastic, wages don’t have to rise when more work becomes available. Finally, workers feel less secure in their jobs today and have moderated their demands for wage increases. As a result, wages have remained stagnant. • Deregulation First came deregulation of the airline and telecommunication industries in the 1970’s, followed by trucking, railroads and natural gas. Today, deregulation continues in banking, telecom, cable and electric utilities. Deregulation increases innovation, releases I N S I D E OUTLOOK LUNCHEON survey results .....................8 FORECAST TABLES ................9 ARIZONA AGRICULTURE ......10 ARIZONA ECONOMIC INDICATORS......................16 ELLER GRADUAT E SCHOOL OF MANAGE MENT • COLLEGE OF BUSINESS AND PUBLIC ADMINISTRAT ION THE U NIVERSITY OF ARIZONA TUCSON, ARIZONA EXHIBIT 1 Unemployment Rate, Monthly Arizona and United States unproductive resources, removes monopoly pricing power, and leads to falling prices. • Inflationary Expectations Expectations of future inflation have dropped below three percent for the first time in over 20 years. This lowers inflation in three ways. Workers moderate their expectations for wage increases. Investors are willing to accept lower interest rates on bonds, which lowers the cost of capital for businesses, which in turn raises profitability sans price increases. Business execs are more compelled to control costs if they feel that they can not make price increases stick. Finally, people are increasingly convinced of the Fed’s resolve (and ability) to attain price stability. • Defense Spending Declining defense spending has freed valuable resources that produced little output for consumption. This outward shift in the supply of resources (for both capital and labor) has played a major role in keeping inflation in check. Traditionalists — those with strong Keynesian ties — believe that transitory factors (and a bit of good luck) can explain the good news on inflation. These only delay the day of reckoning when classic demand and supply imbalances push prices higher, and when inflation reaches a point that is no longer tolerable, the Federal Reserve will take steps to slow the economy. If history PAGE TWO EXHIBIT 2 Index of Help Wanted Ads Phoenix-Mesa Metro Area is a reliable guide, the economy risks slipping into recession. Traditionalist counterpoints for each of the above factors are as follows. Although globalization puts downward pressure on prices, it is only for traded goods, which comprise a small fraction of total output. In the mean time, supply constraints in services are causing service-sector wages to rise. Computers have reduced the cost of communication, but they comprise a small proportion (15%) of the capital stock, and this is insufficient to hold down prices. Concerning the labor market, they note that unionization has been falling for years and did not prevent an uptick of inflation in the 1980’s. Moreover, there is a limit to rising participation rates and more hours from part-timers. In the long run, labor force growth is limited to increases in population. Deregulation is good but its impact on inflation is modest — only a quarter to a half percent per year. Inflation expectations are important, but when companies find it difficult to recruit new workers they will outbid other companies for workers by boosting wage offers. Finally, the effects of reduced defense spending are only temporary. Once resources from defense are reemployed elsewhere, traditional supply and demand factors will determine inflation. Inflation is under control currently, traditionalists argue, because of a confluence of events and a fortuitous dose of good luck. Oil prices have remained steady. Managed care has restrained medical costs. The strong dollar has restrained import prices. The federal government has been able to balance the budget, while avoiding enactment of new regulations and increased compliance costs. Money supply growth has averaged less than three percent per year over the past five years. Finally, we’ve escaped external shocks. When our good luck runs out, inflation will move higher. Recent research by the Federal Reserve Bank of San Francisco (FRBSF) on the trade-off between unemployment and prices also calls into question the idea of a new paradigm. The Phillips curve, which has been neglected in recent years, postulates that when unemployment falls below a certain level (NAIRU – the non-accelerating inflation rate of unemployment) wages begin to rise. The appropriate level has been debated in recent years with most agreeing that it falls in the five to six percent range. FRBSF’s recent efforts to estimate the relationship show that this relationship is not very strong (and certainly not strong enough to be used for setting policy). More importantly, it shows that today’s levels of wage inflation and unemployment are not unusual. This issue is much more important than simply providing entertainment for academicians. Financial markets appear to have embraced the New Economy idea, which helps explain the doubling of the stock market ARIZONA'S ECONOMY EXHIBIT 3 Residential Electrical Customers TEP, SRP, and APS Service Areas in the past three years. Although structural changes have positively affected the way that the economy works, it would be naïve to think that the business cycle has been repealed, that inflation is forever under control and that financial markets will rise forever like a beanstalk growing to the sky. Although this expansion is remarkable, it falls far short of precedent setting. This is not new territory. We’ve been here before – and it was during the 1960’s. An outburst of inflation is the largest risk factor and will likely be triggered by one of six factors: a rise in wages, energy or food price spikes, a decline in the dollar, a drop in productivity growth, a rise in capacity utilization or an increase in the money supply. Keep an eye on service sector wages and the dollar as the new year progresses. Real GDP grew by nearly 4.0% during the past year, well above its long-term potential. We expect the nation’s economy to slow next year to a more modest 2.5% pace. Recent financial problems in Southeast Asia will curtail growth in US exports and lower overall growth by one-quarter percent or so, according to estimates from The WEFA Group. Although Asian problems will help restrain domestic inflation, expect prices to begin to move upward, which will bring a quick response from the Fed in the form of higher short-term interest rates. The result is a slowing economy, but no recession. AR IZ ON A 'S E CO N OMY EXHIBIT 4 Jobs Lead New Building Activity (Arizona) THIS NEW ERA VIEW HOLDS THAT WE HAVE ENTERED A BRAVE NEW WORLD CHARACTERIZED BY STRONGER GROWTH AND PERPETUALLY BENIGN INFLATION... TRADITIONALISTS — THOSE WITH STRONG KEYNESIAN TIES — BELIEVE THAT TRANSITORY FACTORS (AND A BIT OF GOOD LUCK) CAN EXPLAIN THE GOOD NEWS ON INFLATION. THESE ONLY DELAY THE DAY OF RECKONING WHEN CLASSIC DEMAND AND SUPPLY IMBALANCES PUSH PRICES HIGHER. ARIZONA’S ECONOMY: 1997 IN REVIEW Nineteen-ninety-seven will go into the record books as another outstanding year for Arizona’s economy. With data through the third quarter, we’re projecting 85,000 additional jobs and a population gain in excess of 130,000 statewide. Although these measures are down from this cycle’s high point, both continue to show Arizona to be among the top two or three fastest-growing states in the country. Unemployment fell throughout the past year from 5.8% one year ago to only 3.9% in October. That’s the lowest rate of unemployment since the end of 1969 — 28 years ago (Exhibit 1)! With unemployment so low, one might wonder if the slower rates of growth experienced in recent months are related to a limited supply of resources rather than to lower demand. The issue is whether we are about to run out of available workers, which could seriously limit the economy’s ability to grow. From around the country, business managers report that workers are increasingly hard to find. Some employers pay rewards to existing workers who recommend someone who is eventually hired. Others recruit in far-away cities for low skilled workers, and offer moving expenses and temporary housing. The simple solution to hiring workers in a tight market is to raise the offered wage. But, employers today are stuck between two unpleasant alternatives. PAGE THREE EXHIBIT 5 Residential Building Permits (Arizona) In an economy that doesn’t allow price increases, employers can pay higher wages only at the expense of lowering profits. But if they forgo hiring, their company sacrifices growth. In the aggregate, year over year job growth in Arizona slowed during the summer to below four percent. Yet, help wanted advertising remains near the high point of this cycle, and has moved upward rather smartly during the past year (Exhibit 2). Locally, shortages of skilled workers are reported in numerous occupations, although a recent survey of retailers found no difficulty in hiring part-time help for the holiday season. It makes sense that Arizona suffers less than other parts of the country from worker shortages since it is relatively easy to attract new residents. People from all over the country find Arizona an attractive place to live. Population growth, as proxied by the numbers of new residential electric customers, remains at high levels although not as high as six months ago (Exhibit 3). If labor markets are tight, we should see wages accelerating. In 1996, the average wage across all industries in Arizona increased by 3.7%. By the second quarter of 1997, the average wage was 4.1% higher than one year earlier, the largest gain since 1992. The largest increases were reported in manufacturing (up 6.2%), services (5.9%) and whole-sale trade (5.7%). The gains in construction (4.3%) and utilities (4.2%) also were above the aggregate. Additionally, PA GE F OU R EXHIBIT 6 Consumer Confidence ONE THING THAT ANALYSTS LEARNED DURING THE PAST YEAR WAS THAT PUBLISHED EMPLOYMENT DATA FOR ARIZONA’S COUNTIES ARE NOT RELIABLE INDICATORS OF SUBSTATE ECONOMIC HEALTH. THAT’S BECAUSE A GROWING NUMBER OF COMPANIES WHO DO BUSINESS AT MULTIPLE LOCATIONS AROUND THE STATE ARE NO LONGER PROVIDING EMPLOYEE COUNTS BY COUNTY. in a recent report from the US Bureau of Economic Analysis, both Tucson and Phoenix experienced average wage increases at or above the national average during 1996. Tucson’s increase was 4.6% with 4.0% in Phoenix. The evidence of accelerating wages, although not overwhelming, supports the idea that labor markets are tight in Arizona in spite of the flood of new workers moving to the state. In addition to labor, a region’s growth potential is determined by growth of the capital stock. Here we mean office and industrial buildings rather than financial capital. Nonresidential building in Arizona, after adjusting for inflation, is running at a high two and one-quarter billion dollars per year at an annual rate (expressed in 1992 dollars). That’s very near the levels reached during the tax induced explosion of the mid-1980s. As shown in Exhibit 4, job growth tends to lead nonresidential building by two or three years. During the past three years, strong nonresidential building has been offsetting modest declines in residential building. A reduction in the numbers of new jobs suggests that nonresidential building may be nearing its peak. Residential building, as measure by units authorized by the permitting process, has remained relatively steady for the past year, at a 47,000-48,000 annual rate (Exhibit 5). The mix has changed in favor of more single family units, and the 40,000 or so expected ARIZONA'S ECONOMY EXHIBIT 7 Metro Growth Rates Diverge Nonag Jobs for the entire year will nearly match the number permitted in 1996. Multi-family permits will be down nearly 40%, reflecting favorable economics of home ownership and changing demographics. The average price of homes sold in the Metro Phoenix climbed to $135,000 in September, a gain in excess of eight percent during the year. Corresponding numbers for Tucson were $129,000 and 3.5%. The outlook is very positive heading into the Christmas selling season. With jobs plentiful and wages increasing faster than inflation, consumers remain ebullient. A survey of consumer confidence conducted by the Behavior Research Center for Stockton EXHIBIT 9 Residential Building Permits Units per 1000 Standing Population Capital Management and Trust of Scottsdale shows that Arizonans are more sanguine than at anytime in history (Exhibit 6). Heading into the holiday season, an aggregate measure of retail, which includes car sales, building materials, furniture, apparel & accessories as well as general merchandise gained 8.5% for the three-months ending in August, although the August increase was only 4.7%. Consumers’ pent-up demand from the last recession having long since been satisfied, coupled with high levels of consumer debt, will preclude a blockbuster Christmas. Return of the Mexican shopper will boost spending, particularly in Southern Arizona, from year ago levels. A gain of six to seven percent for the holidays is a reasonable expectation. For the entire year (1997), retail sales will increase by seven percent and restaurant and bar sales by a little over five percent. Given that inflation is running below two percent, these represent large gains in the volume of sales. PHOENIX AND TUCSON METRO AREAS ARE BOTH VIBRANT One thing that analysts learned during the past year was that published employment data for Arizona’s counties are not reliable indicators of substate economic health. That’s because a growing number of companies EXHIBIT 8 Wage & Salary Job Growth, Arizona AR IZ ON A' S E CO N OMY PAGE 5 who do business at multiple locations around the state are no longer providing employee counts by county. They reason that since reporting of these data are not required by law, they can justifiably avoid these costs. This is entirely rational behavior, but the consequences are disastrous for the quality of published employment information. The problem began in 1995 as growth rates for Arizona’s two largest metro areas began to diverge (Exhibit 7). During the prior 15 years, growth rates for Tucson and Phoenix had tracked pretty closely, with the exception of the late 1980s, when the savings and loan debacle was in the cleanup stage. Areas outside the state’s financial center were dealt with first, and this pushed job growth in Tucson well below that of Phoenix for five consecutive years. Both areas recorded growth of over six percent during 1994. But beginning in 1995, job growth in the two areas diverged. By 1996, job growth in metro Tucson was reported at only two percent, compared to seven percent in the PhoenixMesa area. A large portion of the divergence can be explained by the aforementioned reporting problems. For companies that fail to report county breakdowns, their entire statewide total is dumped into one county. For most companies, that is Maricopa County. Actual counts are not available, but several thousand jobs is a reasonable estimate. This tends to overstate growth in Phoenix-Mesa (by a few tenths of a percentage point) and seriously deflates Tucson’s pace, perhaps by as much as two full percentage points. This puts a whole new spin on the question, “What is wrong with Tucson?” The answer is “Nothing, other than inaccurate data!” Analysts must look to other measures to judge the economic health of the two areas. Retail sales, for the 12-month period ending in August, increased by 6.6% in Phoenix-Mesa, and by 4.7% in metro Tucson. Comparable increases for restaurant & bar sales are 5.8% and 3.8%. One-month comparisons for August actually show a larger gain in Tucson for both sales categories. Apartment vacancies in Tucson fell during the third quarter to a seasonally adjusted 8-3/4%, down two full percentage points from one year earlier. In Phoenix-Mesa, vacancies increased to 5.2% from 4.5%. Total residential building permits in both areas were down almost five percent during the 12 months ending September. Using data from CB Commercial, office vacancies in Phoenix are at 9.7% in PA GE S IX the second quarter, while Tucson’s measures 9.0%. In that same report, Tucson was found to have one of the lowest suburban office vacancy rates of all the cities in their study. Industrial vacancies stood at 7.4% in Phoenix versus 13.1% in Tucson. Unemployment is very low in both areas – 2.5% in PhoenixMesa and 2.9% in Tucson, as of October. All things considered, Tucson’s economy is performing much better than commonly believed or reported. Third quarter housing absorption rose to the highest level in six years, and a number of new master-planned communities, complete with golf courses and resorts, are under development. Hotel and retail projects also have been strong and commercial construction awards in real dollars are beginning to strengthen. Tucson appears to be in a stable equilibrium, growing at a rate equal to long-term averages. Manufacturing jobs are increasing as well as other export-based jobs. There is really nothing wrong with Tucson’s economy at present, and the need for additional industrial and office construction will soon be recognized. The Phoenix-Mesa metro area continues to grow at a rapid rate, which is quite remarkable considering its size. It is quickly becoming the Mega City of the southwest, with virtually every facet of a modern economy represented. Phoenix boasts one of the busiest airports in the country. New regional offices of Charles Schwab and The Vanguard Group compliment American Express, the FINOVA Group and numerous credit card and bank data processing operations. Several regional distribution centers including grocery, US Postal Service and Federal Express recently located in the area. The area has an animation studio, a state-of-the-art broadcast center, and the Mayo Clinic. Motorola (with over 20,000 employees), Intel, Honeywell, Allied Signal and a host of other high technology companies have facilities in the Valley, and a number of new semiconductor fabrication plants that are currently under development promise to keep the Phoenix economy bustling for at least the rest of this decade. THE OUTLOOK The year is coming to an end on a strong note, and we expect this momentum to carry into 1998. Nevertheless, Arizona’s economy will continue to slow, as it has since 1994, toward more normal and sustainable magnitudes. By 1999, the Arizona economy will settle into steady growth more in line with long-term averages. Nonag job growth of just less than four percent is expected in 1998, followed by 2.5-3.0% growth thereafter (Exhibit 8). That means 75,000 net new jobs in 1998 followed by 55,000- 65,000 in 1999 and beyond. Our forecast calls for some 125,000 net new residents to be added in 1998. By the year 2000 population growth will be back to trend growth of roughly 115,000 per year. As the largest state in the Rocky Mountain region, Arizona’s population will surpass the five million mark early in the year 2001 (see forecast tables). Increases in retail sales will run in the neighborhood of 5.5% throughout the forecast period. This is nearly twice the rate of inflation, which is expected to range between 2.5-3.0% at the consumer level. Residential building activity will continue to recede to match slower population growth. By the year 2000, the number of new unit permits will rest at 40,000 units, down from 47,500 in 1997. This remains well above the 23,000 units during the 1990-91 recession. The projected decline is gradual rather than a collapse as experienced during prior business cycles. That’s because construction has matched the demand for new housing, and inventories of speculative homes are virtually non-existent. Better market information and cautious lending are the principal reasons. The well-behaved nature of this building cycle can be seen in Exhibit 9. On a per capita basis, the number of units being built is half that attained in prior building booms. In each of those prior periods, vacancy rates surged. As noted earlier, vacancies remain well under control today. And, that’s good for the economy. A tamer building cycle means a much gentler business cycle. The Phoenix-Mesa metro area promises to continue posting nation-leading rates of growth, even though the pace is expected to slow to “trend line” or even slightly below by 2000. After adding over 75,000 new jobs this year, the pace should slow to 57,000 in 1998 and to roughly 35,000 in 1999 and beyond. That’s a reduction from 5.8% into the neighborhood of 2.5%. After a gain in population of 94,000 this year, the numbers should slow to 75,000 or so. Residential building permits will mirror population and gradually slow from 37,500 in 1997 to 26,000 by 2001. Retail sales gains will remain in the neighborhood of seven percent the next two years. The outlook for metro Tucson is “trend line” growth, which means 8,000-10,000 ARIZONA'S ECONOMY new jobs per year and population gains of 16,000-19,000 per year. Residential permits could increase in 1998 as construction of apartments resumes and single family building remains near or slightly above 1997 levels. Retail sales should increase between six and seven percent during the next three years. Risks to the outlook include a blow-off of inflation followed by a national recession. Less likely, but scarier, is a period of deflation brought on by the financial crisis in Southeast Asia and huge worldwide over-capacity because of too much building and investment in plant and equipment in these same countries. Closer to home, the Mexican peso may be in for another devaluation in the next year or two. But the list of things to worry about is short. For economists, this is boring territory. There are no storm clouds on the horizon and not much to do except lament over the ever-deteriorating quality of statistics. But this environment is great for businesses and individuals as profits remain at high levels and the standard of living rises. For state and local governments, the biggest challenges revolve around issues related to growth: how to provide badly lagging infrastructure after seven years of strong growth, what to do about deteriorating air quality (especially in the Phoenix area) and ever increasing traffic congestion. Growing pains in Tucson have manifested in “incorporation fever” as local residents grapple with issues related to local control, tax sharing and water delivery. So, the economy will continue to cooperate in the coming year, giving policymakers time to address these important issues.$ A New Certificate Program College of Business and Public Administration The University of Arizona A two-week concentrated program for employees who hold a degree in an area other than business. The curriculum includes short courses in fundamental business topics that will be integrated through the use of team projects and business simulations. Topics to be addressed include: ■ money and finance ■ accounting ■ marketing ■ economics ■ management information systems ■ oral and written communication ■ time management ■ organizational structure ■ principles of teamwork ■ business process design BusinessBasics provides employees who lack a business background with the tools necessary to succeed in a business environment. The S P O N S O R S Arizona Joint Legislative Budget Committee Arizona Public Service Company Bank One Arizona CB Commercial Real Estate Group, Inc. 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For more information: College of Business and Public Administration The University of Arizona Tucson, AZ 85721-0108 Contact: Phone: Fax: E-mail: Jennifer West 520/626-3313 520/621-8105 jwest@bpa.arizona.edu P AG E S EV EN GROWTH AND WATER ISSUES AGAIN TOP LIST OF CONCERNS FOR TUCSON LEADERS Compiled by Maile Nadelhoffer, Research Specialist At the 17th Annual Economic Outlook Luncheon held in Tucson on December 12th, attendees were asked to express their level of concern about a variety of local and national issues. Twenty-four issues were considered, and attendees were asked to rate each on a scale of 1 to 10 in terms of the anticipated importance of each issue’s impact on the quality of life/standard of living in the Tucson community in 1997. The issues in this survey were suggested, in part, by topics of discussion raised during the GroupSystems dialogue sessions at the Forecasting Project’s Annual Meeting, held at the UA College of Business and Public Administration on November 25th. Of the approximately 470 people who attended the Outlook Luncheon, 75 completed and turned in surveys. We do not pretend that this sample is representative of the Tucson area population at large. However, these results do reflect the concerns of a large group of community and business leaders. When the issues are ranked according to their mean ratings, the top six issues are all growth related issues. “Infrastructure maintenance and development” topped the list with a mean ranking of 8.84, 42% of respondents gave this issue the highest rating of 10. The next five highest ranked issues were also the top five ranked issues last year. “Water supply and usage” almost tied for first place with a mean score of 8.76, this was followed closely by “traffic congestion,” “Tucson’s ability to attract and expand hi-tech industries,” “Tucson’s long-term economic development strategy,” and “attitudes towards growth,” which received a mean score of 8.23. There is then a significant break in the ranking and the next issue, “focusing education on work place skills,” follows with a mean rating of only 7.43, and “financing of education” received at rating of 7.41. The quality of life issues of crime and air quality came in at the top of the middle third issues. Tax equity issues as well as the business equipment tax fell into the middle third of the ranking. Again, just as in last year’s poll, local issues take precedence over national and PAGE EIGHT international issues. Concerns over the federal budget deficit, turmoil in Asian economies, and a stock market correction all fell into the bottom third of the list. Interestingly enough, given the vigorous debate over incorporation and annexation this year, this issue also received a low rating. Outlook Luncheon attendees were told that the following is a list of issues that could Rank affect the quality of life/standard of living in the Tucson community in the years ahead. They were then asked to indicate the level of importance of each issue on a scale of 1 to 10, where 10 denotes “very important,” and 1 denotes “not important.” Here is the list of issues ranked according to the mean rating they received in the Economic Outlook Poll: Issue Mean Rating 1 infrastructure maintenance and development 8.84 2 water supply and usage 8.76 3 traffic congestion 8.62 4 ability to attract and expand high-tech industries 8.56 5 Tucson’s long-term economic development strategy 8.51 6 attitudes toward growth 8.23 7 focusing education on workplace skills 7.43 8 financing of education 7.41 9 crime, gangs, graffiti and road rage 7.38 10 air quality 7.33 11 tax equity issues 7.18 12 affordable housing 7.04 13 personal property (business equipment) tax 6.90 14 tight labor market 6.69 15 impact fees 6.67 16 inadequate wage rates 6.54 17 growing income inequality 6.49 18 debate on local control vs. regional coordination 6.40 19 major correction in the stock market 6.10 20 healthy downtown 5.91 2` federal budget deficit 5.86 22 foreign competition 5.56 23 deregulation of the electric power industry 5.18 24 turmoil in Asian economies 5.10 ARIZONA'S ECONOMY F O R E C A S T Forecasts for Arizona Personal Income ($ mill) percent change Per Capita Personal Income percent change Aggregate Retail Sales ($ mill)* percent change Population (000s, mid-year) percent change Net Migration (000s) Wage & Salary Employment (000s) percent change Goods-Producing percent change Construction percent change Manufacturing percent change Service-Providing percent change Trade (Wholesale & Retail) percent change Services percent change T A B L E S 1997 102,356.2 8.7 22,438.1 5.5 42,992.5 6.3 4,561.7 3.0 89.7 1,987.1 4.5 358.3 3.9 130.5 1.8 213.0 5.3 1,628.8 4.6 480.8 3.3 600.0 6.5 1998 110,636.5 8.1 23,609.7 5.2 45,156.2 5.0 4,686.1 2.7 83.3 2,064.0 3.9 370.1 3.3 132.2 1.3 222.7 4.6 1,693.9 4.0 493.9 2.7 633.9 5.7 1999 118,877.8 7.4 24,734.0 4.8 47,481.3 5.1 4,806.3 2.6 75.7 2,120.1 2.7 371.2 0.3 132.0 -0.2 223.9 0.6 1,748.9 3.2 506.8 2.6 662.8 4.6 2000 127,259.2 7.1 25,868.5 4.6 49,833.5 5.0 4,919.5 2.4 72.6 2,175.6 2.6 372.8 0.4 131.6 -0.3 225.8 0.8 1,802.8 3.1 520.4 2.7 692.1 4.4 2001 135,717.0 6.6 26,966.8 4.2 52,399.6 5.1 5,032.8 2.3 74.0 2,234.6 2.7 376.0 0.9 133.0 1.1 227.7 0.8 1,858.5 3.1 534.3 2.7 722.6 4.4 2002 144,814.0 6.7 28,133.7 4.3 55,063.0 5.1 5,147.3 2.3 75.0 2,296.8 2.8 380.7 1.2 135.7 2.0 229.7 0.9 1,916.1 3.1 549.1 2.8 754.2 4.4 2003 154,368.1 6.6 29,327.8 4.2 57,980.9 5.3 5,263.5 2.3 76.6 2,361.0 2.8 385.6 1.3 139.1 2.6 231.1 0.6 1,975.3 3.1 563.8 2.7 786.4 4.3 Forecasts for Phoenix-Mesa Metro Area Personal Income ($ mill) percent change Per Capita Personal Income percent change Aggregate Retail Sales ($ mill)* percent change Population (000s, mid-year) percent change Net Migration (000s) Wage & Salary Employment (000s) percent change Goods-Producing percent change Construction percent change Manufacturing percent change Service-Providing percent change Trade (Wholesale & Retail) percent change Services percent change 1997 71,496.6 10.1 25,155.4 6.5 29,108.4 6.7 2,842.2 3.4 67.1 1,390.2 5.8 268.3 5.9 94.4 4.6 166.2 6.2 1,121.8 5.8 337.4 4.0 432.9 7.5 1998 77,157.5 7.9 26,334.9 4.7 30,895.0 6.1 2,929.9 3.1 59.9 1,447.2 4.1 278.4 3.7 94.9 0.6 175.8 5.7 1,168.8 4.2 347.3 2.9 456.9 5.5 1999 82,440.3 6.8 27,393.0 4.0 32,822.7 6.2 3,009.5 2.7 51.2 1,484.1 2.5 279.4 0.4 93.5 -1.5 178.3 1.4 1,204.7 3.1 355.4 2.3 477.2 4.4 2000 87,604.3 6.3 28,407.9 3.7 34,636.4 5.5 3,083.8 2.5 45.3 1,514.7 2.1 277.5 -0.7 91.6 -2.0 178.3 -0.0 1,237.2 2.7 362.7 2.1 495.9 3.9 2001 93,022.5 6.2 29,462.8 3.7 36,516.8 5.4 3,157.3 2.4 44.4 1,547.1 2.1 277.0 -0.2 91.1 -0.5 178.2 -0.0 1,270.1 2.7 370.2 2.1 514.2 3.7 2002 98,822.4 6.2 30,573.2 3.8 38,358.6 5.0 3,232.3 2.4 45.6 1,583.1 2.3 278.7 0.6 92.4 1.4 178.7 0.2 1,304.4 2.7 377.9 2.1 533.5 3.7 2003 105,093.5 6.3 31,761.1 3.9 40,500.7 5.6 3,308.9 2.4 46.8 1,621.0 2.4 281.4 1.0 94.8 2.6 178.9 0.1 1,339.6 2.7 386.0 2.1 552.6 3.6 Forecasts for Tucson Metro Area Personal Income ($ mill) percent change Per Capita Personal Income percent change Aggregate Retail Sales ($ mill)* percent change Population (000s, mid-year) percent change Net Migration (000s) Wage & Salary Employment (000s) percent change Goods-Producing percent change Construction percent change Manufacturing percent change Service-Providing percent change Trade (Wholesale & Retail) percent change Services percent change 1997 17,133.8 7.8 21,535.4 5.2 6,925.6 5.6 795.6 2.4 14.1 324.1 3.9 51.6 3.7 19.6 -0.9 29.5 6.9 272.5 3.9 69.9 1.3 102.8 5.8 1998 18,304.6 6.8 22,464.1 4.3 7,296.9 5.4 814.8 2.4 14.6 335.7 3.6 53.7 4.1 19.9 1.8 31.1 5.5 282.0 3.5 71.0 1.6 108.3 5.4 1999 19,530.3 6.7 23,442.6 4.4 7,729.1 5.9 833.1 2.2 13.6 345.0 2.8 55.2 2.8 20.6 3.4 31.6 1.7 289.8 2.8 72.5 2.0 113.3 4.6 2000 20,792.1 6.5 24,455.1 4.3 8,175.2 5.8 850.2 2.1 12.3 353.5 2.4 56.3 2.0 21.1 2.3 32.1 1.4 297.2 2.5 74.1 2.2 117.7 4.0 2001 22,062.2 6.1 25,449.0 4.1 8,625.4 5.5 866.9 2.0 11.9 361.8 2.4 57.1 1.4 21.4 1.7 32.5 1.2 304.7 2.5 75.7 2.3 122.2 3.8 2002 23,359.7 5.9 26,436.8 3.9 9,050.3 4.9 883.6 1.9 11.8 370.0 2.3 57.8 1.3 21.8 1.5 32.9 1.2 312.2 2.5 77.3 2.1 126.7 3.7 2003 24,729.2 5.9 27,467.0 3.9 9,523.4 5.2 900.3 1.9 11.8 378.4 2.3 58.6 1.3 22.1 1.6 33.3 1.2 319.8 2.4 78.8 1.9 131.2 3.5 * Aggregate Retail Sales includes retail, food, restaurant & bars and gasoline sales Source: Economic and Business Research Program, Karl Eller Graduate School of Management, College of Business and Public Administration, The University of Arizona AR IZON A 'S ECON O MY PAGE NINE ARIZONA AGRICULTURE: A LOOK AHEAD Harry W. Ayer, Ph.D. Harry W. Ayer is an extension economist in the Department of Agricultural and Resource Economics at The University of Arizona. The author thanks Jimmye Hillman, Russ Tronstad, and Paul Wilson for comments on an earlier draft. W hat might Arizona Agriculture be like ten years from now? Past trends and known challenges for the future give some clues. In the end, I expect new technology, shifting crop patterns, and increased vertical integration to meet the challenges of increased international competition, more environmental regulations, and increased risk, and that ten years from now Arizona will continue to have a healthy but changed agriculture. A GLANCE BACK Agriculture always faces challenges. The real price of some of Arizona’s most important commodities – cotton, milk, and beef for example – show persistent long term downtrends (Figures 1, 2 and 3). At the same time, the cost of water in some areas has increased. Government regulations increased as society became more concerned about the environment and food safety. And to these add the challenges of pests and periodic drought. By most measures, Arizona agriculture successfully met these challenges. Although the ranching industry declined over the last 15 years (Figure 4), the dairy sector expanded (Figure 5) with urban growth, and since 1983 total crop acreage has gone up and down but overall shows no long term trend (Figure 6). Farm numbers declined from about 7,200 in 1982 to about 7,000 in 1992, but most of these were lost from the very small hobby farms that produce under $10,000 in gross sales per year (Figure 7). The few hundred largest farms, those producing over a half million dollars in gross sales per year and which account for over 80% of all agricultural sales (Figure 8), actually increased. And although real net farm income fluctuated up and down, it too shows no clear trend and averaged nearly $650 million per year (in constant 1992 dollars) over the last ten years (Figure 9). NEW CHALLENGES AHEAD A host of challenges loom rather clearly on the horizon, and will help shape the future of Arizona agriculture. New International Challenges For nearly 25 years now, foreign countries have provided important markets for U.S. agricultural products. During the 1990s, U.S. agricultural exports averaged over 23% of cash marketing receipts. Most of Arizona’s cotton and wheat go to foreign markets. The new GATT, WTO, and NAFTA trade agreements, and others expected in the near future, pose important challenges for Arizona agriculture, as do other world events. On the one hand, the new trade agreements reduce barriers to trade faced by our producers, and coupled with rising international populations and incomes, Arizona PAGE TEN ARIZONA'S ECONOMY FIGURE 1 Real Upland and Pima Prices, AZ agriculture will be challenged to expand and develop new markets for some of its products. For example, NAFTA reduced the barriers to our milk exports – and Mexico’s large, young, and expanding population, coupled with expected increases in income over the next decade, may provide marketing opportunities. Trade agreements also make some U.S. markets more accessible to foreign competition. NAFTA reduces our own restrictions on fruit and vegetable imports. At the same time, Mexico is working to improve its financial and legal infrastructure, and NAFTA reduces restrictions on capital (including new seed varieties and chemicals) going from this country into Mexico. Or, alternatively, large international agricultural companies are using direct foreign investment to enter foreign agricultural input markets with high-technology seeds and other factors of production. These activities, combined with a favorable climate and low wage rates, suggest increased Mexican production of labor-intensive fruit and vegetable crops in the future. The world-wide shift to more marketoriented economies will add to the competition. Budget problems and the rigors of the new trade agreements will likely force the European Union (EU) to a more marketoriented agriculture in the future. I expect Europe will continue to be a major player adding to world wheat supplies and putting downward pressure on wheat prices. ARIZONA'S ECONOMY FIGURE 2 Real Milk Prices, AZ THE FEDERAL AGRICULTURAL IMPROVEMENT AND REFORM ACT (FAIR) OF 1996 REMOVES GOVERNMENT PROGRAMS FROM MOST FARM PRODUCTION DECISIONS – AGRICULTURE WILL BE MORE MARKET-ORIENTED OVER THE NEXT FIVE YEARS. FIGURE 3 Real Steer and Heifer, Calve Prices, AZ The former Soviet Union (FSU), Egypt and China, to name a few, have moved towards more market-oriented economies and agricultural sectors. Considerable room for improvement remains, and over 10 years I expect more progress. How might our cotton market be affected as market conditions improve in the FSU, Egypt and China? Many Latin American economies are making the change to more market-oriented economies. The new trade association, Mercusur, illustrates this shift. Might Mexico, Argentina, and Brazil compete with our beef industry? In the long run, might our labor-intensive dairy operations face competition from Mexico, especially as NAFTA makes grain supplies available at lower prices for Mexican dairy producers? Finally, the new trade agreements will lower barriers to trade, but as the recent case of tomatoes from Mexico shows, interest groups will try to circumvent the new rules. Arizona import firms are harmed by the new restrictions on Mexican tomato imports. Some observers believe that Arizona wheat trade has been negatively affected not so much because of the dangers of Karnal Bunt, but because of the self-interest political actions of competitor exporters. Environmental Regulations The national elections of 1994 brought new members to the House and Senate committed to reduced environmental regulation. In my view, however, several factors suggest that over the next 10 years environmental PAGE ELEVEN FIGURE 4 Beef Cows, AZ regulation will become more, rather than less, challenging. First, a 1995 Gallop Poll shows that a dominant majority of the American public strongly favors environmental improvement for agriculture and expects more regulation of the sector, not less. Second, Federal budget pressures – even though the deficit recently improved markedly – will likely increase over the next 10 years because legislation to cut our long term deficits loads program cuts into the later years. As a consequence, efforts to meet environmental goals may shift from voluntary, cost-shared programs to more regulation. By this logic, the provisions of the 1996 Federal Agriculture Improvement and Reform (FAIR) Act, which basically maintain the status quo through voluntary, subsidized, programs such as CRP and EQIP, may be compromised by budget pressures in favor of stiffer regulations. Third, further international linkages between agriculture and the environment will increase regulation. The Montreal Protocol illustrates how global regulations may work. In that case, the guidelines of the Montreal Protocol were incorporated in our 1991 Clean Air Act amendments, and subsequent regulations banned methyl bromide and freon. New detection and measurement technologies may make so-called nonpoint pollution more subject to regulation. PAGE TWELVE FIGURE 5 Milk Cows, AZ A 1995 GALLOP POLL SHOWS THAT A DOMINANT MAJORITY OF THE AMERICAN PUBLIC STRONGLY FAVORS ENVIRONMENTAL IMPROVEMENT FOR AGRICULTURE AND EXPECTS MORE REGULATION OF THE SECTOR, NOT LESS. Keeping Pace with the New Industrialization of Agriculture Through “industrialization,” farms consolidate and become more vertically integrated with other stages in the food and fiber production chains. Changes in consumer demand, production technology, and international competition drive the industrialization process. Production in the dairy, fruit, vegetable, broiler, and turkey sectors has already moved markedly in this direction. About 20% of beef and pork production now takes place under contracts. Grain production is moving in this direction as well(Offutt). Consumer demand and changing scanner/ computer/communication technologies promote industrialization. Through Efficient Consumer Response (ECR), scanners read electronic bar codes and computers analyze the retail sales data. The resulting information can be quickly passed to producers. In the past, warehousing played a dominant role in the food and fiber system, with excess supplies being warehoused and then sold through special promotions to retailers and consumers. ECR allows a more direct link to consumers, including short-order changes in consumer preferences (Kinsey and Senauer). Producers will be challenged to keep abreast of new technologies and instruments of vertical coordination. A RI ZO NA'S EC O NO M Y FIGURE 6 Acreage of Major Crops, AZ vertically integrate through more contracts and ownership arrangements. New Farm Legislation and Increased Price Risk The FAIR act of 1996 removes government programs from most farm production decisions – agriculture will be more marketoriented over the next five years, and probably beyond. Thus FAIR directly affects cotton, wheat and dairy agriculture. But, like its predecessor farm programs, FAIR does not directly affected our alfalfa, fruit, vegetable, or beef sectors. In contrast to past years when market prices below government targets triggered deficiency payments to participating program farmers, FAIR farm legislation provides no such price security for Arizona cotton and wheat producers. Over 80% of Arizona’s cotton acreage was enrolled in the federal cotton program in recent years, and a large portion of wheat acreage. In Arizona, cotton farmers received by far the lion’s share of all government program payments. Dairy farmers also face more price risk over time. In the past, all dairy producers benefited by the government’s milk price support program under which government purchase and storage of dry milk, cheese and butter provided a minimum milk support price. Under FAIR, the minimum support price for milk declines from $10.35 per cwt. in 1996 to $9.90 in 1999, and disappears altogether New Technology Adoption of new technology will help meet several of the challenges named above, including international competition, environmental regulation, industrialization, and risk. Historically, Arizona farmers have been early adapters of new technologies, including laser leveling, drip irrigation, Bt cottons and insect growth regulators (IGRs). Informed, innovative farm managers, as well as price and yield incentives, helped spur early, widespread adoption. Progressive farm management already in place will help assure the use of new technology in the next decade. New developments in precision implements, communication, and computer technology promise to change some farming activities. Data from precision implements will be analyzed and shared through on-line tools, permitting improved interaction between farmers and various other players in the food and fiber production system. GPS and GIS will be an important part of precision farming. Several elements of GPS and GIS are already available, including reliable yield monitors, GPS accuracy to within six inches, computer capacity and speed, communications systems using fiber optics, cellular and satellite transmissions, and agribusiness firms already gearing up to offer precision agriculture technology. Agribusinesses will be more closely linked by these technologies to the farm and provide inputs tailored to individual field and feedlot needs. Farms will use more biotechnology. According to a recent report in Agri-Finance, some 300 genetically engineered products will soon be ready for farm use. Bt and Roundup Ready cotton provide good examples of ways that biotechnology will help meet the challenge of long-run price declines and environmental challenges. These technologies can cut input cost, raise yields, increase quality, and presumably reduce chemical impacts on the environment. Biotechnology will also promote, and sometimes force, greater vertical integration between producers and seed suppliers. Biotechnology and new legislation provide seed developers increased proprietary control over their seeds. As a result, seed companies may require that farmers sign a contract specifying, for example, how farmers may ARIZONA'S ECONOMY after December 31, 1999. The new farm bill is in effect through 2002. Farm policy observers wonder, of course, how congress will react, even before the year 2002, if commodity prices tumble and farmers fall on hard times. People make convincing arguments on both sides, some saying that government would resume its traditional subsidies, and others arguing that traditional programs will not return. My guess is that they will not return. The 1996 legislation continued past trends to decouple program payments from cropping decisions. The GATT, WTO, NAFTA, and new agreements yet to come, did, and likely will, discourage domestic programs which in effect provide farm subsidies for export crops – a perceived restraint of fair trade. And finally, budgetary constraints will also help shape farm support at a time when the government wrestles with Medicare, Medicaid and welfare payments more generally. MEETING THE CHALLENGES: ACTIONS BY INDIVIDUAL PRODUCERS I believe individual producers and groups related to Arizona agriculture will respond to these challenges. Individuals will adopt new technologies, shift cropping patterns, and P AG E T HI RT EEN FIGURE 7 Number of Farms by Value of Sales, AZ use or market the crop produced with the new seeds. As hinted above, farmers will often try to adopt complementary technologies which not only increase short run profits, but also simultaneously meet environmental goals. A number of farm technologies already in use illustrate this profit/environmental complement: conservation tillage, soil nutrient testing, IPM, and Bt and IGR technologies. Precision farming will be another complementary tool. Shift Cropping Patterns In the past, Arizona farmers shifted not only the acreage of individual crops produced, as shown in Figure 7, but also the location of production. While some areas such as Pinal and Cochise Counties reduced crop acreage in response to higher water costs, cropped acreage on reservations with low-cost water increased. Reservation cropped acreage may increase in the future. But other kinds of shifts may also take place, as they have in the past. Vegetable production already moves from one climatic or even micro-climatic zone to another, taking advantage of marketing windows and seeds developed for very specific microclimates. Production moves not only within Arizona, but also between Arizona and California and Mexico. More Vertical Integration Like the adoption of new technologies, I expect more vertical integration in Arizona PAGE FOURTEEN FIGURE 8 Percent of Farms and of Market Value Ag Products Sold: Arizona, 1992 NEW DEVELOPMENTS IN PRECISION IMPLEMENTS, COMMUNICATION, AND COMPUTER TECHNOLOGY PROMISE TO CHANGE SOME FARMING ACTIVITIES. DATA FROM PRECISION IMPLEMENTS WILL BE ANALYZED AND SHARED THROUGH ON-LINE TOOLS, PERMITTING IMPROVED INTERACTION BETWEEN FARMERS AND VARIOUS OTHER PLAYERS IN THE FOOD AND FIBER PRODUCTION SYSTEM. agriculture. Integration will help meet the challenges of international competition and price risk. The form of integration will vary and include forward contracts for produce, contracts for input use, alliances of various kinds which promote cooperation and coordination, alternative means of ownership, and control of more than one part of the food/fiber system. In some cases integration will allow farm producers to capture the gains from “value-added” products. In many ways, vertical coordination reduces risk. Contracts or ownership or other forms of vertical strategic alliances help assure adequate input supplies at favorable prices and a market and price for the firm’s produce. To successfully make cooperative agreements, farm managers may need to acquire added skills, including communication skills and those which build trust and commitment, as they seek to form versical alliances and negotiate contracts, instead of hauling their harvest to a local or regional market (van Duren, Howard, and McKay). MEETING THE CHALLENGES: COLLECTIVE ACTIONS BY FARM-RELATED GROUPS Collective actions, in contrast to individual producer actions described above, will also affect farming in the next decade, perhaps even more so than in the past. Three groups, and the actions they take, will all affect ARIZONA'S ECONOMY FIGURE 9 Real Net Farm Income and Government Payments, AZ Arizona agriculture: 1) the government, 2) the educational/research system – especially the land grant colleges, and 3) grass roots groups of farmers who jointly make decisions. agriculture to respond to the international market and increased industrialization. Continuing education at off-campus locations using new computer/communication-based technologies will increase (Salant, et. al) and become more accessible to farm and agribusiness managers and employees. And the institutional structure through which we do agriculture research will continue to change, especially as both private firms and public institutions are better able to capture the benefits of new technologies through property rights. Grass Roots Group Action Grass roots collective action by farmers will affect the next 10 years of Arizona agriculture. Example groups already in place include the Farm Bureau, the Cotton Growers, pest control districts, and marketing cooperatives. Many goods and services can be better provided by groups than individuals. Take market development as a case in point. An individual farmer will not find it profitable to single-handedly create a cotton advertising campaign. The cost is great, and the increase in cotton price which may result as consumers shift their demand to cotton and away from other fibers will not likely compensate the single-farmer advertising campaign. But thousands of farmers would benefit, and if the campaign raises the price enough, it’s quite possible that the collective gains would outweigh advertising costs. Similar stories could be told about efforts to develop new international markets, secure more favorable environmental legislation, create better management techniques, obtain government approval for new pesticides, control pests through IPM and pest-control districts, or reach accords on access to public lands. It seems to me that issues relating to these more public goods are increasing, and that grass roots collectives of farmers will play an increasing role in issues surrounding trade regulations, international markets, and environmental regulations. Government Actions At the federal level, economic policies seem on track to foster low interest rates, a crucial factor for capital-intensive agriculture, and a growing economy. Higher incomes will encourage demand for valueadded and specialty agricultural products. Federal monetary policy has discouraged over-valued exchange rates, an action which promotes our agricultural exports. USDA research and services will help develop profitable, environmentally sound production technologies, provide needed market data for expanding world market opportunities, and promote further reductions in world trade barriers. Farm revenue assurance programs, now being piloted in some states, may be expanded to reduce price and yield risks. Research and extension activities at the federal and state levels will provide information to reduce producer risk. State government will make rules to reduce pest problems and promote the interests of Arizona agriculture in federal legislation. A SUMMARY VIEW OF THE FUTURE Public Education and Research Public education and research will be an important part of agriculture over the next decade as it helps create the new technologies and prepare those working in Through ups and downs, most of Arizona agriculture has prospered over the last 10 to 15 years by successfully meeting the challenges of declining real commodity prices, increasing input prices, serious pest ARIZONA'S ECONOMY problems, drought, and increasing government regulations. This capacity to meet challenges bodes well for the future. Over the next 10 years, Arizona agriculture will likely be challenged by more international competition, more environmental regulation, changes in technologies in the food and fiber production chain, and increased risk. But I expect both individual management decisions and actions by government, land grant colleges, and grass roots groups of agricultural producers to meet these challenges. Progressive, innovative and financially strong owners and managers will play crucial roles because many of the challenges require adopting new technologies and institutions – often ones which require substantial financial resources. Ten years from now I speculate that Arizona agriculture will have about the same number of very large farms producing most of the state’s agricultural production; the dairy sector will continue to expand; ranching may decline somewhat; and cropped acreage will be at about its present level, although the acreage of individual crops may change over the years. More noticeable changes will be made in production technologies, the degree of vertical integration, and increased interaction with the international market.$ References Boehlje, M., "The New Agriculture," CHOICES, 4th quarter, 1995, pp. 34-35. Ervin, D. "Leaner Environmental Policies for Agriculture," CHOICES, 4th quarter, 1996, pp. 27-33. Hillman, J., "The World Trade Organization: Protectionist Issues After 50 Years of GATT," CHOICES, 1st quarter 1997, pp. 43-45. Kinsey, J., and B. Senauer, "Food Marketing in an Electronic Age: Implications for Agricultural Producers," CHOICES, 2nd quarter, 1997, pp. 32-35. Lodwick, S., "Reviewing the World Trade Organization," CHOICES, 3rd quarter, 1996, p. 39. Offutt, S., "Subsidizing Agriculture: The Road Ahead," CHOICES, 2nd quarter, 1996, pp. 30-33. Salant, P., D. Dillman, J. Christenson, and P. Warner, "Educating for a Lifetime of Work: Whose Business is It?" CHOICES, 4th quarter 1996, pp. 16-20. Sharples, J., et al, "World Events Shaping Future U.S. Agricultural Trade," CHOICES, 2nd quarter 1994, pp. 4-9. Sonka, S. and K. Coaldrake, ""Cyberfarm and the Challenge to the Agricultural System," CHOICES, 3rd quarter, 1997, pp. 20-26. van Duren, E., W. Howard, and H. McKay, "Forging Vertical Strategic Alliances," CHOICES, 2nd quarter, 1995, pp. 31-33. Wilson, P. G. Thompson, and R. Cook, "Mother Nature, Business Strategy, and Economics," CHOICES, 1st quarter, 1997, pp 18-22, 24-26. PAGE FIFTEEN A R I Z O N A E C O N O M I C YUMA METROPOLITAN REGION Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Mining Construction Manufacturing Trans., Comm. & Publ. Util. Trade Finance, Ins. & Real Estate Services Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bar Gasoline, EBR Gallons (000s) ADOT Contracting Value of Construction Contract Awards ($000s) F.W. Dodge Total Residential Building Non-Residential Building Non-Building Number of Dwelling Units Awarded, F.W. Dodge Total One Family Houses MOHAVE-LA PAZ REGION Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Mining Construction Manufacturing Trans., Comm. & Publ. Util. Trade Finance, Ins. & Real Estate Services Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bar Gasoline, EBR Gallons (000s) ADOT Contracting Value of Construction Contract Awards ($000s) F.W. Dodge Total Residential Building Non-Residential Building Non-Building Number of Dwelling Units Awarded, F.W. Dodge Total One Family Houses I N D I C A T O R S % change versus year ago for: most most recent recent month 12-months JUN 97 JUL 97 AUG 97 SEP 97 OCT 97 69,675 47,975 21,700 31.1 71,175 46,950 24,225 34.0 74,225 47,675 26,550 35.8 71,725 47,725 24,000 33.5 68,575 49,700 18,875 27.5 -5.3 3.8 -23.0 -18.7 -0.7 1.9 -6.7 -5.0 36,000 0 2,000 1,600 1,900 11,100 1,100 9,000 9,300 34,800 0 2,000 1,600 1,900 10,900 1,100 9,000 8,300 35,300 0 2,000 1,600 1,700 10,900 1,100 9,000 9,000 37,100 0 2,000 1,700 1,900 11,200 1,100 9,200 10,000 37,500 0 2,300 1,600 2,100 11,100 1,200 9,500 9,700 3.9 ... 21.1 0.0 16.7 -1.8 0.0 10.5 0.0 3.8 ... 8.4 2.1 2.2 0.4 -7.4 9.4 4.2 60,888 48,053 6,338 6,497 5,211 11,200 58,814 45,742 6,586 6,486 5,402 12,176 59,658 46,504 6,269 6,885 5,442 15,281 64,026 50,787 6,475 6,764 5,089 16,875 ... ... ... 7,505 5,698 ... 4.7 3.9 9.2 14.2 8.7 43.9 9.2 10.7 6.9 1.7 0.4 2.9 12,636 5,664 5,132 1,840 14,705 5,410 4,468 4,827 19,899 5,500 13,927 472 24,231 6,929 5,446 11,856 11,340 6,865 2,303 2,172 -40.7 -55.1 142.2 -25.4 35.9 -4.0 141.3 -16.1 72 72 58 58 69 69 83 80 93 93 -61.1 -6.1 -9.6 7.8 71,675 68,025 3,650 5.1 71,850 68,175 3,675 5.1 71,725 68,225 3,500 4.9 71,225 67,575 3,650 5.1 70,875 67,500 3,375 4.8 -1.5 4.4 -53.8 -53.1 2.0 4.1 -23.2 -24.7 40,600 200 3,500 3,100 1,900 11,700 1,900 10,800 7,500 40,500 200 3,400 3,100 2,000 11,700 1,800 10,600 7,700 41,100 200 3,400 3,200 1,900 11,700 1,800 10,700 8,200 41,500 200 3,500 3,200 1,900 11,700 1,900 10,800 8,300 41,200 200 3,400 3,200 1,900 11,500 1,800 10,800 8,400 5.4 0.0 13.3 0.0 0.0 2.7 -5.3 8.0 9.1 4.4 0.0 7.5 -1.3 4.0 -0.1 3.2 11.0 4.4 85,272 63,380 10,323 11,569 9,280 17,108 82,184 58,373 11,468 12,343 10,279 15,689 82,681 58,647 10,742 13,292 10,507 15,656 75,523 55,303 9,252 10,968 8,252 15,711 ... ... ... 10,117 7,681 ... -0.2 5.4 -8.9 -15.9 -19.9 0.0 1.9 4.2 -0.7 -7.7 -7.4 10.7 16,744 11,972 940 3,832 29,248 10,719 1,686 16,843 16,393 11,204 3,518 1,671 13,642 11,334 1,720 588 18,929 13,915 4,859 155 7.0 16.2 12.1 -88.8 17.5 12.8 64.7 -0.1 124 120 116 116 116 116 125 117 149 147 5.7 4.3 5.1 7.4 See notes at bottom of Arizona - Quarterly table. PAGE SIXTEEN ARIZONA'S ECONOMY A R I Z O N A E C O N O M I C COCHISE-SANTA CRUZ REGION Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Mining Construction Manufacturing Trans., Comm. & Publ. Util. Trade Finance, Ins. & Real Estate Services Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bar Gasoline, EBR Gallons (000s) ADOT Contracting Value of Construction Contract Awards ($000s) F.W. Dodge Total Residential Building Non-Residential Building Non-Building Number of Dwelling Units Awarded, F.W. Dodge Total One Family Houses GILA-GRAHAM-GREENLEE REGION Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Mining Construction Manufacturing Trans., Comm. & Publ. Util. Trade Finance, Ins. & Real Estate Services Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bar Gasoline, EBR Gallons (000s) ADOT Contracting Value of Construction Contract Awards ($000s) F.W. Dodge Total Residential Building Non-Residential Building Non-Building Number of Dwelling Units Awarded, F.W. Dodge Total One Family Houses I N D I C A T O R S % change versus year ago for: most most recent recent month 12-months JUN 97 JUL 97 AUG 97 SEP 97 OCT 97 55,125 48,675 6,450 11.7 56,100 49,425 6,675 11.9 56,775 49,325 7,450 13.1 56,800 49,150 7,650 13.5 55,925 49,075 6,850 12.2 -5.1 0.0 -30.6 -26.9 -3.9 -2.2 -14.0 -10.6 39,500 100 1,700 2,300 2,300 11,200 1,200 8,500 12,200 39,500 100 1,700 2,300 2,300 11,200 1,200 8,800 11,900 39,800 100 1,700 2,300 2,300 11,200 1,100 8,500 12,600 40,700 100 1,900 2,400 2,400 11,200 1,100 8,500 13,100 40,600 100 1,900 2,500 2,400 11,200 1,100 8,500 12,900 1.5 0.0 18.7 0.0 4.3 1.8 -8.3 2.4 -0.8 0.3 0.0 -1.5 1.4 1.8 1.6 7.8 -2.3 0.0 67,973 53,872 7,419 6,682 5,360 10,870 64,825 50,029 8,055 6,741 5,614 16,364 63,311 48,193 7,966 7,152 5,653 11,432 64,915 50,495 7,467 6,953 5,231 13,820 ... ... ... 8,326 6,321 ... 10.2 9.5 8.2 34.3 27.8 27.1 6.8 8.7 1.8 1.5 0.7 -2.3 14,517 7,682 6,782 53 9,422 8,000 60 1,362 9,686 7,665 372 1,649 9,230 7,918 1,156 156 12,639 10,562 1,631 446 -56.1 -13.3 -88.5 -81.4 -35.8 -25.6 -56.3 -46.2 83 81 75 75 84 84 99 86 152 89 -44.7 12.7 -24.2 -7.9 34,300 31,450 2,850 8.3 34,325 31,550 2,775 8.1 34,725 32,150 2,575 7.4 34,500 31,775 2,725 7.9 34,700 32,150 2,550 7.3 -2.0 0.4 -25.0 -23.4 -1.3 -0.6 -8.5 -7.3 24,700 3,000 2,000 1,900 800 5,900 500 4,000 6,600 24,400 3,000 1,900 1,900 800 5,900 500 4,000 6,400 25,100 3,000 1,900 1,900 800 5,900 500 4,100 7,000 25,400 3,000 1,900 1,900 800 5,900 500 4,000 7,400 25,500 3,000 1,900 1,900 800 6,000 500 4,000 7,400 0.8 -3.2 -9.5 0.0 0.0 3.4 0.0 -2.4 5.7 2.7 0.8 6.2 2.7 4.3 0.7 11.5 2.3 3.6 42,496 33,090 5,350 4,056 3,253 14,514 42,265 32,050 5,913 4,302 3,583 11,988 43,110 32,519 5,640 4,951 3,913 10,848 40,231 31,141 4,778 4,312 3,245 10,233 ... ... ... 4,617 3,506 ... 3.4 4.9 -4.9 9.8 4.5 -30.2 4.4 5.5 1.4 0.0 0.1 16.0 7,310 3,102 972 3,236 16,033 5,650 1,882 8,501 7,320 4,557 743 2,020 8,255 6,552 1,603 100 6,576 5,376 0 1,200 -53.6 39.5 -100.0 -34.1 -14.5 22.4 -55.3 -43.0 34 34 50 50 50 44 60 60 53 53 55.9 55.9 20.9 7.6 See notes at bottom of Arizona - Quarterly table. ARIZONA'S ECONOMY PAGE SEVENTEEN A R I Z O N A APACHE-NAVAJO REGION Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Mining Construction Manufacturing Trans., Comm. & Publ. Util. Trade Finance, Ins. & Real Estate Services Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bar Gasoline, EBR Gallons (000s) ADOT Contracting Value of Construction Contract Awards ($000s) F.W. Dodge Total Residential Building Non-Residential Building Non-Building Number of Dwelling Units Awarded, F.W. Dodge Total One Family Houses COCONINO-YAVAPAI REGION Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Mining Construction Manufacturing Trans., Comm. & Publ. Util. Trade Finance, Ins. & Real Estate Services Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bar Gasoline, EBR Gallons (000s) ADOT Contracting Value of Construction Contract Awards ($000s) F.W. Dodge Total Residential Building Non-Residential Building Non-Building Number of Dwelling Units Awarded, F.W. Dodge Total One Family Houses E C O N O M I C I N D I C A T O R S % change versus year ago for: most most recent recent month 12-months JUN 97 JUL 97 AUG 97 SEP 97 OCT 97 53,075 42,575 10,500 19.8 52,700 42,325 10,375 19.7 51,600 43,475 8,125 15.7 49,925 42,900 7,025 14.1 49,575 42,900 6,675 13.5 -6.6 -2.3 -26.8 -21.7 -2.5 -1.9 -5.2 -2.9 39,600 900 2,200 1,800 2,800 7,300 1,200 8,300 15,100 38,800 900 2,200 1,800 2,700 7,400 1,200 8,500 14,100 40,300 900 2,200 1,900 2,700 7,500 1,200 8,500 15,400 40,800 900 2,200 1,900 2,700 7,400 1,200 8,000 16,500 40,700 900 2,200 1,800 2,600 7,400 1,200 8,000 16,600 -1.0 0.0 4.8 5.9 -0.0 0.0 0.0 -2.4 -2.4 0.8 -5.3 14.4 -4.1 2.3 1.6 -4.0 3.7 -1.4 61,183 48,173 6,656 6,354 5,097 8,817 58,847 45,735 6,185 6,927 5,769 8,940 54,585 40,243 6,338 8,004 6,327 9,445 58,471 45,832 5,453 7,186 5,407 10,324 ... ... ... 7,221 5,482 ... 3.2 8.1 1.1 -17.0 -21.0 -26.0 -8.0 -7.3 0.6 -17.5 -17.2 -8.3 19,251 4,409 3,423 11,419 11,305 4,953 2,380 3,972 10,258 3,437 4,139 2,682 17,541 7,497 4,325 5,719 13,772 5,286 6,394 2,092 14.5 6.5 21.0 17.3 2.4 -20.6 34.0 15.6 54 54 53 53 37 37 69 69 50 48 -7.4 -11.1 -16.3 -16.8 126,700 118,200 8,500 6.7 128,825 120,425 8,400 6.5 127,275 120,025 7,250 5.7 125,175 118,575 6,600 5.3 125,925 119,750 6,175 4.9 0.3 1.9 -22.6 -22.8 1.1 1.8 -9.6 -10.4 93,000 800 6,500 6,500 3,000 26,000 2,700 26,400 21,100 93,900 800 6,500 6,500 3,000 26,500 2,700 26,800 21,100 94,300 900 6,700 6,500 2,800 26,600 2,700 27,200 20,900 95,200 900 6,500 6,400 2,800 26,300 2,700 27,100 22,500 96,900 800 6,500 6,600 3,000 26,300 2,800 26,700 24,200 3.1 -11.1 3.2 1.5 0.0 3.1 3.7 6.4 0.8 4.6 -4.6 1.9 5.6 -3.9 3.7 5.2 7.9 3.1 183,257 134,532 33,135 15,590 12,505 40,868 176,370 125,277 32,620 18,473 15,384 42,988 185,276 133,635 31,234 20,407 16,131 42,990 179,513 125,561 35,673 18,279 13,753 48,099 ... ... ... 17,119 12,998 ... 1.5 -0.8 12.4 -6.0 -10.5 2.6 5.0 5.9 4.7 -1.8 -1.1 -5.6 50,000 25,865 5,320 18,815 65,405 25,261 19,004 21,140 41,318 26,727 12,594 1,997 39,268 26,416 7,939 4,913 54,220 32,013 15,831 6,376 29.4 14.3 56.7 68.4 -13.9 -6.7 -28.9 -14.5 249 245 240 220 277 225 253 242 310 245 29.2 12.9 -4.6 7.3 See notes at bottom of Arizona - Quarterly table. PAGE EIGHTEEN ARIZONA'S ECONOMY A R I Z O N A E C O N O M I C I N D I C A T O R S % change versus year ago for: PHOENIX-MESA METROPOLITAN REGION (MARICOPA AND PINAL) Civilian Labor Force (000s) ADES Employment Unemployment Unemployment Rate, Seas. Adj. (%) Employees on Nonagricultural Payrolls (000s) ADES Total Mining Construction Manufacturing Durable Nondurable Trans., Comm. & Publ. Util. Trade Wholesale Retail Finance, Ins. & Real Estate Services Government Sales ($000s) ADOR Aggregate Retail Sales Retail Food, EBR Restaurants & Bars Gasoline, EBR Contracting Value of Construction Contract Awards ($000s) F.W. Dodge Total Awards Residential Building Non-Residential Building Non-Building New Housing Units Authorized, Census C-40 Total Units Single Family Units 2-4 Unit Structures 5-plus Unit Structures Housing Sales and Prices, ARMLS Total Sales ($000s) Total Units Average Price ($) Phoenix Skyharbor International Airport, PSIA Total Passengers Total Aircraft Movements JUN 97 JUL 97 AUG 97 SEP 97 OCT 97 most recent month most recent 12-months 1,505.0 1,459.5 45.5 2.9 1,517.5 1,471.6 45.9 2.9 1,507.4 1,462.2 45.2 3.0 1,514.5 1,467.0 47.5 2.9 1,526.1 1,483.3 42.8 2.5 3.4 4.8 -28.9 -34.2 2.7 3.3 -13.8 -14.6 1,369.2 7.8 96.4 158.5 121.0 37.5 72.6 340.4 87.4 253.0 102.9 429.8 160.8 1,365.7 8.1 96.9 160.0 122.6 37.4 73.2 339.4 86.6 252.8 103.3 429.7 155.1 1,368.3 8.2 97.5 161.1 123.7 37.4 71.3 340.3 86.5 253.8 103.9 427.6 158.4 1,400.6 8.1 97.0 162.3 124.6 37.7 73.8 344.6 87.3 257.3 104.6 430.7 179.5 1,424.4 8.1 98.6 163.5 125.7 37.8 75.3 349.7 88.6 261.1 105.6 437.2 186.4 6.4 19.1 5.8 6.0 8.1 -0.5 6.1 7.5 7.9 7.3 8.6 6.2 4.0 6.0 14.8 5.3 2.6 3.6 -0.6 5.9 5.8 7.4 5.3 8.8 7.8 4.3 2,473,778 1,776,011 314,823 260,148 122,796 545,691 2,217,576 1,571,707 298,242 229,159 118,468 481,143 2,256,064 1,580,382 303,390 240,850 131,443 499,226 2,364,792 1,665,866 313,170 256,167 129,590 547,545 ... ... ... ... 141,095 ... 8.5 9.8 6.3 5.4 -4.6 16.6 6.7 7.0 7.4 5.7 0.9 8.6 799,363 377,567 279,686 142,110 480,864 340,981 106,367 33,516 551,322 339,140 127,832 84,350 629,891 396,417 193,458 40,016 590,131 350,817 195,187 44,127 -3.2 -2.0 19.6 -49.9 -4.7 -7.3 -14.3 38.7 2,790 2,576 29 185 2,980 2,888 8 84 3,867 2,867 21 979 4,112 3,137 12 963 4,047 2,620 56 1,371 26.4 22.8 69.7 32.3 -4.1 2.0 16.2 -22.3 536,833 3,756 142,927 625,098 4,405 141,906 604,036 4,374 138,097 452,201 3,332 135,715 549,878 3,932 139,847 20.7 9.7 10.0 12.7 3.4 8.7 2,536,618 42,118 2,349,567 42,915 2,554,589 44,538 2,198,082 40,519 ... ... -4.5 -2.8 3.3 -1.0 PHOENIX-MESA METROPOLITAN REGION (MARICOPA AND PINAL) - QUARTERLY DATA Demographics & Vital Statistics (000s, seas adj) ADHS & EBR Population Natural Increase Births Deaths Net Migration Personal Income by Source ($mil, SAAR) EBR Total Personal Income Earnings by Place of Work Less: Contributions for Social Insurance Plus: Adjustment for Residence Plus: Dividends, Interest & Rents Plus: Transfer Payments Per Capita Personal Income ($, SAAR) EBR % change versus year ago for: most most recent recent quarter 4-quarters III 96 IV 96 I 97 II 97 III 97 2,760.4 6.6 11.9 5.4 16.7 2,783.7 6.6 12.0 5.4 16.7 2,807.1 6.6 12.1 5.4 16.7 2,830.5 6.7 12.1 5.5 16.7 2,853.9 6.7 12.2 5.5 16.7 3.4 2.1 2.4 2.7 0.0 3.4 2.9 3.2 3.5 3.5 65,835 47,831 3,273 -92 11,472 9,897 23,850 67,443 49,066 3,344 -92 11,746 10,068 24,228 69,038 50,296 3,415 -93 12,016 10,234 24,594 70,677 51,533 3,486 -92 12,308 10,414 24,970 72,316 52,770 3,556 -92 12,600 10,594 25,339 9.8 10.3 8.6 -0.4 9.8 7.0 6.2 10.5 10.8 8.9 1.5 11.1 7.8 6.8 See notes at bottom of Arizona - Quarterly table ARIZONA'S ECONOMY PAGE NINETEEN A R I Z O N A E C O N O M I C TUCSON METROPOLITAN REGION (PIMA) Civilian Labor Force (000s) ADES Employment Unemployment Unemployment Rate, Seas. Adj. (%) Employees on Nonagricultural Payrolls (000s) ADES Total Mining Construction Manufacturing Durable Nondurable Trans., Comm. & Publ. Util. Trade Wholesale Retail Finance, Ins. & Real Estate Services Government Sales ($000s) ADOR Aggregate Retail Sales Retail Food, EBR Restaurants & Bars Gasoline, EBR Contracting Value of Construction Contract Awards ($000s) F.W. Dodge Total Awards Residential Building Non-Residential Building Non-Building New Housing Units Authorized, Census C-40 Total Units Single Family Units 2-4 Unit Structures 5-plus Unit Structures Housing Sales and Prices, TAR Total Sales ($000s) Total Units Average Price ($) Tucson International Airport, TAA Total Passengers Total Aircraft Movements I N D I C A T O R S JUN 97 JUL 97 AUG 97 SEP 97 OCT 97 381.0 368.2 12.8 3.2 372.9 360.2 12.7 3.1 375.5 363.0 12.5 3.3 379.6 366.4 13.2 3.2 381.3 369.2 12.1 2.9 -0.3 0.7 -24.4 -23.7 -1.0 -0.6 -11.0 -9.1 311.6 2.3 18.8 29.6 23.7 5.9 13.6 67.9 10.4 57.5 12.5 99.7 67.2 301.5 2.5 19.2 29.4 23.6 5.8 13.4 67.9 10.5 57.4 12.6 99.3 57.2 306.8 2.4 19.4 29.7 23.8 5.9 13.2 68.3 10.6 57.7 12.7 98.2 62.9 315.6 2.3 19.2 29.8 23.9 5.9 13.3 68.5 10.6 57.9 12.8 99.3 70.4 320.2 2.4 19.4 29.8 23.9 5.9 13.4 69.2 10.7 58.5 12.8 100.5 72.7 2.8 4.3 0.5 1.7 2.1 0.0 1.5 3.9 3.9 3.9 5.8 1.8 3.7 2.2 2.5 -2.7 3.3 4.1 0.3 -1.2 1.7 1.8 1.7 2.2 4.4 1.3 580,615 404,483 80,407 61,856 33,869 92,050 528,481 359,569 76,172 58,651 34,088 89,556 548,862 372,092 77,487 62,258 37,025 89,466 544,575 365,502 79,985 63,907 35,182 89,618 ... ... ... ... 36,989 ... 3.4 3.7 4.0 4.5 -4.8 -7.1 4.4 4.7 4.4 3.8 1.6 -4.6 134,579 54,185 75,755 4,639 78,168 46,941 21,096 10,131 79,843 43,924 9,410 26,509 93,028 53,728 32,195 7,105 86,191 52,817 23,884 9,490 -36.8 -6.8 -65.0 -17.7 -19.3 -27.1 -10.1 1.4 562 548 5 9 392 384 1 7 407 361 5 41 739 481 18 240 403 403 0 0 3.3 5.2 -100.0 ... -3.3 0.9 9.8 -36.1 106,778 805 132,643 102,976 782 131,683 93,933 729 128,852 97,392 705 138,145 ... ... ... 25.0 13.2 10.4 -0.9 -4.5 4.2 277,970 20,103 280,818 19,012 274,726 19,582 246,049 17,383 289,765 20,946 0.9 4.1 -0.1 -2.1 TUCSON METROPOLITAN REGION (PIMA) - QUARTERLY DATA Demographics & Vital Statistics (000s, seas adj) ADHS & EBR Population Natural Increase Births Deaths Net Migration Personal Income by Source ($mil, SAAR) EBR Total Personal Income Earnings by Place of Work Less: Contributions for Social Insurance Plus: Adjustment for Residence Plus: Dividends, Interest & Rents Plus: Transfer Payments Per Capita Personal Income ($, SAAR) EBR % change versus year ago for: most most recent recent month 12-months % change versus year ago for: most most recent recent quarter 4-quarters III 96 IV 96 I 97 II 97 III 97 779.3 1.1 2.8 1.7 3.5 783.9 1.1 2.8 1.7 3.6 788.6 1.1 2.8 1.7 3.5 793.3 1.1 2.8 1.7 3.5 797.9 1.1 2.9 1.7 3.5 2.4 1.5 1.0 0.7 -0.6 2.4 0.7 1.1 1.4 -2.5 16,055 9,870 684 161 3,491 3,217 20,602 16,365 10,082 698 165 3,549 3,266 20,875 16,671 10,291 711 170 3,607 3,315 21,140 16,980 10,495 724 175 3,669 3,366 21,404 17,288 10,699 738 179 3,731 3,417 21,666 7.7 8.4 7.8 11.2 6.9 6.2 5.2 7.8 8.1 7.5 9.6 7.8 6.7 5.3 See notes at bottom of Arizona - Quarterly table PAGE TWENTY A RI ZO NA'S EC O NO M Y A R I Z O N A ARIZONA MONTHLY DATA Civilian Labor Force (000s) ADES Employment Unemployment Unemployment Rate, Seas. Adj. (%) Employees on Nonagricultural Payrolls (000s) ADES Total Mining Construction Manufacturing Durable Nondurable Trans., Comm. & Publ. Util. Transportation Trade Wholesale Retail Finance, Ins. & Real Estate Services Government Federal State & Local Schools Hours Worked Per Week, Manufacturing, ADES Average Hourly Earnings ($) ADES Copper Mining Construction Manufacturing Utilities Retail Trade Wholesale Trade Sales ($000s) ADOR Aggregate Retail Sales Retail Food, EBR Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Utilities Communications Amusements Rentals - Real Property Rentals - Personal Property Contracting Mining - Metal, Oil & Gas Hotel/Motel Value of Construction Contract Awards ($000s) Total Awards Residential Building Non-Residential Building Non-Building New Housing Units Authorized, Census C-40 Total Units Single Family Units 2-4 Unit Structures 5-plus Unit Structures Bankruptcy Filings, U.S. Bankruptcy Court Total Chapter 7 Chapter 11 Chapter 13 E C O N O M I C I N D I C A T O R S % change versus year ago for: most most recent recent month 12-months JUN 97 JUL 97 AUG 97 SEP 97 OCT 97 2,296.5 2,184.5 112.0 4.4 2,305.3 2,190.6 114.7 4.2 2,299.3 2,186.1 113.2 4.4 2,303.5 2,191.1 112.4 4.2 2,313.0 2,213.6 99.4 3.9 1.7 3.6 -28.1 -31.6 1.5 2.2 -11.6 -12.8 1,952.4 14.9 132.8 205.6 156.5 49.1 100.1 63.1 481.1 107.4 373.7 123.0 593.8 301.1 41.7 259.4 138.3 41.1 1,937.5 15.2 134.2 206.6 157.7 48.9 100.5 63.6 479.0 105.0 374.0 123.6 594.6 283.8 41.9 241.9 119.1 40.6 1,947.5 15.2 134.7 207.9 158.8 49.1 97.6 60.7 480.8 105.2 375.6 124.3 590.6 296.4 41.6 254.8 133.9 40.9 1,990.4 15.1 134.0 208.9 159.4 49.5 100.6 63.6 483.9 106.1 377.8 124.7 596.3 326.9 43.0 283.9 163.9 41.1 2,022.2 15.2 135.6 209.6 160.1 49.5 102.2 64.7 490.2 107.1 383.1 126.2 605.4 337.8 42.6 295.2 175.1 41.3 4.3 4.8 4.4 4.1 5.3 0.4 4.0 6.8 4.1 5.1 3.8 7.9 5.2 2.2 -0.9 2.6 3.4 -2.1 4.6 4.9 4.1 2.7 3.4 0.5 4.3 6.8 4.3 5.4 4.0 6.7 6.4 2.7 -2.8 3.6 5.5 -3.9 18.89 14.58 11.70 17.26 11.43 13.28 15.25 14.39 11.96 17.27 11.48 13.37 15.65 14.37 11.74 17.81 11.37 13.31 16.57 14.62 11.82 17.84 11.50 13.57 16.21 14.29 11.78 17.55 11.39 13.22 -7.4 9.3 1.5 -3.5 7.5 5.6 2.5 11.1 2.7 2.4 7.0 2.1 3,641,115 2,561,594 480,884 391,225 207,412 166,369 436,909 162,921 52,658 284,846 248,548 741,118 137,769 103,861 3,310,505 2,288,482 455,557 358,637 207,829 173,076 481,846 143,134 50,486 26,502 198,864 678,844 135,443 86,558 3,376,089 2,312,215 463,419 371,297 229,158 181,138 506,452 139,346 61,247 -31,505 187,904 694,344 119,353 86,917 3,477,251 2,390,487 478,359 389,172 219,234 164,949 510,214 177,792 41,443 9,020 227,938 752,225 115,549 112,427 ... ... ... ... 232,989 176,895 ... ... ... ... ... ... ... ... 6.8 7.9 5.5 5.3 -4.0 -8.6 6.4 29.2 25.7 -97.1 10.9 10.6 -2.4 6.6 5.8 6.2 6.3 5.0 -0.4 -0.6 2.4 15.4 29.7 -7.9 12.7 6.3 -4.3 8.9 1,054,400 490,446 378,010 185,944 705,150 447,915 156,943 100,292 736,039 442,154 172,535 121,350 835,086 516,791 247,842 70,453 793,798 477,651 250,089 66,058 -9.7 -2.7 -9.0 -41.9 -6.6 -9.5 -11.5 19.9 3,925 3,645 54 256 3,892 3,777 19 96 4,956 3,694 105 1,157 5,507 4,155 54 1,298 5,113 3,563 81 1,469 20.3 16.5 -12.9 33.7 -7.7 0.2 -8.3 -34.5 2,154 1,699 18 436 2,301 1,807 28 465 2,129 1,676 33 420 2,157 1,725 32 399 2,248 1,782 22 444 16.6 22.7 0.0 -2.0 27.1 30.0 -1.0 19.4 See notes at bottom of Arizona - Quarterly table. A R IZO N A' S ECO N OMY PAGE TWENTY-ONE A R I Z O N A E C O N O M I C ARIZONA - QUARTERLY DATA Demographics & Vital Statistics (000s, seas adj) ADHS & EBR Population Natural Increase Births Deaths Net Migration Personal Income Derivation ($mil, SAAR) EBR Total Personal Income Earnings by Place of Work Less: Contributions for Social Insurance Plus: Adjustment for Residence Plus: Dividends, Interest & Rents Plus: Transfer Payments Components of Earnings ($mil, SAAR) BEA Wages and Salaries Other Labor Income Proprietor's Income Farm Nonfarm Per Capita Personal Income ($, SAAR) EBR Average Wage Per Employee, Annual Rate ($) EBR I N D I C A T O R S % change versus year ago for: most most recent recent quarter 4-quarters III 96 IV 96 I 97 II 97 III 97 4,446.5 9.7 18.6 8.9 23.3 4,479.8 10.0 19.0 9.0 23.6 4,512.9 9.1 18.7 9.6 23.5 4,545.5 9.6 19.0 9.4 22.9 4,577.5 9.7 19.0 9.3 22.0 2.9 -0.3 2.5 5.5 -5.9 3.0 0.9 2.7 4.7 -3.0 94,838 65,401 4,505 298 17,000 16,644 96,812 66,876 4,596 303 17,351 16,877 99,271 68,516 4,707 308 17,784 17,370 101,346 70,044 4,801 313 18,175 17,613 103,358 71,515 4,891 318 18,506 17,910 9.0 9.3 8.5 6.6 8.9 7.6 8.7 8.9 8.1 6.6 9.0 7.4 53,512 5,635 6,734 512 6,222 21,329 27,433 54,223 5,625 6,752 464 6,288 21,611 27,525 55,657 5,708 6,870 485 6,385 21,997 28,016 57,068 5,828 7,085 588 6,497 22,296 28,472 ... ... ... ... ... 22,579 ... 9.0 4.2 6.3 33.3 4.4 5.9 4.1 8.7 2.7 5.4 11.2 5.0 5.5 3.4 TRAVEL AND TOURISM - MONTHLY DATA JUN 97 Visits to Parks & Other Recreational Areas, ADOT, NPS & ASPB Northern Arizona Historical Scenic Water Based Recreation Southern Arizona Historical Scenic Water Based Recreation International Border Crossings, USINS & USCS U.S. Citizens Aliens Vehicles JUL 97 AUG 97 SEP 97 % change versus year ago for: most most recent recent month 12-months OCT 97 2,221,820 203,491 790,583 1,227,746 178,922 28,426 106,141 44,355 2,677,087 211,370 998,558 1,467,159 167,243 26,978 93,969 46,296 2,461,427 213,393 830,209 1,417,825 145,197 26,037 87,234 31,926 1,978,945 185,993 768,384 1,024,568 143,751 31,980 84,045 27,726 1,573,232 176,414 601,797 795,021 209,941 36,374 143,722 29,845 -10.5 -1.0 10.7 -23.2 -7.2 -22.8 -4.9 6.0 -3.4 -1.3 3.1 -7.1 -2.8 -5.7 -2.6 0.9 722,656 1,873,859 790,204 717,859 1,874,132 560,787 652,269 1,963,646 778,635 628,858 1,922,374 ... ... ... ... -6.1 10.0 6.7 4.2 -1.4 5.0 MEASURES OF INFLATION AND PRICES - MONTHLY DATA Consumer Price Index (1982-1984=100) BLS U.S. - All Urban U.S. - Wage Earners Sources and abbreviations: ADES: Arizona Department of Economic Security ADHS: Arizona Department of Health Services ADOR: Arizona Department of Revenue ADOT: Arizona Department of Transportation ARMLS: Arizona Regional Multiple Listing Service ASBD: Arizona State Banking Department ASPB: Arizona State Parks Board ASU: Arizona State University, College of Business, Research Centers PAGE TWENTY-TWO JUN 97 JUL 97 AUG 97 SEP 97 OCT 97 160.3 157.4 160.5 157.5 160.8 157.8 161.2 158.3 161.6 158.5 BEA: Bureau of Economic Analysis, U.S. Department of Commerce BLS: Bureau of Labor Statistics, U.S. Department of Labor Census C-40, Bureau of the Census, U.S. Department of Commerce EBR: Economic & Business Research Program, The University of Arizona F.W. Dodge, Division of McGraw Hill Information Systems Co. (proprietary data provided by special permission) NPS: National Park Service, U.S. Department of the Interior % change versus year ago for: most most recent recent month 12-months 2.1 1.9 2.6 2.5 NSCCC: Nogales-Santa Cruz Chamber of Commerce PSIA: Phoenix Skyharbor International Airport SAAR: Seasonally adjusted at annual rates TAA: Tucson Airport Authority TAR: Tucson Association of Realtors USINS: U.S. Immigration & Naturalization Service, U.S. Department of Justice U.S. Bankruptcy Court, District of Arizona USCS: U.S. Customs Service, U.S. Department of the Treasury ARIZONA'S ECONOMY A R I Z O N A E C O N O M I C I N D I C A T O R S MEASURES OF INFLATION AND PRICES Consumer Price Index (1982-84=100) ASU & BLS Metropolitan Phoenix Western Region (U.S.) U.S. - All Urban Consumers U.S. - Urban Wage Earners Price Indexes (1992=100) BEA Gross Domestic Product Personal Consumption Expenditures % change versus year ago for: most recent most recent quarter 4-quarters III 96 IV 96 I 97 II 97 III 97 167.6 158.6 157.4 154.6 168.6 158.7 158.5 155.8 171.3 160.8 159.6 156.7 173.9 161.0 160.2 157.3 174.4 162.1 160.8 157.9 4.1 2.2 2.2 2.1 4.2 2.5 2.7 2.6 110.6 110.8 111.1 111.6 111.8 112.2 112.3 112.5 112.8 112.9 2.0 1.9 2.2 2.4 See notes at bottom of Arizona - Quarterly table. Put the Economic Census on your calendar: February 12, 1998. Make sure your business is counted. TO ORDER Check the appropriate box below and include a check or money order, where applicable. Arizona’s Economy ❑ free of charge in the United States ❑ $12.00 (U.S.) international subscription Arizona Economic Indicators ❑ $17.00 in the U.S., Fall 1997 and Spring 1998 ❑ $23.00 (U.S.) international subscription, Fall 1997 and Spring 1998 1990 Arizona Statistical Abstract, includes 1980 Census data. ❑ Quantity ordered:_______ $26.50 (includes $3 shipping and handling) ❑ Quantity ordered:_______ $30.00 (U.S.) international order 1993 Arizona Statistical Abstract, includes 1990 Census data. ❑ Quantity ordered:_______ $27.95 (includes $3 shipping and handling) ❑ Quantity ordered:_______ $36.00 (U.S.) international order ARIZONA'S ECONOMY IS PUBLISHED QUARTERLY BY THE KARL ELLER GRADUATE SCHOOL OF MANAGEMENT, COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION, THE UNIVERSITY OF ARIZONA, TUCSON, ARIZONA 85721. 520-621-2155. COPYRIGHT 1998 BY THE UNIVERSITY OF ARIZONA. 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