J U L Y 2 0 0 3 Dear Readers, A new partnership with Compass Bank (see details below) allows us to get the award-winning Arizona’s Economy back into print! We are grateful to Compass Bank for underwriting the costs of printing and mailing this publication as well as the opportunity to develop a new Arizona Business Leaders Confidence Index® (BLCI). BLCI survey results will be delivered in printed format each quarter as a four-page insert along with this newsletter. The April and October 2002 issues, and January and April 2003 issues of Arizona’s Economy were published in electronic format only, as cuts in our state budget forced us to eliminate printing and mailing. PDFs for these four issues, along with others going back to May 1996, may be accessed via our award-winning website: http://ebr.eller.arizona.edu. – Editor S U M M E R I S S U E NEW INDUSTRY CLASSIFICATION SYSTEM SHOWS THAT ARIZONA’S RECESSION IS OVER By Marshall J. Vest Forecasting Project Director May 31, 2003 T Compass Bank and the Eller College Partner on New Initiative The Eller College is pleased to announce an exciting new partnership with Compass Bank. Together, we will develop an Arizona Business Leaders Confidence Index® (BLCI) based on surveys completed by business leaders in diverse industries throughout the state. Expectations about the quarter ahead for such things as sales, hiring, expenditures, profits, interest rates and the future direction of the state and national economy are collected. Panelists complete a user-friendly web-based survey that takes only a few minutes. The inaugural survey began on June 1 with results contained in this issue of Arizona’s Economy. Arizona is the fourth state to join Compass Bank (along with Alabama, Texas and Colorado) in the Compass on Business initiative, which is designed to provide business leaders with valuable insights into topical economic news and business trends on local and state levels. Results are provided via a special website (www.blcindex.com), links to university websites, periodic newsletters and local seminars. Expectations are that the new BLCI index will become a valuable, highly anticipated statistic for assessing the economy’s future course. We invite business leaders in small to mid-sized firms (general guidelines are 10100 employees or $5 million to $50 million in sales) to join our panel. Please register to participate at www.blcindex.com. he first look at industry employment using the new NAICS categories shows that the job base has been growing over the past year, rather than the no growth indicated by preliminary estimates. Some NAICS sectors look much like their old SIC counterparts. Others are brand new industries that will take some “getting used to.” (continued on page 2) I N S I D E FORECAST TABLES . . . . . . . . .5 STATISTICAL ABSTRACT . . . .6 HIGHER EDUCATION BENEFITS STATE . . . . . . . . . . .6 HIGHER TAXES WON’T HURT ECONOMY . . . . . . . . . . .7 METRO AREAS REDEFINED . . . . . . . . . . . . . . . . .8 ECONOMIC INDICATORS . .9 ELLER COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION T UCSON, ARIZONA EXHIBIT 1 Lost Jobs Have Been Recovered EXHIBIT 2 Information Sector Still Sliding Nonfarm Employment, AZ (seasonally adjusted) Info Employment, AZ (seasonally adjusted) (continued from page 1) Our models remain SIC based for this forecast update; plans are to incorporate NAICS categories next quarter. We continue to expect gradual improvement in the months ahead, which will set the stage for “trend” growth in 2004 and beyond. In March, the Arizona Department of Economic Security released its annual rebenchmarked estimates of employment and, in the process, provided analysts with their first look at industry employment using the new North American Industry Classification System (NAICS, rhymes with snakes). The aggregate across all industries, i.e., nonfarm employment, for calendar year 2002 was revised upward by 16,900, an amount slightly larger than the average revision over the past 20 years. This left employment virtually unchanged during 2002 from the year before, rather than the 0.8% loss that was contained in the preliminary estimates. Better yet, the numbers now show that employment was growing during 2002, with nearly 20,000 new jobs created from December 2001 to December 2002. Moreover, the jobs lost during the 2001 recession have now been regained (Exhibit 1). PAGE 2 NAICS provides 20 broad industrial sectors, up from 10 divisions under the old SIC system. The new system provides much more detail for services and less for goods producing industries. Many of the new sectors are recognizable from the old SIC system, others represent combinations of pieces from different SIC divisions, and several are brand new industries recognized for the first time. Unfortunately, historical data is only available back to 1990. A detailed description of NAICS is available at http://www.census.gov/epcd/www/naics.html. Mining and construction under NAICS compare closely to their predecessors. Mining jobs continue on the downward path that began in 1996. Today there are only 8,400 miners in Arizona, down 500 over the past year. The construction industry has added nearly 4,000 jobs during the past year and is approaching the record high set in August of 2001. Manufacturing under NAICS is little changed in the aggregate, even though a number of important activities have been moved out while other activities have moved in. This sector continues its free fall, having lost 10,000 jobs in the past year, with no turnaround in sight. The new computer and electronic products sector accounts for most of the losses, although nondurable manufacturing, fabricated metal products, and aerospace also are down. Both wholesale and retail trade sectors are significantly different under NAICS, as numerous activities are now categorized in other industries. For example, retail no longer includes eating and drinking places, which was combined with hotels and lodging places (a component of services), to form a new leisure and hospitality sector (more on that later). As a result, wholesale and retail trade now account for 16.2% of total nonfarm jobs, compared to almost 24% under the old SIC system. Wholesale trade has trimmed roughly 500 jobs during the past year and continues the downward path that began in early 2001. Retail trade has added roughly 8,000 jobs during the past twelve months, but most of that growth came in early 2002; in recent months there has been very little growth, after adjusting for seasonality. Furniture & home furnishings and building materials & garden supply, both related to homebuilding, have moved higher during the past year, while electronics & appliances continues to lose employment. Other components, including clothing & general merchandise, motor vehicles & parts, and food & beverage, have remained relatively flat. Utilities now is reported separately, and is little changed over the past year, accounting for less than 11,000 jobs statewide. Likewise for transportation & warehousing, which totals roughly 66,000. A large series ARIZONA'S ECONOMY EXHIBIT 3 Employment Agencies Show Improvement EXHIBIT 4 Tourism-Related Sectors Remain Flat Employment Services Jobs, AZ (seasonally adjusted) Leisure & Hospitality Employment, AZ (seasonally adjusted) break for utilities in 1993 reflects the move of Salt River Project from utilities to local government. The new information sector is comprised of establishments that create, disseminate, or provide the means to distribute information. Included are newspaper, book, and periodical publishers (that were previously included in SIC’s manufacturing sector); software publishers (previously included in services); broadcasting and telecommunications producers and distributors (previously included with utilities and transportation); and motion picture and sound recording industries, information services, and data processing services (previously part of services). Twenty of the 34 industries included in this new subsector are new. Some of the new industries include paging, cellular and other wireless telecommunications, and satellite telecommunications. This sector, which was hit hard by the high tech bust, has trimmed 6,000 jobs since mid-2000 and continues its downward slide. Both publishing and telecommunications subsectors share this trend (Exhibit 2). The financial activities sector closely resembles its predecessor. Employment here has been relatively flat with a loss of roughly 2,000 during the past year (compared to a total job count of 153,000). Fortunately, real estate, rental and leasing is ARIZONA'S ECONOMY now reported separately from finance & insurance. The real estate component, which totals 44,000, has been flat since mid1999. Finance & insurance has trended modestly downward over the past year. The new professional & business services sector represents businesses whose major input is human capital, and is defined by the expertise and training of their workers. This sector includes lawyers, engineering THE AGGREGATE ACROSS ALL INDUSTRIES, I.E., NONFARM EMPLOYMENT, FOR CALENDAR YEAR 2002 WAS REVISED UPWARD BY 16,900, AN AMOUNT SLIGHTLY LARGER THAN THE AVERAGE REVISION OVER THE PAST 20 YEARS. THIS LEFT EMPLOYMENT VIRTUALLY UNCHANGED DURING 2002 FROM THE YEAR BEFORE, RATHER THAN THE 0.8% LOSS THAT WAS CONTAINED IN THE PRELIMINARY ESTIMATES. services, architectural services, advertising services, veterinary services, and interior design services. Comprising 315,000 workers, or 14% of the workforce, this sector has remained steady over the past year. One component, employment services, which includes temporary help agencies, has added 9,400 during the past year. This is an important indicator of an improving economy (Exhibit 3). Educational & health services total 240,000 workers and comprises 10.5% of the workforce. Of that, educational services (private schools, technical and professional schools) accounts for 33,000 jobs. The remainder of this sector groups health care and social assistance, as it is often difficult to distinguish between the two. Included are enterprises such as hospitals, HMO medical centers, family planning centers, blood and organ banks, diagnostic imaging centers, continuing care retirement communities, community food services and ambulance services. This sector has shown strong growth in excess of six percent, or 13,500 jobs, during the past year. Leisure & hospitality sector groups accommodation (hotels & lodging from SIC) with food services & drinking places (SIC’s eating & drinking places), and adds arts, entertainment & recreation. These businesses are engaged in meeting the (continued on page 4) PAGE 3 (continued from page 3) cultural, entertainment, and recreational interests of their patrons, and include such activities as historical sites and sports teams and clubs. (Casinos, since they are Native American owned enterprises, are counted in local government). The 230,000 jobs in this sector have remained steady over the past year; accommodation remains depressed at post- 9/11 levels, food services & drinking places is flat, while arts, entertainment and recreation has moved up sharply (adding about 1,000 jobs) (Exhibit 4.). Another 86,000 jobs (3.8%) are classified in other services. This is a catch-all for establishments not elsewhere classified, and includes such activities as repair and maintenance; dry cleaning and laundry services; barber shops and beauty or nail salons; weight reducing and personal centers; funeral homes, cemeteries, and crematories; industrial launderers; pet care; business, grant-making, civic, professional, and religious organizations; labor unions; and political organizations. This component has been flat over the past year. The last sector is government and its components: federal, state, local and public education. These are unchanged from their SIC definitions. Federal payrolls have increased sharply over the past year, by 1,600 jobs, reflecting increased focus on homeland security and security personnel at airports (who are now federal employees). Education has continued to grow in step with increasing school enrollments, while state & local non-education has been flat. The new NAICS detail shows that Arizona’s economy is growing at a modest rate, led by construction, retail sectors related to homebuilding, educational and health services, the federal government and public education. The economy is being held back primarily by weakness in manufacturing, mining, information, and accommodation. Technically, Arizona’s economy has moved out of the recovery stage and into the expansion stage. That’s because all the jobs lost in the last recession have been recovered. This is a much better situation than nationwide, where employment continues on a downward trend that is not expected to reverse until mid-2004. THE OUTLOOK Now that the war in Iraq is over, and frontpage headlines are no longer focused on war PAGE 4 ALTHOUGH RECOVERY SHOULD BE CLEARLY VISIBLE IN THE NEXT FEW MONTHS, MODEST GROWTH SHOULD BE EXPECTED. A RETURN TO THE OPTIMISM AND PROSPERITY OF THE LATE 1990s IS NOT IN THE CARDS. THERE ARE A NUMBER OF REASONS FOR OPTIMISM. THE WAR IN IRAQ IS OVER, OIL PRICES ARE FALLING, AND CONSUMER SENTIMENT AND THE STOCK MARKET HAVE REBOUNDED. and terrorism, the economy should begin growing again. Consumers breathed a collective sigh of relief as the war ended and should return to their spending ways. CEOs will refocus on growing their companies, now that a major uncertainty has been removed and memory of last year’s corporate and accounting scandals fade. First quarter earning reports have consistently exceeded expectations, and the stock market has bounced back, which in turn will boost consumer and business confidence. Although recovery should be clearly visible in the next few months, modest growth should be expected. A return to the optimism and prosperity of the late 1990s is not in the cards. There are a number of reasons for optimism. The war in Iraq is over, oil prices are falling, and consumer sentiment and the stock market have rebounded. Both fiscal and monetary policies are very stimulative. Unemployment is low. After-tax incomes continue to grow (and more tax cuts are in the pipeline). Robust housing markets are offsetting the effects of the stock market decline on household wealth. Corporate cash flow and liquidity is the strongest in 40 years. Inventories are very low. Productivity growth remains strong, and the falling dollar is boosting exports. Nevertheless, there are ample reasons to be cautious. U.S. corporations remain extremely risk averse. Capacity utilization is very low. Job losses continue across the economy, but especially in manufacturing. Under funded pensions will absorb billions of dollars in earnings over the coming years. Household debt levels are near record highs. Household mortgage liabilities have increased by 40% over the past four years, driving mortgage outstandings as a share of homeowner’s equity to a record 77%. Growth in the rest of the world is very weak. Further stagnation, delayed recovery in capital spending, or a retrenchment by consumers are major risks. We expect Arizona’s economy to continue to improve in coming months. Travel and tourism will stage a recovery. The slide in manufacturing will reverse course by yearend as computers stabilize and aerospace strengthens. Business services will begin growing again. Population growth will continue at high levels and support residential construction. Health care and social services will lead all other sectors. By year-end, the economy will have recovered to long-term average, or trend growth. That means 80-90,000 new jobs per year and 140,000 annual population gains in 2004 and 2005. Personal income growth will improve from roughly four percent in 2002 to 4.7% this year and 6.6% in 2004. Corresponding growth for retail sales shows improvement from 1.0% to 2.1% to 4.5% (See Forecast table on page 5). ■ S P O N S O R S Arizona Department of Commerce Arizona Joint Legislative Budget Committee Arizona Public Service Company Bank One Arizona CB Richard Ellis City of Mesa City of Tucson Compass Bank Elliott D. Pollack and Company KB Home Merrill Lynch Pascua Yaqui Tribe Pima Association of Governments Pima County Salt River Project Tucson Electric Power Company Tucson Newspapers 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 2001 137,313.5 4.8 25,811.3 2.1 55,423.1 2.1 5,319.9 2.7 101.2 2,266.8 1.1 384.7 -0.5 165.0 2.2 210.1 -2.4 1,882.1 1.4 533.3 1.3 711.1 0.4 2002 143,094.5 4.2 26,146.7 1.3 56,183.7 1.4 5,472.8 2.9 118.5 2,266.7 0.0 366.7 -4.7 161.1 -2.4 196.8 -6.3 1,900.0 1.0 539.9 1.2 714.4 0.5 2003 149,882.1 4.7 26,573.3 1.6 58,154.7 3.5 5,640.3 3.1 105.4 2,308.1 1.8 368.2 0.4 168.4 4.5 191.2 -2.9 1,939.9 2.1 545.1 1.0 738.7 3.4 2004 159,759.2 6.6 27,668.7 4.1 60,433.4 3.9 5,774.0 2.4 91.3 2,390.5 3.6 365.1 -0.8 166.6 -1.1 190.0 -0.6 2,025.4 4.4 566.7 4.0 788.1 6.7 2005 171,383.3 7.3 28,944.5 4.6 65,030.1 7.6 5,921.1 2.5 105.8 2,480.5 3.8 375.7 2.9 172.2 3.4 195.0 2.6 2,104.8 3.9 586.0 3.4 827.3 5.0 2006 183,517.5 7.1 30,215.7 4.4 69,304.5 6.6 6,073.6 2.6 102.5 2,554.6 3.0 387.6 3.2 179.0 4.0 200.2 2.7 2,167.0 3.0 601.5 2.7 857.5 3.7 2007 195,303.8 6.4 31,435.7 4.0 72,695.9 4.9 6,212.8 2.3 84.6 2,610.7 2.2 395.9 2.1 182.8 2.1 204.8 2.3 2,214.8 2.2 612.9 1.9 883.7 3.0 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 2001 93,305.4 3.3 27,614.0 0.2 37,876.4 1.6 3,378.9 3.1 67.2 1,598.4 1.3 285.7 -0.3 121.5 2.6 161.8 -2.4 1,312.7 1.6 383.1 2.0 514.4 0.0 2002 96,088.7 3.0 27,543.3 -0.3 38,114.2 0.6 3,488.6 3.2 76.6 1,593.6 -0.3 276.0 -3.4 121.1 -0.3 152.6 -5.7 1,317.6 0.4 385.6 0.6 514.5 0.0 2003 100,279.4 4.4 27,931.6 1.4 39,599.1 3.9 3,590.2 2.9 70.2 1,627.5 2.1 271.6 -1.6 122.1 0.8 147.2 -3.5 1,355.9 2.9 392.4 1.8 533.8 3.8 2004 105,804.5 5.5 28,728.5 2.9 40,976.8 3.5 3,682.9 2.6 61.7 1,683.9 3.5 268.8 -1.1 122.8 0.6 143.7 -2.4 1,415.1 4.4 402.6 2.6 568.1 6.4 2005 113,523.2 7.3 29,985.4 4.4 44,366.8 8.3 3,785.9 2.8 71.5 1,747.6 3.8 275.8 2.6 126.7 3.1 147.0 2.3 1,471.7 4.0 416.1 3.4 594.8 4.7 2006 121,697.9 7.2 31,296.9 4.4 47,026.9 6.0 3,888.5 2.7 71.0 1,802.8 3.2 284.1 3.0 130.8 3.3 151.0 2.8 1,518.7 3.2 427.8 2.8 616.8 3.7 2007 129,675.5 6.6 32,562.4 4.0 49,375.5 5.0 3,982.4 2.4 62.5 1,848.4 2.5 289.7 2.0 133.5 2.1 154.0 1.9 1,558.7 2.6 437.1 2.2 636.8 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 2001 21,023.6 4.5 24,148.1 2.0 8,655.6 1.8 870.6 2.5 16.2 350.5 0.1 57.5 0.6 21.9 -0.8 33.7 1.7 293.0 0.0 72.4 -0.5 116.5 -0.8 2002 21,812.5 3.8 24,493.4 1.4 8,707.2 0.6 890.5 2.3 15.4 349.7 -0.2 55.5 -3.4 21.8 -0.5 32.1 -4.5 294.2 0.4 72.0 -0.6 116.6 0.0 2003 22,737.5 4.2 25,017.0 2.1 9,022.9 3.6 908.9 2.1 13.6 353.6 1.1 55.6 0.1 22.0 0.7 32.5 1.0 298.1 1.3 72.3 0.4 118.4 1.6 2004 24,080.8 5.9 25,853.1 3.3 9,438.9 4.6 931.4 2.5 17.7 367.1 3.8 56.3 1.3 22.2 0.9 33.0 1.7 310.8 4.3 74.6 3.1 126.6 6.9 2005 25,465.0 5.7 26,737.4 3.4 9,858.6 4.4 952.4 2.3 15.8 378.3 3.1 57.3 1.7 22.8 2.7 33.5 1.5 321.1 3.3 76.8 3.0 132.5 4.7 2006 27,028.0 6.1 27,817.3 4.0 10,302.2 4.5 971.6 2.0 13.9 386.7 2.2 58.2 1.7 23.4 2.8 33.9 1.1 328.5 2.3 78.4 2.0 136.8 3.2 2007 28,664.9 6.1 28,944.0 4.1 10,757.6 4.4 990.4 1.9 13.3 394.2 1.9 58.9 1.2 23.8 1.4 34.2 1.1 335.3 2.1 79.6 1.5 140.7 2.9 * Aggregate Retail Sales includes retail, food, restaurant & bars and gasoline sales. Source: Economic and Business Research Program, Eller College of Business and Public Administration, The University of Arizona ARIZONA'S ECONOMY PAGE 5 Now available 2003 Arizona Statistical Abstract T Arizona ract t Statistical Abs 2003 book Data Hand Data 00 Census 0 2 s e d lu c In ogram Research Pr istration d Business min Economic an siness and Public Ad of Bu ona Eller College The University of Ariz izona Tucson, Ar he authoritative source for economic and social information for Arizona and its political subdivisions, the 2003 Arizona Statistical Abstract includes data on physical resources of the state, human resources (such as population, vital statistics, health, education, employment and welfare), public sector activities, and various economic measures such as output, sales, jobs, etc. Included are statistics from numerous sources such as the 2000 Census of Population and Housing, Economic Censuses, Annual Survey of Manufacturers, and County Business Patterns, to name a few. Data are presented by jurisdiction as well as comparisons to other states. The presentation is both comprehensive and concise. The 2003 edition of the Arizona Statistical Abstract is now available. Order your copy now by filling out the form below and return it by mail with a check payable to Economic and Business Research. ORDER FORM Mail to: Economic and Business Research Eller College of Business and Public Administration McClelland Hall 103 $54.95 each (includes $5.00 shipping and handling) The University of Arizona $70.00 each international order (includes S&H) P.O. Box 210108 ❑ check enclosed ❑ send invoice Tucson, AZ 85721-0108 All orders must be prepaid prior to shipment. I would like ____ copies of the 2003 Arizona Statistical Abstract at AE 7/03 Fax to: (520) 621-2150 Name__________________________________________________________________ Title ___________________________________________________________________ Organization _____________________________________________________________ Address ________________________________________________________________ City _____________________________ State _____________ Zip ________________ Telephone_________________________ Fax__________________________________ E-mail _________________________________________________________________ PAGE 6 GOLDWATER INSTITUTE’S STUDY PROVES HIGHER EDUCATION BENEFITS STATE By Alberta H. Charney, Ph.D. June 19, 2003 The Goldwater Institute’s recently released study proves that state appropriations on higher education significantly increase per capita gross state product (GSP, the sum of all goods and services produced in Arizona). According to the study, every dollar increase in per capita higher education appropriations, if sustained for six years, increases per capita GSP by almost $30. Given this result, Arizona could achieve the highest per capita GSP in the nation within six years simply by quadrupling appropriations on higher education. These statements are inescapable conclusions drawn directly from the statistically estimated relationships presented in the study recently released by the Goldwater Institute: “Does Spending on Higher Education Drive Economic Growth? 20 Years of Evidence Reviewed.” The executive summary of this study, in which the author argues that higher education appropriations do not impact economic growth, has appeared in newspapers throughout this state. However, the actual equations presented in the just-released full report ‘prove’ precisely the opposite of what the author of the study, Mr. Jon Sanders, claim the equations show. Mr. Sanders, whose background is in English, not economics nor statistics, completely misinterprets the results of his own estimated statistical relationships. Mr. Sanders uses one measure, state appropriations on higher education, to explain the variation in per capita GSP across states and across time. In his statistical analysis, he recognizes that higher education appropriations may not have an immediate impact, so the ARIZONA'S ECONOMY appropriations measure is entered six times in the equation: current year appropriations, and each of the previous five years. Mr. Sanders estimates three equations, one using levels of deflated per capita GSP, one using changes in deflated per capita and one using percent changes. The equations show that state appropriations on higher education explain between 7 and 15 percent of the fluctuation in real per capita GSP. While Mr. Sanders interprets this as a “weak correlation,” it is actually a remarkable finding that public spending on higher education can, by itself, account for 7 to 15 percent of the variation in real per capita GSP across states. Further, Mr. Sanders argues that appropriations on higher education have a weak effect on real per capita GSP because only some of the six estimated coefficients are “statistically significant” and some are of the wrong sign. However, it is the cumulative, or combined, or ‘joint’ effect of all six years of appropriations that is relevant in determining real per capita GSP. The joint effect is very “statistically significant,” proof that the cumulative effect of higher education appropriations strongly effects real per capita gross state product, according to his equation. Unfortunately, the author of the study chose not to discuss the joint effect. If the equations presented in the Goldwater Institute paper are to be believed, then the Goldwater Institute has proven beyond any reasonable doubt (a 0.0001 probability of error) that appropriations on higher education significantly and substantially raise the state’s real per capita GSP. This result is the exact opposite of the conclusion drawn by the paper’s author and which has been so widely and loudly publicized by the Goldwater Institute. In reality, no economist or econometrician would have specified nor estimated the statistical relationship used by Mr. Sanders. It is utter nonsense to attempt to explain variations in per capita GSP using only higher education appropriations, but it is even more absurd that the resulting statistics were so blatantly misinterpreted. ■ ARIZONA'S ECONOMY HIGHER TAXES WON’T HURT AZ’S ECONOMY By Alberta H. Charney, Ph.D. What effect does state and local government spending have on Arizona’s economy? The politically popular, but unsupported, arguments that lower taxes positively impact economic activity are all too familiar: 1) We need to give tax dollars back to the people so they will spend it and generate economic activity. 2) Lower taxes will make the economy grow, thereby making up all the lost revenues. 3) Lower taxes make the state more attractive for people and businesses to locate here. While there is an element of truth in these, they represent only a small part of the whole truth. Argument #1 completely ignores the fact that governments, as well as consumers, spend money and generate economic activity as they spend. And, because of balanced budget requirements, lower state taxes necessarily mean lower spending as well (only the federal government can spend more than it collects). In fact, it can be argued that during a recession, shortterm tax increases can actually stimulate the state’s economy because a) the government spends every dollar it gets while consumers save a portion, and b) the government buys in-state produced goods and services (such as roads and teachers) while consumers buy things produced elsewhere (such as clothes, cars, appliances and electronics). Therefore, government spending generates a stronger short-run multiplier, or ripple effect, than consumer spending. Argument #1 also ignores the fact that Arizona residents value both private and public goods and services. Some public services actually reduce other, non-tax, costs to residents: quality fire protection reduces insurance costs; police protection reduces property losses and loss of life; health care for low-income kids reduces future health care costs; quality education reduces crime and future welfare costs, and produces a quality workforce that is the foundation for increased prosperity. Public services also have an intrinsic value to residents that extend far beyond just cost saving. For example, the feeling of ‘safety’ is valued much more than only the reduced costs of theft and fire insurance; residents value beautiful and functional state and local parks, even if they don’t use them regularly; and most derive satisfaction from the knowledge that there is a safety net for families during hard times. Argument #2 is just plain wrong. Tax cuts are not self-financing. When tax rates are cut, revenues fall by almost the full amount of the tax cut. Estimates of the percentage of revenues “created” by a tax cut are in range of 5-10% of the original tax cut, according to the preponderance of empirical evidence. Thus, for each dollar of a tax cut, only 5-10 cents is recouped as a result of additional activity, but the remaining 90-95 percent of the cut is a permanent reduction in government revenues and services. SOME HAVE JUMPED TO CONCLUDE THAT THE TAX CUTS DURING THE 1990’S CAUSED THE STRONG GROWTH. IN FACT, THE CONVERSE IS LIKELY TRUE: THE LEGISLATURE WAS ABLE TO CUT TAXES BECAUSE OF THE ECONOMY’S GROWTH. In addition, recouping the 5-10% of the tax cut may take years to occur. Consider a $100 million tax cut that generates a 10% revenue ‘feedback’ with a 10 year adjustment period. This means that $100 million in revenues is lost the first year, $99 million the 2nd year, $98 million the third year, …until the 10th year, in which only $90 million in revenues are lost to the government. Also, the models that have been used to estimate these revenue ‘feedback’ effects do not adequately account for the growth enhancing potential of government spending on public infrastructure, university research and technology transfers, or investment in human capital (education). Thus, even the 5-10% estimates are overstated. During the 1990’s, employment in Arizona grew by 32.5% and some have jumped to conclude that the tax cuts caused the strong growth. In fact, the converse is (continued on page 8) PAGE 7 (continued from page 7) likely true: the legislature was able to cut taxes because of the economy’s growth. With strong growth, revenues expand faster than inflation and population growth, but in a recession, revenues fall despite ongoing inflation and population growth. An ASU study comparing Arizona’s growth during high-tax years vs. low-tax years found no perceptible effect of tax cuts or tax increases on economic growth. Argument #3 ignores the fact that quality public services are just as important to the location decisions of individuals and companies as are the level of taxes. The academic literature on the locational effects of taxes is very mixed, but if there is a consensus statement that can be made it is the following: If two states have identical levels of public services, then the state with lower taxes will have a slightly higher level of economic activity and the state with higher taxes will have a slightly lower economy. Further, the tax/expenditure package can affect the type of growth and type of activity attracted to the state. This completely overlooked point is critical to Arizona’s future. High tech companies and high tech professionals cite ‘quality of place’ as the most important consideration for choosing where to locate, where ‘quality of place’ includes numerous publicly provided services: high education spending, quality universities, parks and recreational facilities, and so forth. In contrast, low tax environments attract retirees and companies providing low-skilled low-wage jobs. The tax/public expenditure mix does affect locational decisions, but focusing only on the tax side has been detrimental to Arizona’s ability to compete in the New Economy. Our per capita real income has fallen from 5% below the national average in the mid-1980’s to 20% below the national average today. If the persistent tax cuts can be credited for part of Arizona’s growth, they can also be blamed for the type of growth created in Arizona. With state and local public spending as a percentage of Gross State Product in Arizona one-third below the national average, with educational spending ranked 49th in the country (just above Mississippi), Arizona has left behind its image of a progressive, high-tech player to become a tax haven for retirees and low-wage companies. How and why have our public policies de facto emulated the state of Mississippi? ■ PAGE 8 DATA FOR ARIZONA’S COUNTIES TO INCREASE SIGNIFICANTLY By Pia Montoya, State Data Center The following description is extracted from the Federal Office of Management and Budget (OMB) Bulletin No.03-04, http://www.whitehouse.gov/omb/bulletins/ b03-04_attach.pdf and Press Release 2003-18, http://www.whitehouse.gov/omb/ pubpress/2003-18.pdf both dated June 6. “On June 6, 2003, OMB released revised definitions of Metropolitan Statistical Areas, new definitions of Micropolitan Statistical Areas and Combined Statistical Areas, and guidance on uses of the Statistical definitions of these areas. Included are 49 new Metropolitan Statistical Areas, bringing the total number of Metropolitan Statistical Areas to 370 (362 in the United States and 8 in Puerto Rico). In addition, OMB has designated and defined two new sets of statistical areas: 565 Micropolitan Statistical Areas (560 in the United States and 5 in Puerto Rico) and 116 Combined Statistical Areas. Although the federal government and some state and local government entities base some program and funding decisions on these areas, OMB establishes and maintains these definitions solely for statistical purposes. For example, Medicare defines hospital labor market areas based on the definitions of MSAs, Primary MSAs (PMSAs), and New England County Metropolitan Areas (NECMAs). Changes to MSA designations could affect Medicare payment rates, but Medicare will not begin to use the revised MSAs until FY 2005. Likewise, MSAs are used to allocate funds in some federal community development programs and in calculations for federal employee locality pay, among other uses. The Metropolitan and Micropolitan Statistical Area Standards do not equate to an urban-rural classification; many counties included in Metropolitan and Micropolitan Statistical Areas, and many other counties, contain both urban and rural territory and populations. Metropolitan Statistical Areas have at least one urbanized area of 50,000 or more population. Micropolitan Statistical Areas have at least one urban cluster of at least 10,000 but less than 50,000 population. These areas also include adjacent counties that have a minimum of 25 percent commuting to the central counties. Metropolitan and Micropolitan Statistical Areas are defined in terms of whole counties (or equivalent entities). If the specified criteria are met, a Metropolitan Statistical Area containing a single core with a population of 2.5 million or more may also be subdivided to form smaller groupings of counties referred to as Metropolitan Divisions. One or more principal cities are identified within each Metropolitan and Micropolitan Statistical Area. These cities are the population and employment centers and are used in titling the areas.” Arizona loses one Metropolitan Statistical Area: Las Vegas NV-AZ MSA which included Mohave County, Arizona and Clark County, Nevada. This MSA is now called Las VegasParadise, NV and includes Clark County, NV only. Arizona still has five Metropolitan Statistical Areas as it gains a new one: Prescott, AZ MSA, which covers all of Yavapai County. Arizona’s 5 Metropolitan Statistical Areas: 1) Flagstaff, AZ MSA changed name from Flagstaff AZ-UT MSA.. Equals Coconino County, AZ and now excludes Kane County, Utah 2) Phoenix-Mesa-Scottsdale MSA changed name from Phoenix-Mesa MSA. It still includes Maricopa and Pinal County. Major cities: Phoenix, Mesa, Scottsdale and Tempe. 3) Prescott, AZ MSA new and equals Yavapai County 4) Tucson, AZ MSA same and equals Pima County 5) Yuma, AZ MSA same and equals Yuma County Arizona’s 5 Micropolitan Statistical Areas (name and composition): 1) Lake Havasu City-Kingman, AZ Mohave County 2) Nogales, AZ - Santa Cruz County 3) Payson, AZ - Gila County 4) Safford, AZ - Graham and Greenlee Counties 5) Sierra Vista-Douglas, AZ - Cochise County ARIZONA'S ECONOMY A R I Z O N A APACHE COUNTY Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Total Private Goods Producing Service-Providing Trade, Transportation, and Utilities Other Private Service-Providing Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Contracting New Housing Units Authorized, Census C-40 Total Units Single Family Units NAVAJO COUNTY Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Total Private Goods Producing Natural Resources and Mining Construction Manufacturing Service-Providing Trade, Transportation, and Utilities Information Financial Activities Professional and Business Services Educational and Health Services Leisure and Hospitality Other Services Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Contracting New Housing Units Authorized, Census C-40 Total Units Single Family Units E C O N O M I C I N D I C A T O R S % change versus year ago for most recent: month 12-months DEC 2002 JAN 2003 FEB 2003 MAR 2003 APR 2003 21,425 18,450 2,975 13.9 21,525 18,425 3,100 14.4 21,375 18,400 2,975 13.9 21,200 18,300 2,900 13.7 21,200 18,375 2,825 13.3 0.0 -2.3 17.7 17.7 2.4 0.3 17.4 14.7 19,025 6,275 725 18,300 1,700 3,850 12,750 2,800 9,950 18,875 6,175 700 18,175 1,700 3,775 12,700 2,675 10,025 19,050 6,275 725 18,325 1,700 3,850 12,775 2,725 10,050 19,025 6,125 725 18,300 1,425 3,975 12,900 2,825 10,075 19,050 6,275 725 18,325 1,425 4,125 12,775 2,800 9,975 -1.9 -9.4 -6.5 -1.7 -14.9 -7.8 2.2 0.0 2.8 -0.6 -2.3 -7.0 -0.3 2.5 -3.2 0.3 -0.5 0.5 8,676 5,003 563 3,110 2,385 10,236 8,925 4,443 514 3,968 2,936 5,517 9,064 4,060 530 4,474 2,771 4,394 9,451 4,337 631 4,483 2,244 3,747 ... ... ... ... ... ... 11.6 0.5 5.0 26.1 -22.1 -28.3 10.2 0.4 1.1 27.6 14.8 3.5 2 2 2 2 5 5 4 4 8 8 33.3 33.3 10.9 10.9 34,350 30,600 3,750 10.9 34,500 30,575 3,925 11.4 34,350 30,550 3,800 11.1 34,350 30,625 3,725 10.8 34,175 30,800 3,375 9.9 -1.2 -2.1 8.0 9.3 1.1 0.4 7.0 5.8 27,225 16,250 3,150 925 1,400 825 24,075 5,475 525 625 825 2,475 2,425 750 10,975 1,500 9,475 27,050 16,200 3,125 925 1,375 825 23,925 5,425 525 625 900 2,500 2,350 750 10,850 1,300 9,550 27,275 16,225 3,075 875 1,375 825 24,200 5,450 525 625 950 2,500 2,325 775 11,050 1,275 9,775 27,550 16,500 3,125 875 1,425 825 24,425 5,500 550 625 925 2,550 2,425 800 11,050 1,425 9,625 27,600 16,700 3,175 900 1,450 825 24,425 5,500 575 625 900 2,550 2,625 750 10,900 1,450 9,450 -1.7 0.1 -3.8 -5.3 -6.5 3.1 -1.4 4.8 9.5 0.0 -2.7 -4.7 1.9 -6.3 -4.4 -12.1 -3.1 -0.5 0.8 -3.2 -9.8 -1.6 2.0 -0.1 3.0 4.5 -5.8 14.4 2.9 -2.7 -2.1 -2.4 -6.9 -1.7 67,357 56,344 4,889 6,124 4,696 12,254 53,877 42,719 4,716 6,442 4,766 10,774 54,801 43,121 4,676 7,004 4,338 9,245 54,964 41,797 4,991 8,176 4,093 8,704 ... ... ... ... ... ... -2.6 -8.3 -2.6 43.2 -11.6 -17.0 4.4 4.1 3.4 6.9 -0.6 -3.2 12 12 20 20 21 21 22 22 39 39 -18.8 -18.8 -13.1 -13.2 See sources and abbreviations at the bottom of Page 16. ARIZONA'S ECONOMY PAGE 9 A R I Z O N A GRAHAM COUNTY Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Total Private Goods Producing Service-Providing Trade, Transportation, and Utilities Other Private Service-Providing Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Contracting COCONINO COUNTY Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Total Private Goods Producing Natural Resources and Mining Construction Manufacturing Service-Providing Trade, Transportation, and Utilities Information Financial Activities Professional and Business Services Educational and Health Services Leisure and Hospitality Other Services Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Contracting New Housing Units Authorized, Census C-40 Total Units Single Family Units E C O N O M I C I N D I C A T O R S % change versus year ago for most recent: month 12-months DEC 2002 JAN 2003 FEB 2003 MAR 2003 APR 2003 10,600 9,750 850 8.0 10,100 9,375 725 7.2 10,075 9,300 775 7.7 10,150 9,375 775 7.6 10,075 9,350 725 7.2 -13.1 -13.4 -9.4 4.3 -3.4 -4.0 4.3 7.8 6,475 4,250 425 6,050 1,500 2,325 2,225 350 1,875 6,375 4,225 425 5,950 1,500 2,300 2,150 325 1,825 6,450 4,225 425 6,025 1,500 2,300 2,225 325 1,900 6,475 4,200 425 6,050 1,475 2,300 2,275 325 1,950 6,500 4,225 425 6,075 1,450 2,350 2,275 350 1,925 -11.9 -5.6 -5.6 -12.3 -1.7 -7.8 -21.6 7.7 -25.2 -5.9 -0.4 -0.9 -6.2 2.4 -2.0 -14.7 6.3 -17.7 17,164 14,441 1,419 1,304 1000 2,601 16,485 14,017 1,128 1,340 991 3,555 7,934 5,652 730 1,552 961 1,456 15,128 11,599 1,398 2,131 1,067 2,058 ... ... ... ... ... ... 11.7 3.0 28.5 79.6 10.9 -40.4 2.0 0.0 0.1 23.0 11.8 -15.4 65,500 61,500 4,000 6.1 65,150 60,625 4,525 6.9 64,425 59,975 4,450 6.9 64,100 59,950 4,150 6.5 64,475 60,875 3,600 5.6 -3.0 -3.4 4.3 7.6 0.9 0.5 8.4 7.4 57,650 39,075 5,500 125 2,225 3,150 52,150 10,175 425 1,425 2,675 6,550 10,550 1,775 18,575 3,300 15,275 56,825 38,250 5,325 125 2,100 3,100 51,500 9,675 425 1,400 2,600 6,500 10,550 1,775 18,575 3,000 15,575 56,875 38,100 5,375 125 2,125 3,125 51,500 9,575 400 1,425 2,450 6,550 10,550 1,775 18,775 2,975 15,800 56,800 38,225 5,475 125 2,175 3,175 51,325 9,500 425 1,400 2,500 6,525 10,675 1,725 18,575 3,075 15,500 57,300 38,775 5,425 125 2,125 3,175 51,875 9,625 425 1,475 2,500 6,550 11,000 1,775 18,525 3,050 15,475 -3.4 1.1 -2.7 0.0 -18.3 11.4 -3.5 4.3 -10.5 0.0 -7.4 4.8 0.7 2.9 -11.7 -8.3 -12.3 -0.1 2.3 0.6 -3.2 -7.5 8.1 -0.2 6.6 -10.0 1.6 1.4 0.4 0.5 9.0 -4.6 0.7 -5.7 111,789 78,390 16,890 16,509 12,659 27,979 84,696 58,242 14,819 11,635 8,608 14,990 79,335 58,062 12,119 9,154 5,669 18,863 103,164 66,889 20,433 15,842 7,930 20,622 ... ... ... ... ... ... 4.7 -0.3 5.9 30.1 -19.6 8.7 3.1 3.7 -1.3 6.4 -1.2 14.5 62 62 66 62 32 32 57 42 79 79 -11.2 -8.1 -3.6 -7.5 See sources and abbreviations at the bottom of Page 16. PAGE 10 ARIZONA'S ECONOMY A R I Z O N A GREENLEE COUNTY Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Total Private Goods Producing Service-Providing Trade, Transportation, and Utilities Other Private Service-Providing Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Contracting YAVAPAI COUNTY Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Total Private Goods Producing Natural Resources and Mining Construction Manufacturing Service-Providing Trade, Transportation, and Utilities Information Financial Activities Professional and Business Services Educational and Health Services Leisure and Hospitality Other Services Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Contracting New Housing Units Authorized, Census C-40 Total Units Single Family Units E C O N O M I C I N D I C A T O R S APR 2003 % change versus year ago for most recent: month 12-months DEC 2002 JAN 2003 FEB 2003 MAR 2003 3,900 3,575 325 8.3 3,800 3,525 275 7.2 3,775 3,500 275 7.3 3,775 3,500 275 7.3 3,775 3,500 275 7.3 -4.4 -2.8 -21.4 -17.8 -5.4 -3.7 -21.2 -16.9 3,575 3,025 2,375 1,200 275 375 550 25 525 3,525 3,000 2,350 1,175 275 375 525 25 500 3,550 3,025 2,375 1,175 275 375 525 25 500 3,550 3,025 2,375 1,175 275 375 525 50 475 3,550 3,000 2,375 1,175 275 350 550 50 500 -0.7 -1.6 -2.1 2.2 0.0 0.0 4.8 100.0 0.0 -4.6 -5.2 -6.8 0.4 -2.9 4.6 -0.8 17.6 -2.1 5,834 5,451 155 228 175 1,200 1,222 850 200 172 127 2,356 9,840 9,361 177 302 187 688 7,204 6,594 260 350 175 2,735 ... ... ... ... ... ... 57.1 67.5 -34.2 38.1 -14.8 52.4 6.2 7.4 -4.3 -6.0 -12.5 71.9 81,125 78,275 2,850 3.5 80,225 77,475 2,750 3.4 80,475 77,675 2,800 3.5 81,050 78,325 2,725 3.4 82,075 79,375 2,700 3.3 2.8 3.2 -6.1 -8.7 5.9 5.7 10.2 4.2 53,950 43,300 9,625 900 5,525 3,200 44,325 10,225 675 1,800 4,500 7,500 7,300 1,675 10,650 1,275 9,375 52,625 42,675 9,375 825 5,400 3,150 43,250 10,175 675 1,750 4,375 7,500 7,150 1,675 9,950 1,275 8,675 53,600 42,925 9,400 825 5,375 3,200 44,200 10,050 675 1,800 4,450 7,625 7,250 1,675 10,675 1,250 9,425 54,000 43,350 9,450 850 5,400 3,200 44,550 10,250 700 1,800 4,525 7,600 7,325 1,700 10,650 1,250 9,400 54,175 43,525 9,475 850 5,425 3,200 44,700 10,325 700 1,825 4,700 7,600 7,300 1,600 10,650 1,250 9,400 2.5 2.8 0.5 -8.1 1.4 1.6 2.9 2.2 12.0 5.8 11.9 2.0 3.5 -8.6 0.9 4.2 0.5 4.4 4.8 2.3 -12.4 5.6 1.6 4.8 3.2 9.1 4.0 18.6 5.0 5.1 -4.8 2.5 3.5 2.4 142,752 116,586 17,303 8,863 6,796 41,446 107,480 84,296 14,927 8,257 6,109 36,444 107,174 83,576 14,108 9,490 5,877 36,720 125,338 93,915 16,954 14,469 7,243 33,761 ... ... ... ... ... ... 9.4 6.0 -0.3 60.7 -0.8 -7.0 4.0 4.1 3.1 4.6 -5.7 5.8 185 179 204 184 225 209 222 202 222 188 -11.9 -11.7 35.7 20.1 See sources and abbreviations at the bottom of Page 16. ARIZONA'S ECONOMY PAGE 11 A R I Z O N A GILA COUNTY Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Total Private Goods Producing Service-Providing Trade, Transportation, and Utilities Other Private Service-Providing Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Contracting MOHAVE COUNTY Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Total Private Goods Producing Natural Resources and Mining Construction Manufacturing Service-Providing Trade, Transportation, and Utilities Information Financial Activities Professional and Business Services Educational and Health Services Leisure and Hospitality Other Services Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Contracting New Housing Units Authorized, Census C-40 Total Units Single Family Units E C O N O M I C I N D I C A T O R S % change versus year ago for most recent: month 12-months DEC 2002 JAN 2003 FEB 2003 MAR 2003 APR 2003 17,925 16,550 1,375 7.7 17,925 16,450 1,475 8.2 17,875 16,275 1,600 9.0 17,850 16,250 1,600 9.0 17,675 16,225 1,450 8.2 -7.6 -7.9 -3.3 4.6 -1.9 -3.4 19.2 21.8 13,350 8,650 2,125 11,225 2,100 4,425 4,700 450 4,250 13,075 8,500 2,075 11,000 2,075 4,350 4,575 400 4,175 13,050 8,450 2,050 11,000 2,025 4,375 4,600 400 4,200 13,125 8,550 2,050 11,075 2,050 4,450 4,575 450 4,125 13,050 8,375 2,000 11,050 1,950 4,425 4,675 475 4,200 -7.9 -8.7 -17.5 -6.0 -11.4 -2.7 -6.5 -20.8 -4.5 -4.3 -5.1 -13.9 -2.3 -3.6 -1.0 -2.8 -9.1 -2.0 30,332 23,752 3,992 2,588 1,984 8,310 22,906 17,460 3,120 2,326 1,721 7,830 22,895 16,910 3,267 2,718 1,683 5,781 27,267 18,561 3,616 5,090 2,548 5,874 ... ... ... ... ... ... 5.9 -5.1 2.9 91.5 18.2 -1.4 -3.1 -3.4 -2.6 -1.8 -9.6 -2.5 74,075 70,275 3,800 5.1 74,200 70,500 3,700 5.0 74,050 70,225 3,825 5.2 73,850 70,225 3,625 4.9 73,925 70,725 3,200 4.3 0.7 1.5 -15.2 -15.8 2.8 2.2 12.6 9.6 44,975 36,950 8,825 75 5,725 3,025 36,150 10,125 900 1,525 3,175 5,575 4,675 2,150 8,025 500 7,525 44,600 36,525 8,700 75 5,625 3,000 35,900 9,800 900 1,500 3,125 5,625 4,725 2,150 8,075 475 7,600 44,950 36,825 8,850 75 5,750 3,025 36,100 9,850 900 1,500 3,100 5,600 4,825 2,200 8,125 475 7,650 45,450 37,275 8,875 75 5,800 3,000 36,575 9,775 925 1,475 3,350 5,650 4,975 2,250 8,175 500 7,675 45,600 37,450 8,825 75 5,725 3,025 36,775 9,825 925 1,500 3,375 5,650 5,125 2,225 8,150 475 7,675 1.6 0.6 -4.9 -25.0 -5.8 -2.4 3.2 -2.0 2.8 -3.2 7.1 6.6 4.1 6.0 6.2 -5.0 7.0 2.7 2.3 2.7 -7.0 4.2 0.3 2.7 0.6 2.4 2.6 7.7 5.9 -3.5 6.7 4.6 -3.6 5.2 125,325 100,746 12,925 11,654 8,937 27,590 101,910 79,301 11,294 11,315 8,371 24,453 107,523 82,353 12,435 12,735 7,887 26,316 126,726 93,929 14,075 18,722 9,372 29,433 ... ... ... ... ... ... 10.6 4.9 4.1 63.4 0.9 2.7 9.7 9.7 3.4 16.2 7.1 9.9 275 213 263 222 211 176 318 262 272 262 21.4 29.7 25.3 18.2 See sources and abbreviations at the bottom of Page 16. PAGE 12 ARIZONA'S ECONOMY A R I Z O N A LA PAZ COUNTY Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Total Private Goods Producing Service-Providing Trade, Transportation, and Utilities Other Private Service-Providing Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Contracting YUMA METROPOLITAN REGION Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Total Private Goods Producing Natural Resources and Mining Construction Manufacturing Service-Providing Trade, Transportation, and Utilities Information Financial Activities Professional and Business Services Educational and Health Services Leisure and Hospitality Other Services Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Contracting New Housing Units Authorized, Census C-40 Total Units Single Family Units E C O N O M I C I N D I C A T O R S APR 2003 % change versus year ago for most recent: month 12-months DEC 2002 JAN 2003 FEB 2003 MAR 2003 7,200 6,750 450 6.3 6,900 6,475 425 6.2 6,675 6,250 425 6.4 6,700 6,275 425 6.3 6,600 6,175 425 6.4 -1.9 -3.5 30.8 33.2 4.9 4.8 5.4 0.6 5,000 2,625 350 4,650 1,275 1,000 2,375 175 2,200 5,025 2,625 325 4,700 1,275 1,025 2,400 175 2,225 4,900 2,550 300 4,600 1,300 950 2,350 150 2,200 4,925 2,550 300 4,625 1,250 1,000 2,375 175 2,200 4,875 2,525 300 4,575 1,275 950 2,350 150 2,200 -1.0 -6.5 -20.0 0.5 0.0 -9.5 5.6 0.0 6.0 2.8 -1.9 -3.0 3.3 2.7 -6.7 8.6 5.6 8.8 13,822 8,755 1,827 3,240 2,485 1,428 15,988 9,989 2,428 3,571 2,642 1,058 16,283 9,920 2,330 4,033 2,498 1,612 17,537 9,590 2,274 5,673 2,840 1,637 ... ... ... ... ... ... -9.0 -29.6 9.6 58.6 -2.1 -26.3 -0.8 -3.2 -5.3 7.5 -2.8 -2.3 72,025 59,200 12,825 17.8 66,950 56,725 10,225 15.3 65,600 56,025 9,575 14.6 66,175 56,000 10,175 15.4 68,850 53,825 15,025 21.8 4.6 -0.4 27.3 21.7 6.3 4.8 11.0 4.5 46,350 32,925 5,825 25 3,650 2,150 40,525 10,300 975 1,425 2,700 5,550 4,650 1,500 13,425 2,750 10,675 45,775 32,550 5,700 25 3,575 2,100 40,075 9,775 1,000 1,400 2,850 5,600 4,725 1,500 13,225 2,725 10,500 45,775 32,450 5,700 25 3,575 2,100 40,075 9,725 1,000 1,400 2,825 5,625 4,675 1,500 13,325 2,725 10,600 46,000 32,750 5,750 25 3,600 2,125 40,250 9,775 1,050 1,400 2,875 5,650 4,750 1,500 13,250 2,750 10,500 44,375 30,825 5,475 25 3,600 1,850 38,900 8,375 1,025 1,375 2,800 5,600 4,700 1,475 13,550 2,775 10,775 3.1 1.1 2.8 0.0 10.8 -9.8 3.1 -3.7 10.8 7.8 -0.9 7.7 0.0 -3.3 7.8 2.8 9.1 3.4 1.8 2.6 0.0 12.5 -11.7 3.5 -1.5 9.0 4.4 4.4 9.7 -3.1 -2.5 7.3 3.3 8.4 132,285 108,081 12,376 11,828 9,070 23,698 106,618 82,605 12,237 11,776 8,712 16,705 109,464 83,156 12,981 13,327 8,254 23,249 123,118 92,015 13,883 17,220 8,620 14,924 ... ... ... ... ... ... 14.5 11.3 6.6 46.0 -9.9 1.6 7.7 6.5 5.7 18.4 6.3 9.3 188 104 114 114 123 123 134 134 162 162 14.9 14.9 15.8 16.4 See sources and abbreviations at the bottom of Page 16. ARIZONA'S ECONOMY PAGE 13 A R I Z O N A SANTA CRUZ COUNTY Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Total Private Goods Producing Service-Providing Trade, Transportation, and Utilities Other Private Service-Providing Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Retail Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Contracting New Housing Units Authorized, Census C-40 Total Units Single Family Units COCHISE COUNTY Civilian Labor Force, ADES Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADES Total Total Private Goods Producing Natural Resources and Mining Construction Manufacturing Service-Providing Trade, Transportation, and Utilities Information Financial Activities Professional and Business Services Educational and Health Services Leisure and Hospitality Other Services Government Federal Government State and Local Government Sales ($000) ADOR Gross Retail Retail Restaurants & Bars Gasoline, EBR Gallons (000s) ADOT Contracting New Housing Units Authorized, Census C-40 Total Units Single Family Units E C O N O M I C I N D I C A T O R S % change versus year ago for most recent: month 12-months DEC 2002 JAN 2003 FEB 2003 MAR 2003 APR 2003 14,450 12,775 1,675 11.6 14,325 12,875 1,450 10.1 14,150 12,825 1,325 9.4 13,950 12,675 1,275 9.1 13,975 12,700 1,275 9.1 1.3 1.0 4.1 2.8 2.3 1.9 4.4 1.8 12,425 9,250 1,300 11,125 5,125 2,825 3,175 1,125 2,050 12,575 9,425 1,300 11,275 5,325 2,800 3,150 1,075 2,075 12,650 9,475 1,300 11,350 5,350 2,825 3,175 1,075 2,100 12,600 9,450 1,325 11,275 5,275 2,850 3,150 1,075 2,075 12,600 9,475 1,350 11,250 5,300 2,825 3,125 1,075 2,050 2.4 5.3 1.9 2.5 9.8 -0.9 -5.3 -2.3 -6.8 0.8 0.9 -2.2 1.2 4.1 -2.8 0.5 1.5 0.0 40,643 34,242 3,421 2,980 2,285 3,874 25,302 19,508 2,856 2,938 2,173 3,190 27,057 20,365 3,069 3,623 2,244 3,263 32,983 24,846 3,105 5,032 2,519 4,013 ... ... ... ... ... ... 0.9 -5.6 -16.4 88.0 16.1 17.3 3.4 2.8 1.3 10.5 0.3 4.6 22 22 42 42 35 35 51 45 54 51 17.4 45.7 12.6 36.4 46,650 44,250 2,400 5.1 46,100 43,675 2,425 5.3 45,925 43,300 2,625 5.7 46,125 43,450 2,675 5.8 46,300 43,675 2,625 5.7 2.4 2.1 8.2 5.7 5.1 4.6 15.5 10.0 34,500 22,775 3,125 25 2,150 950 31,375 6,225 475 850 3,450 3,550 4,025 1,075 11,725 4,575 7150 34,025 22,475 3,050 25 2,100 925 30,975 5,925 475 850 3,475 3,575 4,050 1,075 11,550 4,525 7025 34,200 22,525 3,125 25 2,150 950 31,075 5,800 475 850 3,475 3,575 4,125 1,100 11,675 4,500 7175 34,325 22,725 3,100 25 2,125 950 31,225 5,900 500 850 3,500 3,575 4,200 1,100 11,600 4,500 7100 34,325 22,800 3,125 25 2,125 975 31,200 5,900 500 900 3,475 3,600 4,175 1,125 11,525 4,500 7025 2.6 3.4 7.8 0.0 -1.2 34.5 2.1 0.9 5.3 5.9 -0.7 0.0 10.6 2.3 1.1 1.7 0.7 3.3 3.7 4.4 9.1 4.8 3.3 3.2 1.1 0.0 12.1 0.7 3.8 7.9 6.5 2.5 2.9 2.2 87,032 72,259 7,983 6,790 5,207 15,838 61,466 48,129 7,515 5,822 4,307 14,373 65,565 51,468 7,790 6,307 3,906 14,442 72,209 55,087 8,584 8,538 4,274 13,442 ... ... ... ... ... ... 10.5 8.2 1.8 41.7 -12.5 -5.6 7.3 5.9 1.9 26.7 14.3 13.6 41 41 53 53 44 44 72 72 70 70 6.1 6.1 9.5 9.0 See sources and abbreviations at the bottom of Page 16. PAGE 14 ARIZONA'S ECONOMY 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 Natural Resources and Mining Construction Manufacturing Computer and Electronic Prod. Aerospace Products and Parts Wholesale Trade Retail Trade Transp., Warehousing, and Utilities Information Financial Activities Professional and Business Services Educational and Health Services Arts, Entertainment, and Recreation Accommodation Food Svcs and Drinking Places Other Services Federal Government State and Local Government State and Local Government Education Sales ($000s) ADOR Aggregate Retail Sales Retail Food, EBR Restaurants & Bars Gasoline, EBR Contracting New Housing Units Authorized, Census C-40 adjusted by EBR Total Units Single Family Units 2-5-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 APR 2003 JAN 2003 FEB 2003 MAR 2003 411.8 394.2 17.6 4.2 426.9 408.3 18.6 4.1 426.4 407.7 18.7 4.2 426.2 407.2 19.0 4.6 428.9 410.7 18.2 4.6 6.5 6.6 2.8 -8.0 3.6 3.1 15.3 10.1 352.9 1.4 22.9 29.5 5.6 12.2 7.2 42.9 7.8 7.7 14.1 40.9 44.7 5.4 7.6 24.7 14.7 9.6 71.8 48.0 345.4 1.4 22.9 29.3 5.7 12.1 7.3 40.1 7.8 7.6 14.2 40.3 44.6 5.5 7.5 24.5 14.6 9.6 68.2 44.6 349.4 1.4 23.1 29.3 5.6 12.0 7.2 39.8 7.7 7.6 14.3 40.4 45.1 5.5 7.8 25.2 14.7 9.4 70.9 47.4 349.5 1.4 22.9 29.2 5.6 12.0 7.3 40.2 7.7 7.5 14.6 40.2 44.6 5.6 7.7 25.5 14.7 9.5 70.9 47.2 351.0 1.4 22.9 29.2 5.6 12.0 7.2 40.0 7.7 7.4 14.7 40.5 45.0 5.7 7.7 26.0 14.9 9.5 71.2 47.6 0.3 -12.5 4.6 -4.9 -1.8 -6.3 0.0 2.3 0.0 -6.3 3.5 -2.4 3.4 0.0 -4.9 2.0 2.1 5.6 -0.6 0.8 0.0 -13.7 0.4 -7.5 -7.6 -7.7 -1.6 3.2 -11.1 -1.2 -0.3 0.1 4.4 2.3 -4.6 1.1 1.6 2.5 0.3 0.3 887,077 652,675 96,562 90,409 47,431 140,488 705,760 472,955 99,522 85,108 48,176 117,744 713,342 474,060 99,915 89,538 49,830 120,491 789,192 526,526 100,133 95,343 67,190 131,565 ... ... ... ... ... ... 2.7 0.2 4.0 -8.3 58.1 3.8 1.8 1.1 -0.0 1.1 15.3 0.4 516 497 19 562 533 29 594 577 18 624 608 16 833 736 97 -3.6 14.8 -56.5 2.4 7.6 -20.7 187,037 1,022 183,011 134,441 861 156,145 150,741 899 167,676 189,194 1,102 171,683 226,515 1,249 181,357 16.0 7.4 8.0 14.7 8.1 6.2 318,093 23,017 283,064 25,993 306,195 19,651 345,308 22,864 305,450 22,053 -2.1 -4.3 0.7 4.6 I 2002 II 2002 III 2002 IV 2002 I 2003 883.4 1.1 3.0 1.9 3.8 888.1 1.1 3.0 1.9 3.6 892.7 1.1 3.1 1.9 3.5 896.9 1.2 3.1 1.9 3.0 901.4 1.2 3.1 1.9 3.4 2.0 2.8 2.4 2.2 -10.2 2.2 -5.3 0.3 4.0 -13.6 21,486 13,433 804 95 5,029 3,733 24,323 21,695 13,535 811 96 5,046 3,829 24,429 21,916 13,662 820 97 5,065 3,911 24,550 22,153 13,823 831 99 5,087 3,975 24,701 22,391 13,982 842 100 5,111 4,039 24,839 4.2 4.1 4.7 6.0 1.6 8.2 2.1 3.9 2.7 3.8 4.1 1.8 11.4 1.7 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 % change versus year ago for most recent: month 12-months DEC 2002 % change versus year ago for most recent: quarter 4-quarters See sources and abbreviations at the bottom of Page 16. ARIZONA'S ECONOMY PAGE 15 A R I Z O N A E C O N O M I C 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 Natural Resources and Mining Construction Durable Goods Manufacturing Fabricated Metal Products Computer and Electronic Prod. Aerospace Products and Parts Non-Durable Goods Manufacturing Wholesale Trade Retail Trade Utilities Transportation and Warehousing Information Finance and Insurance Real Estate, Rental, and Leasing Professional and Business Services Educational Services Health Care and Social Assistance Arts, Entertainment, and Recreation Accommodation Food Svcs and Drinking Places Other Services Federal Government State and Local Government State and Local Government Education Sales ($000s) ADOR Aggregate Retail Sales Retail Food, EBR Restaurants & Bars Gasoline, EBR Contracting 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 I N D I C A T O R S % change versus year ago for most recent: month 12-months DEC 2002 JAN 2003 FEB 2003 MAR 2003 APR 2003 1,798.1 1,702.7 95.4 5.4 1,773.7 1,682.4 91.3 5.0 1,769.2 1,677.6 91.6 5.2 1,777.1 1,685.8 91.3 5.4 1,787.2 1,695.3 91.9 5.5 0.3 0.7 -5.5 -6.8 1.9 1.3 14.7 12.3 1,613.5 2.3 126.0 106.5 13.0 40.5 15.4 27.8 77.1 199.5 7.6 52.7 37.4 95.5 34.4 252.4 22.9 134.9 20.9 25.6 108.3 61.1 22.6 198.0 103.2 1,581.3 2.2 123.7 105.0 13.0 39.9 15.3 27.7 76.0 191.6 7.5 52.5 37.2 95.1 33.8 249.3 21.9 135.0 20.7 25.6 106.9 61.3 21.7 186.6 92.3 1,597.3 2.3 124.0 103.9 12.8 39.4 15.2 27.4 76.3 190.3 7.5 51.8 37.0 95.8 34.0 250.6 23.5 135.5 21.2 25.9 109.4 61.9 22.0 197.0 102.6 1,606.6 2.3 124.6 103.6 12.6 39.2 15.2 27.3 76.9 189.5 7.5 52.0 36.6 95.9 34.1 254.9 23.7 136.3 21.6 26.4 111.5 62.7 22.1 197.1 103.0 1,609.7 2.3 126.0 103.4 12.5 39.1 15.3 27.4 76.6 188.7 7.4 51.6 37.0 95.6 34.2 256.1 24.2 136.9 21.8 26.1 112.2 63.0 22.0 197.2 103.0 0.5 -4.2 1.5 -7.8 -6.0 -10.5 -0.6 -2.1 -0.8 1.4 2.6 -8.0 -2.1 2.4 0.5 10.5 6.3 2.8 -0.8 1.3 2.8 7.3 0.3 1.6 0.3 0.4 -1.2 -9.2 -6.7 -12.7 -3.3 -3.3 -1.6 2.1 -1.5 2.2 -8.0 -1.3 1.5 -0.0 11.6 5.6 3.0 -3.2 2.3 2.4 4.0 2.7 4.0 3,937,929 2,958,848 399,251 403,029 176,801 768,738 3,083,210 2,079,784 413,153 408,092 182,181 566,000 3,160,270 2,140,246 414,785 403,858 201,381 624,806 3,559,829 2,396,992 415,692 471,915 275,230 668,026 ... ... ... ... ... ... 5.7 1.6 4.5 6.2 65.7 -5.0 2.1 0.7 1.7 4.0 17.7 -5.1 3,897 2,689 40 1,168 3,062 2,935 32 95 3,724 3,182 6 536 3,885 3,714 23 148 4,078 3,835 64 179 -3.3 2.8 12.3 -58.4 17.7 19.3 -29.2 13.2 1,045,449 5,562 187,963 840,943 4,483 187,585 974,842 5,162 188,850 1,186,792 6,167 192,442 1,331,555 6,960 191,315 26.5 22.5 3.2 16.4 8.9 7.0 3,158,765 46,647 2,834,808 46,475 2,787,722 41,650 3,430,332 46,898 ... ... 2.7 0.3 4.8 2.1 See sources and abbreviations below. 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 BEA: Bureau of Economic Analysis, U.S. Department of Commerce PAGE 16 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 NPS: National Park Service, U.S. Department of the Interior 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 2002 II 2002 PHOENIX-MESA METROPOLITAN REGION (MARICOPA AND PINAL) - QUARTERLY DATA Demographics & Vital Statistics (000s, seas adj) ADHS & EBR Population 3,448.8 3,475.4 Natural Increase 8.5 8.4 Births 14.6 14.6 Deaths 6.2 6.2 Net Migration 19.0 18.3 Personal Income by Source ($mil, SAAR) EBR Total Personal Income 94,617 95,543 Earnings by Place of Work 70,880 71,559 Less: Contributions for Social Insurance 4,383 4,440 Plus: Adjustment for Residence -48 -48 Plus: Dividends, Interest & Rents 16,486 16,432 Plus: Transfer Payments 11,682 12,039 Per Capita Personal Income ($, SAAR) EBR 27,435 27,491 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 IV 2002 I 2003 3,501.1 8.2 14.5 6.3 17.5 3,528.1 8.1 14.5 6.4 18.9 3,553.4 7.9 14.4 6.4 17.4 3.0 -6.2 -1.8 4.2 -8.7 3.1 -3.3 -0.2 4.1 -5.1 96,553 72,386 4,500 -47 16,366 12,347 27,578 97,642 73,367 4,561 -46 16,294 12,588 27,676 98,708 74,317 4,619 -46 16,229 12,827 27,778 4.3 4.8 5.4 5.0 -1.6 9.8 1.3 3.5 3.0 4.0 5.0 -0.5 12.7 0.3 5,415.4 10.7 21.3 10.7 27.6 5,453.6 11.2 21.9 10.7 27.0 5,494.1 11.5 22.0 10.4 31.2 5,537.7 11.8 21.9 10.1 32.7 5,580.8 11.2 21.7 10.4 30.4 3.1 5.6 1.8 -2.0 10.2 2.9 6.1 2.7 -0.8 14.4 141,705 99,688 6,254 460 27,193 20,619 142,484 99,679 6,251 455 27,455 21,146 143,066 100,205 6,297 452 27,285 21,422 145,123 101,945 6,410 460 27,211 21,919 147,061 103,455 6,543 466 27,192 22,492 3.8 3.8 4.6 1.2 -0.0 9.1 4.0 3.4 5.1 -0.1 1.6 10.9 79,277 8,716 10,785 997 9,788 26,167 34,626 80,421 8,967 10,298 286 10,012 26,126 34,923 80,727 9,181 10,585 446 10,140 26,040 34,934 81,654 9,401 10,969 607 10,362 26,206 35,348 ... ... ... ... ... 26,351 ... 3.7 10.6 11.0 61.0 9.0 0.7 2.6 2.3 8.6 6.9 60.8 4.8 1.0 2.2 DEC 2002 JAN 2003 FEB 2003 MAR 2003 APR 2003 TRAVEL AND TOURISM - MONTHLY DATA 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 MEASURES OF INFLATION AND PRICES - MONTHLY DATA Consumer Price Index (1982-1984=100) BLS U.S. - All Urban U.S. - Wage Earners % change versus year ago for most recent: quarter 4-quarters III 2002 % change versus year ago for most recent: month 12-months 2,183,827 135,563 684,190 1,364,074 143,167 20,772 88,545 33,850 1,601,720 128,875 460,485 1,012,360 96,631 19,541 51,970 25,120 1,357,160 129,697 467,817 759,646 163,331 28,200 107,146 27,985 903,554 90,875 315,281 497,398 189,581 32,056 137,672 19,853 747,292 70,844 226,446 450,002 194,403 38,780 145,327 10,296 2.7 8.9 -14.7 13.4 -6.4 -13.5 -3.3 -18.5 -7.8 -5.1 -3.3 -10.4 -13.6 -16.5 -14.4 -7.0 862,826 2,340,636 911,075 802,188 2,150,381 887,222 842,304 2,243,959 935,176 793,992 2,166,856 871,531 1,193,979 2,126,365 893,268 31.8 -8.0 2.7 21.7 11.8 2.9 180.9 177.0 181.7 177.7 183.1 179.2 184.2 180.3 183.8 179.8 2.2 2.3 2.0 1.9 See sources and abbreviations at the bottom of Page 16. ARIZONA'S ECONOMY PAGE 17 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 Natural Resources and Mining Construction Durable Goods Manufacturing Fabricated Metal Products Computer and Electronic Prod. Aerospace Products and Parts Non-Durable Goods Manufacturing Wholesale Trade Retail Trade Utilities Transportation and Warehousing Information Finance and Insurance Real Estate, Rental, and Leasing Professional and Business Services Educational Services Health Care and Social Assistance Arts, Entertainment, and Recreation Accommodation Food Svcs and Drinking Places Other Services Federal Government State and Local Government State and Local Government Education Hours Worked Per Week, Manufacturing, ADES Average Hourly Earnings ($) ADES Construction Manufacturing Trade, Transportation, 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 - Personal Property Contracting Mining - Metal, Oil & Gas Hotel/Motel 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 recent: month 12-months DEC 2002 JAN 2003 FEB 2003 MAR 2003 APR 2003 2,680.1 2,527.6 152.5 5.9 2,642.3 2,497.4 144.9 5.5 2,634.4 2,489.6 144.8 5.7 2,642.7 2,498.0 144.7 5.9 2,659.2 2,511.6 147.6 6.0 0.3 0.5 -2.5 -1.6 2.1 1.4 13.4 11.0 2,298.4 8.6 174.2 142.9 17.1 46.9 27.7 36.3 94.4 288.7 10.9 66.3 50.0 108.5 44.5 314.0 33.3 207.8 29.8 41.9 158.2 85.6 51.6 350.9 191.4 39.9 2,253.4 8.5 171.4 141.5 17.0 46.2 27.5 36.1 93.6 276.4 10.8 66.5 49.9 108.2 43.8 310.0 31.9 207.8 29.4 41.6 156.6 85.4 49.4 334.6 175.3 40.4 2,274.9 8.4 172.0 140.4 16.9 45.8 27.3 35.8 93.9 274.6 10.8 65.7 49.5 108.8 44.1 310.8 33.7 208.8 30.0 42.1 160.1 86.2 49.5 349.7 190.6 39.2 2,286.7 8.4 172.7 140.1 16.8 45.6 27.3 35.8 94.7 274.3 10.8 65.9 49.2 109.3 44.4 315.6 34.0 209.3 30.6 42.9 162.3 87.6 49.9 348.9 190.2 40.1 2,291.6 8.5 174.4 140.0 16.6 45.5 27.4 35.8 93.4 273.2 10.8 65.5 49.5 108.9 44.6 316.9 34.5 210.4 31.0 42.9 163.6 88.0 50.2 349.5 190.9 40.2 0.5 -5.6 2.5 -6.5 -4.0 -9.0 -4.9 -0.8 -0.1 1.6 -3.6 2.5 -6.1 -2.0 1.4 0.1 8.2 5.9 2.3 -2.7 0.9 1.4 3.5 -0.3 0.5 -0.5 0.5 -6.3 0.3 -8.4 -6.7 -11.8 -6.2 -3.1 -1.0 2.5 -0.6 1.1 -5.6 -1.0 0.4 0.3 10.6 5.5 2.9 -3.7 1.5 0.8 2.5 1.7 2.3 -0.7 14.82 14.50 13.08 11.12 16.51 14.88 14.41 13.35 11.41 16.01 14.86 14.27 13.38 11.47 16.00 14.97 14.28 13.50 11.55 16.48 15.05 14.21 13.40 11.64 16.24 5.2 1.2 2.2 3.3 5.6 0.6 1.9 1.7 0.4 7.2 5,751,566 4,235,573 639,363 577,181 299,450 229,622 431,351 281,650 62,030 292,967 1,085,680 24,702 119,475 4,528,680 3,014,298 645,509 568,954 299,919 221,883 466,853 221,462 78,410 273,926 824,989 18,187 158,337 4,623,906 3,082,310 648,059 567,608 325,929 201,851 410,004 236,149 67,200 276,047 891,326 21,019 185,446 5,197,762 3,442,677 649,476 657,462 448,148 224,332 406,576 249,942 86,019 300,696 940,541 26,573 219,899 ... ... ... ... ... ... ... ... ... ... ... ... ... 5.2 1.6 1.9 3.4 60.8 -0.7 -1.0 -11.8 -1.4 -5.7 -3.5 3.9 5.1 2.6 1.4 2.3 3.2 15.8 5.5 -0.1 0.6 4.6 -6.0 -2.5 45.1 1.3 5,085 3,721 82 1,282 4,276 4,065 102 109 4,939 4,296 62 581 5,260 4,983 67 210 5,642 5,282 105 255 -2.1 4.6 -3.7 -57.9 16.0 16.1 -9.6 20.0 2,233 1,728 14 490 2,218 1,642 18 558 ... ... ... ... ... ... ... ... ... ... ... ... 7.9 9.9 28.6 2.0 14.8 13.9 3.9 19.5 See sources and abbreviations at the bottom of Page 16. PAGE 18 ARIZONA'S ECONOMY A R I Z O N A MEASURES OF INFLATION AND PRICES - QUARTERLY DATA Consumer Price index (1982-84=100) BLS Western Region (U.S.) U.S. - All Urban Consumers U.S. - Urban Wage Earners Price Indexes (1996=100) BEA Gross Domestic Product Personal Consumption Expenditures E C O N O M I C I N D I C A T O R S II 2002 III 2002 IV 2002 183.2 177.9 173.9 184.8 179.8 175.8 185.2 180.6 176.6 185.7 181.2 177.2 188.0 183.0 179.1 2.6 2.9 3.0 2.1 2.0 1.9 110.1 110.1 110.5 110.9 110.8 111.4 111.2 111.9 111.7 112.6 1.4 2.2 1.1 1.7 CHANGE OF ADDRESS Attach old label or fill in old address in shaded box below. 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