A P R I L

1 9 9 9

Marshall J. Vest
Forecasting Project Director
March 1, 1999

IS IT TIME TO WORRY
ABOUT A BUBBLE
ECONOMY?
The 1999 economy began much
stronger than anyone expected, which
sets the stage for what could be another
robust year. After revising our forecasts
downward last quarter in the aftermath
of a severe shock to U.S. financial
markets, we’re revising them back up
this quarter. Can you say whiplash?
That doesn’t mean the risks are any
less. The world financial crisis has
now spread to Brazil and is sure to
affect other Latin American countries,
including Mexico – Arizona’s largest
trading partner. We’ve increased our
estimate of the number of export jobs
at risk in the months ahead, but at the
same time concluded that consumers
will carry the economy at least one
more year.
As 1999 begins, economists are busy
revising their forecasts upward. Consensus
forecasts for real GDP, which had been running in the 2-2.5% range, were deemed too
low following release of fourth quarter real
GDP estimates that showed the economy
growing at a torrid 6.1% pace. This puts real
GDP well above the 1998 average, so even if
growth is moderate through 1999, the gain
for the whole year will be sizable. Revised
forecasts now call for growth of near three
percent in 1999.
A two-tier economy has developed during
the past year. On the global scale, nearly half
of the world’s economy is now in recession

S P R I N G

while the U.S. economy flourishes. In the
United States, exporters in industries such
as manufacturing, mining, agriculture as well
as domestic oil production are in recession
while industries that sell to domestic consumers (homebuilding, autos, computers,
and telecommunications) are robust. So
far the world financial crisis has been a net
stimulus to the U.S. economy as the positive
effects on domestic consumption have more
than offset declining exports (Exhibit 1).
Households, which make up roughly twothirds of the economy, accounted for 85% of
real GDP growth during the past year. Therein
lies the major risk: how much longer can
consumers keep carrying the economy?
Near-zero inflation, declining interest rates,
a robust job market and rising real incomes
are major reasons for buoyant consumers’
spirits. The strong stock market also has
played an important role recently. Soaring
asset prices have boosted household net
worth to the point that consumers no longer
see the need to save. Official saving rates have
actually turned negative in recent months.
Various measures reflect consumers’
current spending spree. New car and light
truck sales totaled 15.3 million units nationwide last year, the best year since 1988. In
four of the past five years, sales have equaled
or surpassed 15 million units. Last year, sales
at motor vehicle dealers were strong in both
Tucson and Phoenix.
Consumers’ spending spree is having a
huge effect on resale housing markets. In
metro Phoenix, over 51,000 units sold on
Multiple Listing Services last year, a gain of

I S S U E

16.5%. That is the largest number ever sold,
and marks the fifth year in a row that a new
record has been set. In metro Tucson, sales
exceeded 9750 units, a gain of 15.1%. That
makes 1998 the strongest year this decade
with the largest gains since 1978-79, a speculative bubble in Tucson’s housing market.
Neither Phoenix nor Tucson housing markets
are presently experiencing bubbles, just strong
economics driven by population growth and
low mortgage rates.
Neither are there bubbles presently visible
in commercial real estate. But as the economy
continues to grow rapidly in the face of increasing supply constraints, imbalances will
become more prevalent and the risks of a
bubble developing will grow.

THE IRREPRESSIBLE CONSUMER
Consumer confidence remains buoyant.
The recent bombing of Baghdad, the impeachment of President Clinton and last summer’s
scary crisis in U.S. financial markets had little
effect on consumer confidence. Moreover,
last summer’s sell off in the stock market was
short-lived: from its bottom in mid-October,
the DJIA soared back to record highs in a
mere seven weeks. Two lessons were learned
from last summer’s financial crisis. First, it
reinforced the view that a sell off represents
a buying opportunity and that investors should
not panic. Second, the Federal Reserve showed
that it will do everything in its power to keep
the economy growing.
Consumer confidence fell modestly during
the second half of 1998, but after the stock
market rebound, confidence returned to

I N S I D E

Phoenix
Tu c s o n
F l a g s t a ff
Yu m a

FORECAST TABLES ................5
NEW INFLATION MEASURES
FOR ARIZONA’S METROS ......6
ARIZONA
ECONOMIC
INDICATORS........................8

ELLER GRADUAT E SCHOOL OF MANAGE MENT • COLLEGE OF BUSINESS AND PUBLIC ADMINISTRAT ION
THE U NIVERSITY OF ARIZONA

TUCSON, ARIZONA

EXHIBIT 1
Exports took a Beating Last Year

EXHIBIT 2
98’s Negative News is But a Distant Memory

Merchandise Exports, U.S.

Consumer Confidence Index, AZ (1985 = 100)

record high levels. Exhibit 2 shows Arizona’s
consumer confidence as measured by a survey
conducted by the Behavior Research Center
sponsored by Stockton Capital Management
and Trust of Scottsdale. Since recent negative
news had virtually no effect on the real
economy, consumers are likely to pay little
attention to such things as we go forward.
What will it take to shake consumers?
Maybe the year 2000 computer problem will
have an effect. The extent of the problem
remains anyone’s guess. After all, the world
has never before experienced an event quite
like this. If disruptions are large and last more
than a few days, Y2K could have a serious
effect on confidence. Some inventory building
is likely in advance of this event, and that will
boost the economy. But absorption of those
inventories will subtract a couple of tenths of

a percentage point from economic growth in
early 2000. If air traffic control goes down, if
there is a supply disruption in electric energy,
if the banking system has difficulty clearing
payments, or if any of an unknown number
of failures manifests, the consumer’s current
jubilant mood could head south. Other than
Y2K, U.S. consumers appear ready to continue
their role as the world’s foremost consumers.

ECONOMIC CRISIS
SPREADS TO BRAZIL
The financial crisis that began in Southeast
Asia in early 1997 has now spread to Russia
and more recently to South America. In
January, Brazil was forced to devalue its
currency and its economy has entered what
promises to be a severe recession. Although
Brazil is one of the world’s largest economies,

it comprises a small portion of Arizona’s
exports, less than one percent. The risk to
Arizona’s economy grows if the contagion
spreads to other Latin American countries, as
expected. Mexico is Arizona’s largest export
destination, accounting for nearly $2 billion,
or 14.5% of total exports. Arizona exports
to the entire Latin America and Caribbean
region are $2.2 billion. That compares to
nearly $6 billion that is destined for the
Asian 10 countries (Exhibit 3).
Arizona exports grew robustly through
1997, but in 1998 the Asian crisis began to
take its toll. During the first nine months,
Arizona exports fell some $2-1/4 billion, a
drop of more than 22% (Exhibit 4). Asian
countries accounted for $1.6 billion of that
drop, while exports to both Mexico and Brazil
grew by small amounts.

EXHIBIT 3
Arizona Merchandise Exports To The World By Region 1993-1997
% Change
1993-97

% Change
1996-97

1993

1996

1997

TOTAL EXPORTS TO THE WORLD

5,785,148,000

9,937,766,000

13,556,746,528

134.3

36.4

TO ASIAN 10 COUNTRIES
as a percent of total

2,265,050,074
39.2%

4,451,637,170
44.8%

5,975,815,370
44.1%

163.8

34.2

TO LATIN AMERICA AND THE CARIBBEAN
as a percent of total

1,151,603,343
19.9%

1,776,852,648
17.9%

2,182,004,732
16.1%

89.5

22.8

TO MEXICO
as a percent of total

1,087,417,986
18.8%

1,622,176,008
16.3%

1,963,143,223
14.5%

80.5

21.0

TO BRAZIL
as a percent of total

17,528,205
0.3%

68,414,593
0.7%

124,251,822
0.9%

608.9

81.6

PAGE TWO

ARIZONA'S ECONOMY

What can we expect if other Latin American
countries follow Brazil into recession? The
WEFA Group, a leading worldwide economic
consulting and forecasting firm, expects
the economies of Argentina, Uruguay and
Venezuela to join Brazil in recession in 1999.
Remaining South American countries and
Mexico are expected to continue to grow but
at a slower rate.
The Mexican peso is expected to experience
downward pressure, and interest rates will
rise to thwart capital outflows. Even so, Mexico
is expected to grow by three percent this year
compared to four percent in 1998. If the
situation turns decidedly worse than currently
expected, the impact on Arizona exports to
Mexico could become a factor. The major
devaluation of the Mexican peso at the end
of 1994 and subsequent severe recession did
not devastate Arizona’s exports to Mexico.
Exports remained relatively stable during 1995
before resuming rapid growth the following
year. But that was due to a surge in exports of
electric and electronic equipment that more
than offset declines in most other export
categories. Also, NAFTA was in the early stages
of implementation that resulted in significant
reductions in tariffs. Therefore, it is difficult
at present to assess risks associated with
possible recession in Mexico, but the best
guess at this point is that exports to Mexico
will hold up and not subtract measurably
from Arizona exports.

THE OUTLOOK
FOR ARIZONA

EXHIBIT 5
The Outlook – Slowing, with Risks

Wage and Salary Job Growth, Arizona
Last summer’s crisis
in financial markets had
no effect on Arizona’s real
economy. As discussed
above, consumer confidence rebounded,
records were set in local
housing markets, the
holiday shopping season
was a success and the
economy continued to
accelerate as the year
came to an end. As
a result, we’ve raised
our forecasts from last
quarter (see forecast
table on page 5).
Retail sales finished
last year with a gain of
almost eight percent.
Population will continue to expand by
Although we expect the pace to slow
130-135,000 persons per year, matching
somewhat to nearer seven percent during
the average gain over the past five years.
1999, the economy will continue to be
Roughly 90,000 jobs will be created redriven by strong consumer spending.
sulting in job growth of 4.4%. Manufacturing
Residential building permits neared
payrolls are expected to remain unchanged
61,000 statewide last year, a gain of nearly
in the aggregate as gains in aircraft and
10%. Due to factors related to demographics
missiles offset declines in machinery
that will slow the rate of new household for(including electronic). The fastest-growing
mation, we project fewer permits this year –
sectors promise to be services and FIRE1.
roughly 53,000. Even so, that would make
Wages per job will increase by 4.2%, which
1999’s total the third largest year this decade.
will help boost personal income by 7.5%.
The year 2000 promises to bring slower
growth,
but no recession. Another year of
EXHIBIT 4
declines
in the number of building permits
Exports from Arizona to the World, Top Destinations
will
bring
a small decline in construction jobs,
9-month year to date comparisons, $000s
and overall nonag job growth closer to three
Destination
96 YTD
97 YTD
% chg
98 YTD
% chg
percent is expected. Population growth slows
a couple of tenths of a percentage point to
Asian 10 Countries
3,022,919
4,603,617
52.3
3031,992
-34.1
2.6%.
Retail sales will also slow by a full
Mexico
1,194,925
1,434,875
20.1
1487,182
3.6
percentage point to near six percent. Growth
Canada
747,464
833,209
11.5
799,791
-4.0
rates for 2000 are indicative of the pace
projected for the 2001-04 period. The
United Kingdom
668,510
804,126
20.3
524,164
-34.8
pattern as the economy transitions from the
Netherlands
207,368
1,131,385
445.6
378,890
-66.5
strong growth of 1998 is best described as
Germany
298,605
296,663
-0.7
361,848
22.0
a soft landing.

France

226,173

293,135

29.6

325,369

11.0

Brazil

51,423

88,604

72.3

105,124

18.6

Switzerland

24,010

65,362

172.2

100,088

53.1

Ireland

69,312

72,332

4.4

99,360

37.4

Australia

60,068

69,765

16.1

98,835

41.7

$6,938,012

$10,271,816

48.1

$8,005,014

-22.1

Total Arizona Exports

ARIZONA'S ECONOMY

FORECAST RISKS
A number of economists believe that the
global crisis now becoming established in
South America will spread to Europe next and
to the U.S. shortly thereafter. In this view,
an outright recession in the world economy
develops early next year. Reduced exports
PA GE TH RE E

and lower profits lead to lower equity markets
and declining business investment. Asset deflation prompts a restriction in bank lending.
Year2000 computer problems effect consumer
sentiment and consumers cut back on spending. The result is a recession beginning in the
first quarter of 2000, resulting in a decline of
1.4% in real GDP for the year.
Arizona job growth in this scenario falls
to near zero, retail sales grows by less than
two percent and the manufacturing and construction sectors are hammered. By 2001,
population growth also falls below two
percent. We assign a subjective probability
of 30% to this scenario.
It is possible, of course, that the U.S.
economy will shrug off the best made predictions and continue growing at an elevated
pace similar to the past four years. Auto and
housing remain strong, the world financial
crisis ameliorates and U.S. exports recover.
These events add a half percent to Arizona’s
rate of growth as measured by retail sales,
jobs and income. A probability of 10% is
assigned to this scenario. A graphical comparison of these scenarios depicting overall
job growth is shown in Exhibit 5.

FASTER GROWTH
FORESEEN FOR TUCSON
Metro Tucson’s economy grew at a healthy
pace last year, adding an estimated 12,000
jobs2 and 17,000 people. The outlook for
1999 is for even faster growth. This year,
a number of companies in manufacturing,
software and telecommunications will be
expanding which will boost Tucson’s export
base. Manufacturing payrolls will increase
by 2400, led by Raytheon, Bombardier,
Universal Avionics and ADE. Increases in software and teleservices payrolls will be led by
Keane, Intuit, First Health, Infonxx, LTD Direct
Marketing, Anderson Financial, National
Information Group, AOL, and Reliant
Insurance, among others. This is one of the
biggest crops of expansions/additions in a
number of years, and it will provide a boost
in demand to business and populationserving activities.
Our forecasts show 1999 to be a stronger
year for Tucson than 1998. We project 17,000
new jobs and nearly 21,000 new residents.
Retail sales are expected to increase in the
7.5-8.0% range during the next two years.
Building permits will rise into the 8500-9000
range. If 1999 turns out as expected, it will
bring the fastest growth to the Old Pueblo
since 1994. $
PA GE F OU R

1

Finance, Insurance and Real Estate (FIRE)

2

Employment estimates for counties continue to
suffer from large and growing numbers of companies with multiple work sites who fail to report
employment counts for individual counties. In
these instances, state-wide totals are allocated
in their entirety to one county (where the largest
numbers are believed to be). The net effect is to
boost reported totals for Maricopa County (metro
Phoenix) while seriously understating job counts
in outlying counties. As such, county employment
estimates are unrepresentative of actual economic
activity and must be interpreted with caution.

S P O N S O R S

Arizona Joint Legislative Budget Committee
Arizona Portland Cement
Arizona Public Service Company
Bank One Arizona
CB Richard Ellis
City of Tucson
Coldwell Banker Success Realty
Elliott D. Pollack and Company
Estes/Kaufman & Broad
Pima County
Salt River Project
Territorial Newspapers
Tucson Electric Power Company
Tucson Newspapers
U S WEST Communications
U S WEST Dex

I N C R E A S I N G

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College of Business and Public Administration
The University of Arizona
Register now for:

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An 8-day intensive certificate program for
employees without a formal business education.
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For more information:
Contact: Lisa Fahey, 520/621-2301
E-mail: lfahey@bpa.arizona.edu

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and Public Administration
McClelland Hall, PO Box 210108
The University of Arizona, Tucson, AZ 85721-0108

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

1998
108,089.8
7.9
22,983.2
4.8
45,762.1
6.5
4,703.0
2.9
93.6
2,079.8
5.1
371.4
5.2
137.3
5.6
221.1
5.7
1,708.4
5.1
496.7
3.7
643.2
6.9

1999
116,172.1
7.5
24,026.9
4.5
48,835.6
6.7
4,835.1
2.8
91.7
2,170.6
4.4
376.8
1.5
142.4
3.8
221.3
0.1
1,793.8
5.0
519.6
4.6
683.4
6.2

2000
124,584.9
7.2
25,107.9
4.5
51,509.9
5.5
4,962.0
2.6
81.8
2,238.4
3.1
377.7
0.3
138.7
-2.6
225.7
2.0
1,860.6
3.7
535.6
3.1
719.4
5.3

2001
133,883.1
7.5
26,351.1
5.0
54,898.3
6.6
5,080.7
2.4
79.0
2,306.6
3.0
381.9
1.1
136.0
-2.0
232.5
3.0
1,924.7
3.4
554.7
3.6
753.1
4.7

2002
142,811.9
6.7
27,469.8
4.2
58,628.2
6.8
5,198.9
2.3
78.1
2,372.1
2.8
384.1
0.6
135.8
-0.2
234.9
1.1
1,988.0
3.3
574.7
3.6
786.6
4.5

2003
152,575.5
6.8
28,697.2
4.5
62,611.6
6.8
5,316.7
2.3
80.0
2,445.4
3.1
390.3
1.6
137.8
1.5
239.0
1.7
2,055.1
3.4
594.7
3.5
822.3
4.5

2004
163,284.2
7.0
30,028.7
4.6
67,039.8
7.1
5,437.6
2.3
81.9
2,521.0
3.1
398.6
2.1
141.6
2.7
243.6
1.9
2,122.3
3.3
614.3
3.3
858.3
4.4

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

1998
78,023.4
10.1
26,424.6
6.2
31,530.0
7.6
2,952.7
3.6
67.6
1,479.3
6.1
281.3
5.7
104.5
7.6
170.2
4.6
1,198.0
6.2
360.1
5.6
470.6
7.0

1999
83,802.3
7.4
27,512.5
4.1
33,573.6
6.5
3,046.0
3.2
63.0
1,536.6
3.9
280.0
-0.5
106.0
1.5
167.4
-1.6
1,256.6
4.9
377.8
4.9
496.0
5.4

2000
90,177.2
7.6
28,791.8
4.6
35,484.2
5.7
3,132.0
2.8
54.6
1,585.2
3.2
281.9
0.7
102.7
-3.1
172.6
3.1
1,303.3
3.7
392.3
3.8
516.5
4.1

2001
97,162.3
7.7
30,206.1
4.9
37,589.3
5.9
3,216.6
2.7
52.2
1,632.2
3.0
286.0
1.5
100.1
-2.5
179.3
3.9
1,346.2
3.3
407.0
3.7
535.5
3.7

2002
103,885.5
6.9
31,475.7
4.2
39,642.3
5.5
3,300.5
2.6
50.6
1,674.0
2.6
286.3
0.1
98.9
-1.3
180.9
0.9
1,387.7
3.1
421.1
3.5
554.6
3.6

2003
110,892.7
6.7
32,766.1
4.1
41,760.2
5.3
3,384.4
2.5
50.2
1,719.2
2.7
289.4
1.1
99.8
0.9
183.1
1.2
1,429.8
3.0
434.9
3.3
573.5
3.4

2004
118,616.3
7.0
34,180.9
4.3
43,997.4
5.4
3,470.2
2.5
51.9
1,768.0
2.8
294.7
1.8
102.4
2.6
185.7
1.4
1,473.3
3.0
449.8
3.4
592.5
3.3

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

1998
17,898.7
6.6
22,042.7
4.4
7,277.2
4.9
812.0
2.1
13.7
328.1
3.8
52.6
4.6
19.6
4.1
30.3
4.8
275.5
3.6
69.9
2.8
104.9
4.8

1999
19,226.9
7.4
23,086.5
4.7
7,754.8
6.6
832.8
2.6
16.9
345.0
5.2
56.7
7.9
20.9
6.2
33.0
8.7
288.3
4.6
72.7
4.1
110.4
5.2

2000
20,658.3
7.4
24,184.7
4.8
8,312.0
7.2
854.2
2.6
17.6
358.6
3.9
58.3
2.8
21.8
4.3
33.5
1.6
300.3
4.2
75.7
4.1
116.5
5.6

2001
22,146.7
7.2
25,370.2
4.9
8,874.6
6.8
872.9
2.2
15.1
369.5
3.0
58.9
1.0
21.8
0.4
34.0
1.4
310.5
3.4
78.7
4.0
121.7
4.4

2002
23,542.1
6.3
26,465.3
4.3
9,400.9
5.9
889.5
1.9
13.1
378.0
2.3
58.9
-0.1
21.4
-2.2
34.3
1.1
319.2
2.8
81.2
3.2
126.5
3.9

2003
24,906.6
5.8
27,522.0
4.0
9,904.4
5.4
905.0
1.7
12.0
386.3
2.2
58.7
-0.3
20.8
-2.6
34.7
1.1
327.6
2.6
83.2
2.5
131.1
3.7

2004
26,372.7
5.9
28,654.8
4.1
10,430.9
5.3
920.4
1.7
12.1
395.0
2.3
58.9
0.4
20.6
-0.9
35.1
1.1
336.1
2.6
85.4
2.6
135.7
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 IZ ON A 'S E CON OMY

PAGE FIVE

NEW INFLATION
MEASURES FOR
AZ’S METRO AREAS

CHART 1
Phoenix Inflation Rates

CHART 2
Inflation Rates

Quarterly Over-the-Year Increases in Price Indices

Annual Over-the-Year Increases in Price Indices

tion rate in the national CPI could show up in
high vacancy rates for your property. So, some
gauge of local inflation, whether formal or
informal, is necessary for business decisions.
Since 1975, state residents have used the
Phoenix CPI to gauge their local cost of living
index and inflation rates. Unfortunately, Arizona
State University’s Center for Business Research,
which has been altruistic in their efforts to produce the index, announced the abandonment
of the index in their February 1998 issue of
Arizona Business. Due to methodological
problems and a lack of funding, the Center can
no longer produce the index. So, we are left
with ACCRA – the only other local price index.
However, the American Chamber of Commerce
Researchers Association (ACCRA) stresses that
the index was not intended to be a time series,
but a cross-sectional indicator of prices. In
layman’s terms, this means the firm created
the data to compare the costs between metropolitan areas (MA) at one point in time, not
to compare the costs in one MA over time.
There are other problems associated with
ACCRA as well. The association compiles its
databank of prices from the efforts of participating local chambers of commerce. This implies
that if the chamber does not find the effort
worthwhile for a certain quarter, that city will
have no data. Historically, this situation has
occurred one time each in Phoenix, Tucson
and Yuma since 1990. Another problem occurs
since the ACCRA index focuses only on those
items that represent purchases of a typical individual who upholds a mid-management lifestyle.
These items number only 59. Consequently,
the index will not capture the pressures felt by
the average worker in an urban environment,
nor will it capture price movements in high-tech
purchases such as cell phones, software, etc.
Nonetheless, the ACCRA index can be likened
to a diamond in the rough. While it takes quite
a bit of mathematical chiseling, the ACCRA

index can provide a glimpse of the inflationary
pressures in an area. More importantly, right
now, it is all we’ve got!

By Debra J. Roubik, 602-561-2816
Chief Economist of VisionarEcon,
Phoenix-based Consulting Firm

Release of the Consumer Price Index
(CPI) by the Bureau of Labor Statistics
tends to bring on a type of “seizure”
to the financial markets every month.
Markets react as if these numbers play a
monumental role in the health of our
country. The frenzy surrounding these
data releases may not be as eccentric
as they seem at first glance.
The CPI has wormed its way into almost every
fabric of our economy. It affects the labor market
through wage agreements, the real estate market through leasing documents, government
revenue growth through the adjustment of tax
brackets and government spending due to the
indexing of government bonds, and the increase
in entitlement programs. And, the list goes on.
Consequently, if inflation is gaining at an unhealthy pace – the effects are compounded at
an unrelenting rate.
Locally, the same could be expected to be
true: A local price index could give us an insight
into the interworkings of our local economy.
Such an index could alert local companies to
cost pressures and local decision makers to
the growth in revenues that could be expected
simply due to local inflation. So, in reality,
the financial markets are right. That inflation
number does play a big role in measuring the
health of our economy.

DATA COLLECTION DILEMMA
The Bureau of Labor Statistics produces such
a local price index for some metropolitan areas.
However, that pool of local CPI recipients is
limited due to the expense and time factors in
producing a high-quality index. As a result, most
local decision makers are caught in a quandary.
Logically, as any astute businessperson would
stress, simply incorporating national CPI increases into labor and rental agreements, or into
revenue projections, could produce disastrous
results. If local inflation is running higher
than it is nationally, incorporating the national
inflation rate into your raise policy could chase
away good talent. Or, if local inflation rates are
running lower than those nationally, increasing
the payment on rental properties by the inflaPAGE SIX

REMEMBER CALCULUS CLASS?
It all boils down to that old concept practiced
ad nauseam in your calculus class: derivatives.
Since the ACCRA index is a ratio of two different
variables (local prices and national prices) that
change over time, the change in local prices
can not be calculated by taking your simple rate
of change in the ACCRA index. The desired rate
of change is calculated by applying the product
rule for derivatives after solving for local prices.
The following equations walk you through the
mathematics. By definition:
ACCRA = Local Prices / National Prices

Solving for local prices:
Local Prices = ACCRA * National Prices

According to the product rule for derivatives,
and using Dt to denote the partial derivative
with respect to time:
Dt (Local Prices) = Dt (ACCRA) * National
Prices + ACCRA * Dt (National Prices)

Finally, recognizing that our measures are
discrete rather than continuous, the derivative
boils down to the percentage change. Hence,
the rate of change of local prices equates to a
sum of the rate of change in ACCRA multiplied
by the national Consumer Price Index (CPI)
and the rate of change in the CPI multiplied by
the ACCRA index.

WITH STATISTICS, THERE’S
ALWAYS A CATCH
This procedure is no exception. Economic
statistics are always limited by their processes.
As mentioned, the price increases calculated
by this derivation of the ACCRA index are only
representative of inflation for middle-managertype purchases. Also, the ACCRA survey of
ARIZONA'S ECONOMY

CHART 3
Inflation Rates

CHART 4
Inflation Rates

Annual Over-the-Year Increases in Price Indices

Annual Over-the-Year Increases in Price Indices

prices comes nowhere close to being as comprehensive as the price surveys produced by
the Bureau of Labor Statistics (the agency
responsible for the CPI) and the price survey
ASU produced. In the early 1980’s the Bureau
of Labor Statistics incorporated a new concept
into the national consumer price index known
as homeowner equivalency. This procedure
helped to remedy a problem that still runs
rampant in the ACCRA index. Just as with the
old CPI, ACCRA incorporates the price of a new
house and the current mortgage rate, as if an
individual was purchasing a new home every
month. Hence, just as with the old CPI, the
index will become skewed during real estate
peaks and valleys. Any analyst must be attentive
to these common quirks associated with the
local price index.
Chart 1 illustrates the percentage increases
in ASU’s Phoenix CPI, the ACCRA derivative
(or the raw Local Price Index (LPI)) and the
national CPI. As shown, the raw LPI is extremely
volatile. However, it is not by coincidence that
when comparing increases in ASU’s CPI, the
raw LPI and the national CPI, price pressures
render the raw LPI more accurate than the
national CPI when employment growth increases
TABLE 1
Local Inflation Rates
(Annual Percentage Changes)

1991
1992
1993
1994
1995
1996
1997
1998E

Nat’l
CPI
4.2
3.0
3.0
2.6
2.8
2.9
2.3
1.6

Phx
LPI
3.5
2.6
3.4
3.3
3.6
5.1
2.8
1.3

Tuc
LPI
3.6
1.8
2.5
1.7
2.8
2.4
1.8
1.5

Flag
LPI
3.5
3.0
2.8
3.7
2.1
0.5
2.1
2.2

Yuma
LPI
5.1
5.4
5.8
2.8
3.1
6.1
6.6
2.4

Fourth quarter ACCRA numbers unavailable until March.
Hence, estimate represents year-to-date average.

ARIZONA'S ECONOMY

in an metropolitan area. When employment
growth declines, local prices can be expected
to mirror national prices more closely. Hence,
an intricate statistical technique was applied
in order to reduce the volatility in the raw LPI
and account for such cyclical fluctuations.
Not only does this make theoretical sense,
but, this new local price index also affirms two
of ASU’s contentions regarding its own Phoenix
CPI: (1) the Phoenix CPI appears to have overstated local inflation by almost 1.5% over the
last few years and (2) there exists a cyclical
nature to the old Phoenix CPI’s misspecification
error over history.

LOCAL INFLATION SLOWING
As Table 1 shows, all of the local inflation
rates have fallen from the 3.5 to 6 percent range
of the early 1990s to the 1.5 to 2.5 percent range
of 1998. But, the patterns of inflation vary considerably geographically.
1. Fervent Phoenix
As Chart 2 shows, and as witnessed more
visibly in the previously quarterly chart, prices
in Phoenix began to outpace their national
counterparts as soon as the 1990’s expansion
began. Economic development efforts worked
to propel the local economy, and prices reflected this increase in local demand. As a
result, price increases in the Valley out-paced
national inflation (measured by the national
CPI) on average by about one half of one percentage point.
While 1996 shows an inflation differential of
over two percent, this jump simply exemplifies
the problems with the housing component.
The housing index went from 93.6 in the fourth
quarter of 1995 to a high of 99.9 in the first
quarter of 1997. This fact seems to confirm
that the 1996 jump in prices reflected a real
estate boom more than any jump in overall
price pressures.

2. Temperate Tucson
Prices in Tucson have appeared to be more
erratic, yet more temperate than their national
counterparts (see Chart 3). Only in 1995 did
Tucson price increases appear to even approach
the national rate. On average, since 1991 Tucson
prices appear to have increased at about a half
of one percentage point under the increase in
the national CPI.
3. The Slopes of Flagstaff
While it may be tempting to try to attribute
all of the movement in Flagstaff’s LPI to housing,
such is not the case. The LPI suggests that price
increases fell from about par, to substantially
under the national numbers during a period
when housing prices continued to climb (from
1994 to a peak in 1997). Hence, the LPI
suggests that Flagstaff has embarked on a
definite disinflationary trend over the last four
years (see Chart 4).
4. Eluding Yuma
All early indications from the LPI for Yuma
suggest that this MA has a character all of its
own. In contrast to the other MAs, when the
Yuma economy picks up, the raw LPI drops
like a rock. More interestingly, this move seems
to be mostly dictated by the cost of utilities.
Consequently, a different volatility and cyclical
adjustment process was employed for the
Yuma LPI.
Of all four MAs, the LPI for Yuma does not
appear to adequately capture overall price
pressures. This may be due to the fact that the
ACCRA index considers only mid-management
level purchases. At this present time, such a
price index will not adequately represent Yuma’s
economy. Once Yuma succeeds at their efforts
toward developing a more diversified employment base, this LPI will become more useful
for the MA. Consequently, the Yuma LPI should
still be held suspect when searching for a price
measure for the MA’s general population.

MORE WORK TO BE DONE
While these local inflation rates provide
much promise, they also reinforce the fact that
more work needs to be done to get a good
handle on inflation in the smaller metro areas.
At the least, however, with ASU’s Phoenix CPI
now a token of history, the Phoenix, Tucson
and Flagstaff LPI can provide a good indicator
of the direction of price pressures in the major
metro areas of the state. Any way you assess it,
the raw LPI and the LPI itself for all the MAs
suggest that inflation rates are currently running under 2.5%. Armed with this information,
local business managers will be better equipped
to make good pricing decisions. $
P AG E S EV EN

A R I Z O N A

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

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

SEP
98

OCT
98

NOV
98

DEC
98

JAN
99

73,750
49,425
24,325
33.0

66,400
49,775
16,625
25.0

65,350
51,100
14,250
21.8

62,150
49,700
12,450
20.0

...
...
...
...

2.1
1.7
3.5
1.4

4.3
6.0
-0.1
-5.4

38,675
25
2,700
1,800
1,225
10,500
1,175
8,600
12,650

39,725
25
2,725
1,800
1,100
11,200
1,225
8,800
12,850

41,450
25
2,750
1,850
1,125
12,200
1,275
9,000
13,225

41,575
25
2,750
1,875
1,175
12,475
1,275
9,100
12,900

...

6.3

4.7

...
...
...
...
...
...
...

5.8
-1.3
-21.7
0.6
6.3
-1.1
25.2

13.3
0.1
-12.5
0.2
-1.5
1.7
14.1

68,435
55,989
6,436
6,010
5,790
13,962

78,616
62,938
7,937
7,741
7,579
16,836

86,894
70,408
8,474
8,012
8,066
13,438

107,093
88,375
9,547
9,171
9,624
15,460

...
...
...
...
...
...

8.1
7.9
12.2
6.0
40.4
-10.2

6.7
7.7
3.7
2.3
23.5
16.0

21,776
6,636
6,151
8,989

11,852
8,583
3,187
82

11,687
7,011
2,586
2,090

9,715
5,588
3,303
824

11,342
6,969
2,500
1,873

-61.8
78.4
-89.8
61.2

-20.3
16.4
-58.5
51.7

79
79

97
97

90
90

74
74

76
76

85.4
85.4

24.1
23.8

71,625
68,525
3,100
4.3

71,775
69,100
2,675
3.7

71,825
69,150
2,675
3.7

72,125
69,175
2,950
4.1

...
...
...
...

5.2
5.9
-7.8
-12.4

5.5
6.9
-18.8
-22.9

42,700
225
2,750
3,450
2,150
13,425
1,125
11,025
8,550

42,775
225
2,800
3,450
2,150
13,600
1,100
10,950
8,500

42,925
225
2,775
3,400
2,150
13,825
1,100
10,775
8,675

42,750
225
2,775
3,225
2,150
13,900
1,100
10,675
8,700

...
...
...
...
...
...
...
...
...

3.0
12.5
2.8
0.8
2.4
5.3
-15.4
1.7
4.8

4.0
12.5
-9.1
2.9
3.4
7.5
-13.6
5.7
4.5

85,683
64,644
10,970
10,069
9,701
19,096

90,914
69,290
11,901
9,723
9,520
21,577

85,516
66,141
10,525
8,850
8,909
19,085

102,768
83,449
10,663
8,656
9,083
25,384

...
...
...
...
...
...

-3.2
10.6
2.6
-57.4
-43.6
61.0

4.8
9.8
6.1
-20.2
-4.3
18.0

36,748
13,568
14,815
8,365

19,132
14,285
1,612
3,235

16,578
14,847
1,731
0

16,716
12,439
1,531
2,746

22,538
12,933
5,878
3,727

-18.3
17.5
134.6
-73.5

37.6
19.1
106.3
22.5

145
141

143
143

157
157

132
128

136
132

15.3
13.8

20.1
19.7

See notes at bottom of Arizona - Quarterly table.
PAGE EIGHT

ARIZONA'S ECONOMY

A R I Z O N A

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

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

SEP
98

OCT
98

NOV
98

DEC
98

JAN
99

57,000
50,300
6,700
11.8

55,750
50,225
5,525
9.9

55,175
50,650
4,525
8.2

54,550
50,250
4,300
7.9

...
...
...
...

0.2
1.6
-13.6
-13.8

1.9
4.8
-20.0
-21.6

43,250
50
1,900
2,425
2,250
12,075
850
9,425
14,275

43,375
50
1,925
2,400
2,250
12,100
850
9,450
14,350

44,275
50
1,950
2,325
2,325
12,675
875
9,625
14,450

44,350
50
1,900
2,275
2,350
12,825
850
9,600
14,500

...
...
...
...
...
...
...
...
...

3.4
...
0.0
3.4
-2.1
4.3
6.3
-1.0
6.6

4.1
...
-0.3
0.6
-0.7
6.3
-0.7
2.2
5.6

67,624
52,807
7,840
6,977
6,722
13,530

71,739
55,986
8,258
7,495
7,339
15,762

73,106
58,427
7,567
7,112
7,160
15,569

93,958
75,767
9,199
8,992
9,437
14,557

...
...
...
...
...
...

8.1
5.4
10.6
33.1
76.4
30.5

6.3
8.4
1.9
-3.8
17.0
9.7

16,967
9,541
1,058
6,368

13,526
7,166
5,808
552

20,804
8,134
11,129
1,541

11,360
5,475
5,475
410

25,653
6,301
2,795
16,557

255
-4.7
353
...

24.6
1.0
86.8
54.2

95
93

84
84

83
81

62
60

69
69

6.2
6.2

-5.3
7.8

35,800
33,150
2,650
7.4

35,450
33,000
2,450
6.9

34,900
32,525
2,375
6.8

35,000
32,450
2,550
7.3

...
...
...
...

2.7
2.7
3.0
0.3

4.1
5.0
-5.1
-8.9

27,175
2,975
2,000
1,950
875
6,325
400
4,325
8,325

27,175
2,975
1,900
1,950
875
6,300
425
4,275
8,475

27,075
2,950
1,925
1,975
875
6,325
400
4,275
8,350

27,225
2,950
1,925
1,975
875
6,350
425
4,275
8,450

...
...
...
...
...
...
...
...
...

4.3
-4.8
6.9
3.9
9.4
7.6
41.7
-0.6
5.6

4.2
-0.3
1.1
2.3
9.1
7.2
8.0
0.5
6.2

41,067
31,763
4,809
4,495
4,331
10,427

43,348
33,182
5,388
4,778
4,679
11,983

38,817
29,432
4,864
4,521
4,551
11,231

46,702
37,747
4,673
4,282
4,493
7,973

...
...
...
...
...
...

-4.6
-5.6
-1.6
1.5
34.5
-22.5

-0.5
0.0
1.5
-6.8
12.8
10.6

6,289
4,327
450
1,512

12,148
4,735
5,894
1,519

4,668
3,965
263
440

5,296
3,163
2,000
133

4,221
3,577
0
644

-39.0
-46.0
...
113.2

-15.2
-23.4
4.1
-7.9

43
43

39
39

38
38

27
27

32
32

-61.4
-5.9

-25.3
-7.8

See notes at bottom of Arizona - Quarterly table.
AR IZ ON A 'S E CON O MY

PAGE NI NE

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

SEP
98

OCT
98

NOV
98

DEC
98

JAN
99

49,775
43,350
6,425
12.9

48,750
43,000
5,750
11.8

48,250
42,175
6,075
12.6

48,500
41,775
6,725
13.9

...
...
...
...

0.8
0.5
2.7
1.8

1.4
3.9
-11.4
-12.5

42,475
950
1,675
1,700
2,575
7,600
1,125
8,400
18,450

42,275
950
1,725
1,700
2,575
7,525
1,100
8,225
18,475

41,900
950
1,700
1,700
2,575
7,350
1,100
8,075
18,450

41,575
950
1,675
1,700
2,600
7,350
1,100
7,850
18,350

...
...
...
...
...
...
...
...
...

1.2
5.6
-11.8
0.0
8.3
-0.7
0.0
-3.1
4.3

3.0
5.6
-11.2
3.8
0.3
0.0
0.0
-0.7
8.4

63,228
51,084
6,168
5,976
5,758
13,881

59,209
47,921
5,357
5,931
5,807
12,771

54,758
45,573
4,296
4,889
4,922
11,941

61,850
52,231
4,320
5,299
5,561
7,886

...
...
...
...
...
...

-6.1
0.2
-9.2
-41.4
-22.3
-18.0

5.5
9.6
6.3
-18.0
-1.7
27.9

17,970
6,428
6,852
4,690

9,584
6,362
82
3,140

9,161
4,476
3,770
915

11,591
5,374
5,747
470

5,584
3,352
2,000
232

17.2
15.9
7.0
...

5.8
-4.7
22.2
5.4

61
61

60
53

42
42

45
45

31
31

10.7
10.7

-9.2
-2.7

122,250
116,375
5,875
4.8

122,125
117,250
4,875
4.0

120,900
115,700
5,200
4.3

122,000
116,350
5,650
4.6

...
...
...
...

0.1
1.0
-15.4
-15.5

1.7
2.7
-13.9
-15.5

99,650
975
6,700
6,725
3,300
25,950
2,900
27,950
25,150

100,600
975
6,575
6,650
3,350
26,175
2,875
27,825
26,175

100,050
975
6,500
6,600
3,275
25,925
2,900
27,300
26,575

97,800
975
6,375
6,825
3,250
25,600
2,900
26,925
25,950

...
...
...
...
...
...
...
...
...

0.3
8.3
1.2
5.0
1.6
-1.5
3.6
2.0
2.2

3.5
2.2
1.6
-0.1
1.7
0.2
3.3
5.5
6.9

181,562
133,370
34,367
13,825
13,320
47,965

169,477
122,389
33,388
13,700
13,415
50,107

161,155
123,700
26,129
11,326
11,402
47,247

175,131
138,107
25,878
11,146
11,697
46,888

...
...
...
...
...
...

-3.9
-3.6
5.1
-22.5
2.7
14.5

1.2
3.3
6.9
-24.1
-8.6
5.8

67,210
24,647
2,372
40,191

38,219
23,969
8,111
6,139

38,169
24,734
5,088
8,347

31,383
22,956
2,648
5,779

36,042
21,627
6,307
8,108

-8.4
-16.6
-31.0
89.4

-3.7
-3.0
-23.2
18.1

308
224

211
205

251
188

199
187

203
182

-6.0
-2.7

14.4
17.8

See notes at bottom of Arizona - Quarterly table.
PAGE TEN

ARIZONA'S ECONOMY

A R I Z O N A

E C O N O M I C

SEP
98
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

OCT
98

I N D I C A T O R S

NOV
98

DEC
98

% change versus year ago for:
most
most
recent
recent
month
12-months

JAN
99

1,532.8
1,483.50
49.3
2.8

1,528.0
1,487.10
40.9
2.5

1,536.1
1,496.40
39.7
2.7

1,542.3
1,501.60
40.7
2.9

...
...
...
...

4.0
3.9
9.1
7.4

5.9
6.4
-7.9
-13.2

1,474.0
6
102.2
169.5
128.6
40.9
76
352.8
89.3
263.5
116.6
462.4
188.5

1,481.2
5.9
103.4
168.8
128.3
40.5
76.4
355.8
89.7
266.1
117.3
465.7
187.9

1,503.8
5.9
103.5
169
128.2
40.8
76.9
363.7
90.2
273.5
117.4
471.4
196

1,512.4
5.9
103.6
169.4
128.5
40.9
78
370.8
91
279.8
119.1
475
190.6

...
...
...
...
...
...
...
...
...
...
...
...
...

4.6
-13.2
8.8
1.8
1.3
3.5
6.3
3.4
3.6
3.3
7.2
5.2
4.5

5.5
-6.6
6.1
4.9
5.5
3.1
6.2
4.8
5.0
4.8
8.0
6.0
4.3

2,528,034
1,784,026
350,545
276,632
116,831
596,404

2,624,680
1,836,079
364,868
302,080
121,653
562,078

2,663,266
1,873,252
371,835
305,501
112,678
597,871

3,262,855
2,456,515
375,069
309,915
121,356
681,235

...
...
...
...
...
...

7.3
7.9
11.9
3.8
-6.4
15.6

7.3
7.6
10.9
9.0
-8.9
16.9

669,047
385,274
158,115
125,658

651,069
387,088
149,134
114,847

597,612
346,658
152,337
98,617

555,794
356,439
102,663
96,692

521,988
349,736
71,155
101,097

-33.8
3.5
-77.2
-26.4

-5.2
-2.3
-20.9
18.1

4,124
2,909
72
1,143

3,054
2,924
88
42

4,267
2,676
21
1,570

3,835
2,805
26
1,004

4,362
2,936
39
1,376

50.1
33.8
200
96.6

17.9
18.1
72.0
25.0

586,596
3,979
147,423

656,925
4,584
143,308

521,128
3,528
147,712

691,502
4,636
149,159

565,636
3,638
155,480

16.0
13.4
2.3

23.0
16.0
6.1

2,351,397
43,354

2,644,911
46,592

2,583,189
43,742

2,617,190
46,452

...
...

-0.2
7.0

3.9
3.2

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

IV
97

I
98

II
98

III
98

IV
98

2,889.1
7.0
12.4
5.4
19.2

2,915.1
7.1
12.5
5.5
19.0

2,940.5
7.2
12.7
5.5
18.2

2,964.5
7.3
12.8
5.6
16.7

2,987.7
7.4
13
5.6
15.9

3.4
5.2
4.3
3.1
-17.0

3.5
5.4
4.3
2.9
-1.0

73,583
54,164
3,724
-174
12,949
10,368
25,469

75,666
55,815
3,830
-173
13,319
10,534
25,956

77,322
57,136
3,909
-174
13,577
10,692
26,296

78,860
58,356
3,982
-174
13,811
10,849
26,602

80,245
59,446
4,045
-174
14,014
11,004
26,858

9.1
9.8
8.6
0.2
8.2
6.1
5.5

10.1
10.9
9.7
0.5
9.4
6.4
6.3

See notes at bottom of Arizona - Quarterly table.
AR IZ ON A 'S E CO N OMY

PAGE ELEVEN

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

% change versus year ago for:
most
most
recent
recent
month
12-months

SEP
98

OCT
98

NOV
98

DEC
98

JAN
99

368.3
357.1
11.2
2.8

372.0
363.0
9.0
2.2

372.2
363.4
8.8
2.4

374.7
365.9
8.8
2.5

...
...
...
...

2.2
2.8
-16.2
-16.7

3.2
3.9
-16.5
-18.7

320.3
2.3
21.2
29.4
23.0
6.4
13.5
69.7
11.3
58.4
12.7
101.2
70.3

326.5
2.3
21.3
29.6
23.1
6.5
13.5
70.8
11.5
59.3
12.8
102.0
74.2

329.8
2.3
21.3
29.5
23.2
6.3
13.7
72.5
11.6
60.9
12.8
102.5
75.2

331.9
2.3
21.7
29.4
23.1
6.3
13.8
73.2
11.7
61.5
13
103.4
75.1

...
...
...
...
...
...
...
...
...
...
...
...
...

3.2
-4.2
9.0
3.5
3.1
5.0
4.5
3.2
6.4
2.7
7.4
2.4
2.0

3.0
-3.5
7.8
3.4
2.7
6.0
1.4
3.0
5.4
2.6
6.3
2.4
2.5

571,356
390,113
85,951
65,606
29,686
97,183

594,362
399,933
89,464
72,955
32,011
96,657

611,357
421,704
91,172
69,464
29,018
107,916

750,297
548,722
91,965
74,598
35,013
109,677

...
...
...
...
...
...

4.7
5.1
7.6
3.2
-4.4
14.9

4.6
5.8
6.6
6.1
-14.6
9.8

118,386
49,532
55,370
13,484

70,663
43,612
13,311
13,740

82,332
55,939
24,123
2,270

63,938
38,382
22,139
3,417

80,928
43,358
7,738
29,832

-33.7
-24.5
-86.3
258.0

-22.7
-22.0
-29.0
-8.9

616
587
4
0

633
560
14
0

1,110
433
24
520

675
511
4
112

...
...
4
13

-6.3
48.7
-71.4
...

16.2
36.2
-3.3
-3.5

110,040
830
132,579

101,985
780
130,750

102,512
7,770
13,193

119,200
844
141,233

88,831
612
145,149

12.0
3.2
8.5

22.8
99.4
-3.4

253,226
22,796

285,039
26,918

289,733
25,783

302,701
23,885

...
...

-0.1
31.1

-1.8
10.7

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

IV
97

I
98

800.9
1.1
2.8
1.8
2.8
17,200
10,697
750
230
3,706
3,316
21,476

% change versus year ago for:
most
most
recent
recent
quarter
4-quarters

II
98

III
98

IV
98

805.1
1.1
2.8
1.8
3.2

809.7
1.0
2.8
1.8
3.5

814.7
1.0
2.8
1.8
4.0

819.8
1.0
2.8
1.8
4.2

2.4
-5.6
-0.7
2.2
49.6

2.2
-5.7
-0.6
2.6
17.9

17,424
10,855
762
233
3,741
3,358
21,642

17,729
11,094
780
239
3,781
3,395
21,896

18,051
11,350
799
246
3,821
3,433
22,157

18,391
11,626
819
252
3,859
3,473
22,432

6.9
8.7
9.2
9.7
4.1
4.7
4.5

6.6
8.2
8.8
9.0
4.1
4.8
4.3

See notes at bottom of Arizona - Quarterly table.
PAGE TWELVE

ARIZONA'S ECONOMY

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

SEP
98

OCT
98

NOV
98

DEC
98

JAN
99

2311.3
2201.7
109.6
4.2

2300.1
2212.4
87.7
3.5

2304.7
2221.1
83.6
4.0

2311.5
2227.3
84.2
4.1

...
...
...
...

3.3
3.5
0.5
-2.4

5.0
5.6
-9.1
-13.4

2085.5
13.2
141.0
217.2
163.8
53.4
100.5
63.9
497.6
111.0
386.6
135.2
634.7
346.1
44.5
301.6
162.8
39.4

2101.0
13.1
142.3
216.7
163.5
53.2
101.2
64.4
502.9
112.0
390.9
136.1
638.1
350.7
44.0
306.7
173.3
39.4

2129.1
13.1
143.3
216.6
163.4
53.2
101.9
65.1
513.2
113.0
400.2
136.5
643.5
361.0
43.6
317.4
177.0
39.7

2138.9
13.0
143.9
217.3
164.0
53.3
103.2
66.3
521.4
113.9
407.5
138.1
646.7
355.3
44.7
310.6
176.1
39.9

...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...

4.2
-8.5
8.8
2.0
1.7
3.1
4.6
3.8
3.1
4.3
2.8
5.5
4.2
5.0
2.1
5.4
6.3
-5.2

4.6
-4.3
5.1
4.3
4.6
3.4
3.8
3.5
4.0
4.7
3.8
6.1
5.5
4.1
0.3
4.7
4.5
-2.5

17.56
13.88
12.48
17.48
11.56
13.58

17.27
13.94
12.38
17.44
11.52
13.27

17.21
14.05
12.33
17.96
11.50
13.16

17.04
14.17
12.43
18.12
11.48
13.27

...
...
...
...
...
...

2.8
2.4
5.9
1.6
-0.8
1.2

4.1
1.7
4.5
-1.7
0.6
0.6

3,682,157
2,563,796
511,664
412,828
193,869
186,789
512,957
167,979
34,329
1,241
260,631
812,448
86,649
110,117

3,810,585
2,627,718
532,571
447,264
203,032
198,798
473,535
169,369
67,278
...
254,604
787,771
82,198
147,642

3,854,565
2,688,637
542,739
436,784
186,405
187,662
354,085
184,070
55,644
...
255,383
824,298
80,675
139,077

4,681,081
3,480,913
547,461
448,793
203,914
213,993
375,687
177,332
5,324
...
268,968
909,060
72,562
...

...
...
...
...
...
...
...
...
...
...
...
...
...
...

5.6
6.7
7.7
3.9
-11.2
17.6
1.6
14.9
-89.6
-86.2
8.0
15.1
-21.6
5.5

6.0
7.1
6.6
7.9
-11.3
6.9
4.5
13.6
-4.5
-94.5
23.0
15.2
-29.6
5.5

954,393
499,953
245,183
209,257

826,193
495,800
187,139
143,254

781,011
465,764
201,027
114,220

705,793
449,816
145,506
110,471

708,296
447,853
98,373
162,070

-19.2
-1.0
-75.9
878.6

-4.8
-4.2
-19.8
31.3

5,232
3,982
97
1,153

4,196
3,995
118
83

5,738
3,547
71
2,120

4,865
3,684
43
1,138

5,264
3,772
88
1,404

45.3
33.9
87.2
85.2

15.2
17.3
15.8
16.1

2,067
1,707
20
340

2,230
1,846
38
343

1,823
1,515
20
286

1,835
1,442
21
372

...
...
...
...

0.7
0.0
-12.5
4.5

-3.8
-1.4
3.6
-13.5

See notes at bottom of Arizona - Quarterly table.
ARIZONA'S ECONOMY

P AG E T HI RT EEN

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

IV
97

I
98

II
98

III
98

IV
98

4,619.3
9.7
19
9.3
23.8

4,652.8
9.8
19.2
9.4
23.7

4,686.3
9.8
19.2
9.3
23.7

4,719.4
9.8
19.2
9.4
23

4,752.3
9.8
19.3
9.5
23.3

2.9
1.0
1.5
2.1
-2.0

2.9
1.1
1.9
2.8
0.0

102,821
72,851
5,152
264
17,534
17,324

104,578
74,133
5,266
265
17,732
17,714

107,424
76,406
5,402
267
18,236
17,917

109,176
77,751
5,482
269
18,515
18,124

111,181
79,396
5,580
270
18,801
18,293

8.1
9.0
8.3
2.4
7.2
5.6

7.9
9.2
9.1
1.5
5.6
5.2

59,875
5,711
7,266
319
6,947
22,259.2
29,283.1

60,962
5,796
7,412
283
7,129
22,476.7
29,390.0

62,465
5,899
7,601
328
7,273
22,923.2
29,830.9

63,848
5,997
7,647
249
7,398
23,133.5
30,168.7

...
...
...
...
...
23,395.1
...

9.6
6.7
6.1
-37.1
8.7
5.1
4.8

9.7
5.5
7.3
-23.6
9.1
4.8
5.0

TRAVEL AND TOURISM
SEP
98
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

OCT
98

NOV
98

DEC
98

JAN
99

% change versus year ago for:
most
most
recent
recent
month
12-months

1,988,400
190,817
617,056
1,180,527
140,348
27,208
82,548
30,592

1,776,109
174,924
561,261
1,039,924
202,556
39,938
128,648
33,970

1,110,263
96,467
302,071
711,725
208,767
42,438
144,913
21,416

757,285
77,558
227,526
452,201
173,889
48,251
113,806
11,832

967,549
89,845
238,376
639,328
254,419
59,635
171,113
23,671

12.5
1.7
-5.9
23.4
-2.8
1.4
-6.2
15.2

0.7
-5.9
-6.2
6.0
-0.8
-2.4
-0.4
-0.4

703,819
1,924,130
798,190

780,534
2,074,952
866,724

758,782
2,016,456
815,032

801,502
2,210,322
842,514

...
...
...

17.9
0.0
5.5

6.8
2.7
3.3

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 FOURTEEN

SEP
98

OCT
98

NOV
98

DEC
98

JAN
99

163.6
160.2

164.0
160.6

164.0
160.7

163.9
160.7

164.3
161.0

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
1.7
1.6

1.6
1.4

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

IV
97

I
98

II
98

III
98

IV
98

177.4
162.8
161.5
158.4

176.7
163.3
161.9
158.5

180.1
164.2
162.8
159.4

179.7
165.1
163.4
160.0

181.5
165.8
164.0
160.7

2.3
1.8
1.5
1.4

3.0
1.8
1.6
1.3

112.1
112.3

112.3
112.3

112.6
112.6

112.9
112.8

113.2
113.1

1.0
0.7

1.0
0.8

See notes at bottom of Arizona - Quarterly table.

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