AZECJan09.qxd:AZECJan09.qxd 12/17/08 2:31 PM Page 1 J A N U A R Y 2 0 0 9 W I N T E R I S S U E Economic Outlook for 2009-2010: Riding Out the Storm By Marshall J. Vest Forecasting Project Director December 1, 2008 The economic outlook has deteriorated significantly as a result of recent financial turmoil. The downturn, which began in late 2007, accelerated in August and the economy is in a free fall as year end approaches. We now expect a recession stretching into the second half of 2009 and comparable in severity to the mid1970s and early 1980s recessions. Will these events become truly transformational? INSIDE: Forecast Tables ...................................4 Arizona Economic Indicators..........5 The first seven years of this decade is best described as a period of easy money. Financial innovation in the form of sub-prime mortgages and securitization, which permitted risk to be spread across investors worldwide, allowed credit to expand seemingly without limits – and with little effective regulation. The expansion of credit allowed asset bubbles to develop in real estate (and later) commodities. Now credit is contracting, and overextended financial institutions are being forced to deleverage. That’s a painful process in which panic has sent asset prices tumbling. The U.S. stock market has lost over 40% of its value so far – the largest drop since the mid 1970s. Home prices are down nearly 9% nationwide (according to the National Association of Realtors). Oil prices have fallen from over $140 per barrel to below $60. Financial institutions have suffered crippling losses of capital, the nation’s investment banks have all but disappeared, and some portions of financial markets all but stopped functioning in recent weeks. The freeze in financial markets was precipitated by the bursting of the housing bubble and the subsequent insolvency of investment banks, which were major investors in sub-prime mortgage securities, as well as facilitators in the securitization process. These minimally-regulated institutions were operating effectively as hedge funds and taking huge bets using very high leverage. The failure of Lehman Brothers in mid-September precipitated a hard freeze on portions of financial markets. This is a classic financial crisis that is well understood by Federal Reserve Chairman Ben Bernanke. He is quoted as saying, “The Federal Reserve’s first responsibility is to do its part to ensure the integrity of the financial infrastructure – in particular, the payments system and the systems for settling trades of securities and other financial instruments. If necessary, the Fed should provide ample liquidity until the immediate crisis has passed.” So, the Fed has been doing just as expected – providing liquidity. In the evolving process, it has implemented unprecedented measures. As lender of last resort, the Fed has set up new lending facilities for primary dealers (including investment banks), www.ebr.eller.arizona.edu asset-backed commercial paper markets, money market mutual funds, and foreign central banks. Working through the U.S. Treasury, the federal government has effectively nationalized the mortgage lending industry, and assumed control of the nation’s largest insurer. It is also buying preferred stock in dozens of the nation’s largest banks and buying mortgage-backed securities, in an effort to pump liquidity into the financial system. Since the economy floats on a sea of credit, it is no surprise that the U.S. economy is now in a free fall — like Arizona has been all year. Real GDP declined a modest 0.5% in the third quarter and will likely plunge in the fourth and remain in negative territory until 2009’s second half. On December 1, the National Bureau of Economic Research (NBER) officially declared that December of 2007 marked the peak of the last expansion, which spanned 73 months (just over six years). Arizona’s economy peaked a few months earlier. Whereas the nation’s economy didn’t begin to drop significantly until this August, Arizona’s economy has been rapidly losing ground throughout 2008. Consumers are in full retreat as year end approaches. They are truly stunned by recent developments as consumer confidence measures have plunged to the lowest levels ever recorded. Driven by declining housing values and stock holdings, household net worth has fallen by roughly 13% from its recent peak. Households are highly leveraged and very illiquid and their balance sheets are in the worst shape in the post-World War II era. Real consumption dropped 3.7% in the third quarter, the worst decline in 28 years. Auto sales in October were the lowest since 1983. Consumer finances are unlikely to get much better anytime soon. Falling employment, declining real wages, negative wealth effects from lower housing values and stocks, tightening credit conditions, high debt burdens, and low savings will limit consumers’ ability to spend. The unemployment rate stood at a 14-year high at 6.5% in October and is headed toward 8% or higher. Inflation-adjusted consumption is expected to log the worst back-to-back years (2008-09) in the post-World War II period. Homebuilding is at the lowest level AZECJan09.qxd:AZECJan09.qxd 12/17/08 2:31 PM Page 2 since 1945, with starts nationwide dropping below the one million annual rate in recent months. Housing starts have declined by nearly two-thirds from their peak. Inflation is yesterday’s problem. In July, inflation was running at 5.6%. Suddenly, deflation is a real threat. October numbers showed both producer prices and consumer prices declining, due to the effects of falling energy prices. Core inflation at the consumer level fell by 0.1% as well. With declining energy and food prices, headline inflation at the consumer level will remain negative next year. Core price inflation will recede to near 1% from 2.2% currently, but if the core rate drops below zero for several months, monetary policy would be rendered ineffective. This is what happened in Japan in the 1990s as people stopped buying in the face of declining prices. Any money pumped into the system by monetary authorities was stuffed under the mattress. This is economists’ worst fear – the dreaded “liquidity trap.” On the bright side, the economy has four positive factors acting to limit the severity of the recession. First, oil prices are less than half the $140+ peak reached only a few months ago. That means households have more than $200 billion extra to spend on essentials rather than at the pump. Second, swift and coordinated action by governments around the world will stabilize financial markets. Three, these actions have infused a huge amount of liquidity into financial markets that will recapitalize banks and get credit flowing again. Four, we can expect further fiscal stimulus of $200 billion or so from Washington very soon. Expected to be included are grants to states for infrastructure, Medicaid, and other safety net programs; extended unemployment insurance; and rebates to individuals similar to (but smaller than) those provided earlier this year. Combined these actions represent huge amounts of stimulus being poured into the economy and we can rest assured that more will be forthcoming if needed. The Outlook How do we find solace in today’s depressing environment? The answer is: we’ve been here before and often when things appear bleakest, recovery is not too far off. Recessions are messy and downright scary, but they eventually come to an end with the stage set for the return of prosperity. EXHIBIT 1 GDP Declines in Post-WW II Recessions, U.S. Year of Peak 1948 1953 1957 1960 1969 1973 1980 1981 1990 2001 2007 peak-to-trough % change # months -1.8 11 -2.6 10 -3.7 8 -1.6 10 -1.1 11 -3.1 16 -2.2 6 -2.9 16 -1.3 8 -0.4 8 -1.6 to -3.3 18 to 24 note: 2007 numbers are forecasts from Global Insight All considered, we should expect a recession comparable in severity to the mid-70s and early 80s recessions – both lasted 16 months, nearly a year-and-a-half. This one likely will be a bit longer spanning some 18-21 months and stretching into the second half of 2009. According to Global Insight, a global economic forecasting firm, the peak-to-trough decline in real GDP should range between -1.6% and -3.3% (Exhibit 1). We’ve been through ten recessions since World War II and the bad times eventually fade. The last two were very short and mild, so this one seems extreme (as if we were in unchartered territory). But that’s just because many don’t remember the earlier episodes. The primary challenge is to survive – to remain solvent – and secondarily to prepare for the recovery and expansion when the business cycle turns up again. The Outlook for Arizona Arizona’s economy has been contracting since the third quarter of 2007 – a few months before the nation’s economy topped out. Arizona normally enters recessions later but this time it’s leading the rest of the country, along with California, Nevada, and Florida — states that also participated in the recent housing bubble. Malaise has spread far beyond homebuilding, affecting nearly every sector of the economy. Since peaking one year ago (September 2007), nonfarm employment has dropped by more than 85,000 statewide. The construction industry accounts for almost half of those losses (44,000), but effects of the housing debacle are widely felt throughout the economy. The trade, transportation, and utilities (TTU) sector has trimmed 20,200 jobs, followed by professional and business services at 18,000. Other sectors that have trimmed jobs over the past year include manufacturing, financial activities, other services, leisure and hospitality, and information. Only three sectors have added jobs: educational and health services (12,500), government (6,400) and mining (1,100). Mining will swing to negative in coming months with recently announced layoffs due to falling copper prices. We should expect a recession comparable in severity to the mid-70s and early 80s recessions. 2. AZECJan09.qxd:AZECJan09.qxd 12/17/08 2:31 PM Page 3 Aggregate nonfarm employment statewide is expected to continue falling through most of 2009 and perhaps into early 2010. Roughly 6.5% or 170,000 jobs will be lost from peak to trough. That will make this the longest and deepest recession in Arizona history. The longest lasted 16 months with a decline of a little over 2%. Bankruptcies are increasingly in the news; Circuit City, Linens and Things, Lehman Brothers, and Mervyn’s are some of the more recognizable examples. Filings for smaller companies, as well as consumers, are up as well. During the past year (with data through October), total filings have increased by 90% statewide. Most are Chapter 7 liquidations of individuals and businesses. Business bankruptcies under Chapter 11 have nearly doubled during the past year, but remain less than half the number experienced during the 1990-91 recession. Arizona’s unemployment rate in October was 6.1%, up sharply from 3.9% 12 months earlier. That remains well below the rates posted during the mid-1970s and early 1980s recessions, when the unemployment rate reached 13% and 11%, respectively. We look for the rate to approach 8% during this recession. Sales figures for Arizona show that consumers are in full retreat. Retail sales (as narrowly defined) plunged at double-digit annual rates during the second and third quarters, and were 8.3% lower in August than 12 months earlier. A big reason for the out-sized weakness was high gasoline prices. Sales of gasoline were 26% higher during the same period, thereby leaving less money to spend for retail goods. Meanwhile, restaurant and bar sales declined only slightly, down a little over 2%. Combining all three categories, which sum to $70 billion of spending at an annual rate, the total was 3.8% lower. Gasoline is taxed on a per gallon basis, rather than as a percent of the dollars spent, so sales tax revenues reflect the other two categories. Unfortunately, in recent years policy makers have shifted more of the tax burden onto sales taxes in the belief that it was the most stable of the three sources (income taxes and property taxes are the other two). They are now discovering that sales taxes can be quite volatile. Retail spending (including all three categories plus food) will decline 1.6% next year, following a drop of 2.5% this year. That’s in current dollars. In real terms (after adjusting for inflation), sales will drop 2.9% following an outsized 6.6% decline this year. Next year’s decline will be smaller as inflation subsides and as autos and home related components stabilize. Population growth, a major prop under Arizona’s economy, slowed significantly in recent months as potential residents found that they were unable to sell their houses back home. According to U.S. Census Bureau estimates, annual population growth peaked at 3.6% in 2005 and 2006. We expect growth in the 1.2-1.3% range during the next two years, only slightly faster than nationwide. With reduced population growth, it will take longer to fill now-vacant houses. The recession in Arizona began earlier and will last longer than the national recession. The main reason is that credit conditions must first improve and then Arizona’s large inventory of houses must be absorbed. That must happen before homebuilding can commence once again. Unless another source of growth surprises us, homebuilding will need to get back on track before economy-wide growth returns. Will the Current Environment Become Truly Transformational? There is a good chance that policies and behaviors will change in response to the current upheaval. Here are some things that may transform. The structure of the financial system is changing and so will the regulatory structure. The policy of minimal regulation in the belief that financial institutions would self-regulate, in the interest of shareholders and their own preservation, has failed. Much tighter regulatory oversight can now be expected. A topic of interest in coming months is how the federal government will undo its recent actions. It is now the nation’s de facto mortgage lender. It controls the largest insurer. It has assumed large equity stakes in banking institutions. How will the federal government undo these intrusions into free markets? At present the government has no discernable exit strategy. What about the issue of moral hazard? Will the “too big to fail” doctrine entice ever-riskier behavior in the future with the expectation that Uncle Sam will socialize their losses? We should expect a change in spending and savings patterns on the part of consumers. Household net worth (wealth) has plunged by 13% so far, and that means less spending and more savings. The period of easy money is over and Americans’ standard of living has taken a hit. Preferences have already shifted to more fuel efficient cars. Homeowners may even rediscover the wisdom of paying down (or paying off) the mortgage. And consumers will boost their savings rather than spending every dollar. The nation’s policies to boost home ownership (the great American dream) lie at the heart of the current crisis. Affordable housing programs, grants for down payments, low interest/interest only/negative amortization mortgages, second mortgages to cover down payments, etc., were commonly offered to borrowers who had miniscule chances of servicing the loan. Additionally, mortgage interest and real estate taxes are deductible and gains on the sale of a house are free of capital gains within certain limits. Will we continue to promote home ownership with our tax and lending policies? Americans are being blamed by others around the world for the economic problems they are now experiencing. Will U.S. financial markets retain the “safe haven” status that they’ve enjoyed for years? Will foreign investors continue to provide capital? If the liquidity currently being pumped into financial markets isn’t drained as the economy recovers, we’re likely to see much higher inflation and higher interest rates a few years down the road. We may be sowing the seeds of the next bubble. (Do you like roller coasters?) Hang on tightly. n How will the federal government undo its intrusions into free markets? At present there is no discernable exit strategy. 3. AZECJan09.qxd:AZECJan09.qxd 12/17/08 2:31 PM Page 4 F O R E C A S T T A B L E S Arizona Personal Income ($ mill) percent change Wage per Employee percent change Aggregate Retail Sales ($ mill)* percent change Population (000s, mid-year) percent change Residential Permits percent change Non Farm Employment (000s) percent change Goods-Producing percent change Service-Providing percent change Trade, Trans., & Utilities percent change Prof. & Business Services percent change Leisure & Hospitality percent change Government percent change 2007 208,544.8 4.5 43,153 3.5 82,792.8 2.2 6,338.8 2.8 48,434 -25.7 2,675.3 1.5 418.0 -4.1 2,257.4 2.7 527.5 3.0 403.8 2.4 272.4 2.1 422.8 3.5 2008 214,582.4 2.9 44,269 2.6 80,700.9 -2.5 6,442.3 1.6 27,317 -43.6 2,641.8 -1.3 383.6 -8.2 2,258.2 0.0 525.1 -0.5 396.9 -1.7 269.5 -1.1 430.9 1.9 2009 214,448.2 -0.1 45,369 2.5 79,397.3 -1.6 6,522.2 1.2 21,398 -21.7 2,546.3 -3.6 335.6 -12.5 2,210.6 -2.1 500.9 -4.6 379.3 -4.4 260.1 -3.5 429.0 -0.5 2010 218,052.1 1.7 46,434 2.3 81,029.4 2.1 6,605.3 1.3 28,461 33.0 2,515.3 -1.2 311.8 -7.1 2,203.7 -0.3 493.9 -1.4 370.2 -2.4 263.6 1.3 425.3 -0.9 2011 230,080.1 5.5 47,841 3.0 85,862.0 6.0 6,724.6 1.8 47,671 67.5 2,569.9 2.2 319.0 2.3 2,251.0 2.1 507.3 2.7 377.1 1.9 273.5 3.8 425.4 0.0 2012 248,936.6 8.2 49,637 3.8 92,636.2 7.9 6,873.9 2.2 60,811 27.6 2,680.7 4.3 342.9 7.5 2,337.9 3.9 533.4 5.2 396.8 5.2 285.9 4.5 430.7 1.2 2013 270,199.1 8.5 51,610 4.0 99,842.6 7.8 7,035.9 2.4 66,257 9.0 2,799.4 4.4 367.6 7.2 2,431.9 4.0 560.2 5.0 419.3 5.7 297.2 3.9 438.7 1.9 Phoenix-Mesa Metro Area Personal Income ($ mill) percent change Wage per Employee percent change Aggregate Retail Sales ($ mill)* percent change Population (000s, mid-year) percent change Residential Permits percent change Non Farm Employment (000s) percent change Goods-Producing percent change Service-Providing percent change Trade, Trans., & Utilities percent change Prof. & Business Services percent change Leisure & Hospitality percent change Government percent change 146,322.4 5.7 48,617 2.3 57,389.2 1.9 4,179.4 3.3 37,272 -15.8 1,918.2 1.8 309.5 -4.1 1,608.7 3.0 392.0 3.3 327.3 2.5 185.6 2.9 239.8 4.6 151,927.7 3.8 50,972 4.8 55,994.0 -2.4 4,250.7 1.7 20,314 -45.5 1,891.2 -1.4 276.8 -10.6 1,614.4 0.4 387.7 -1.1 324.3 -0.9 189.7 2.2 243.0 1.3 153,475.0 1.0 52,648 3.3 55,211.2 -1.4 4,304.2 1.3 15,269 -24.8 1,839.1 -2.8 256.2 -7.4 1,582.9 -2.0 366.4 -5.5 316.9 -2.3 183.7 -3.1 241.2 -0.8 155,848.2 1.5 54,258 3.1 56,700.4 2.7 4,359.4 1.3 17,478 14.5 1,805.9 -1.8 236.0 -7.9 1,570.0 -0.8 361.0 -1.5 303.4 -4.3 185.8 1.2 238.8 -1.0 165,203.5 6.0 56,168 3.5 61,982.3 9.3 4,450.3 2.1 32,487 85.9 1,844.4 2.1 247.5 4.9 1,596.9 1.7 372.6 3.2 297.5 -1.9 192.6 3.7 239.7 0.4 178,987.6 8.3 58,277 3.8 67,749.1 9.3 4,568.1 2.6 44,121 35.8 1,927.3 4.5 262.9 6.2 1,664.4 4.2 393.5 5.6 310.8 4.5 201.2 4.5 243.8 1.7 195,617.2 9.3 60,513 3.8 73,425.5 8.4 4,705.0 3.0 51,297 16.3 2,033.4 5.5 287.9 9.5 1,745.6 4.9 415.3 5.5 332.1 6.9 209.4 4.1 250.3 2.7 Tucson Metro Area Personal Income ($ mill) percent change Wage per Employee percent change Aggregate Retail Sales ($ mill)* percent change Population (000s, mid-year) percent change Residential Permits percent change Non Farm Employment (000s) percent change Goods-Producing percent change Service-Providing percent change Trade, Trans., & Utilities percent change Prof. & Business Services percent change Leisure & Hospitality percent change Government percent change 31,727.6 6.4 41,042 3.3 11,969.5 2.5 967.1 1.9 5,237 -38.5 384.3 1.2 55.5 -3.6 328.8 2.1 64.3 2.6 52.1 4.7 40.1 -1.2 77.9 2.1 33,061.9 4.2 42,591 3.8 11,736.8 -1.9 979.5 1.3 3,618 -30.9 378.2 -1.6 50.2 -9.6 328.0 -0.2 63.8 -0.8 51.4 -1.4 39.1 -2.5 79.0 1.4 33,496.7 1.3 43,411 1.9 11,812.9 0.6 990.6 1.1 3,433 -5.1 370.0 -2.2 46.8 -6.7 323.2 -1.5 62.2 -2.6 50.3 -2.1 38.2 -2.3 76.8 -2.7 34,548.6 3.1 44,354 2.2 12,142.8 2.8 1,006.3 1.6 5,556 61.8 370.9 0.2 46.5 -0.7 324.4 0.4 62.4 0.3 48.8 -2.9 38.8 1.6 76.8 0.0 36,753.8 6.4 45,491 2.6 12,857.7 5.9 1,026.2 2.0 7,542 35.7 381.8 2.9 49.8 7.0 332.0 2.4 64.1 2.8 49.3 1.0 40.3 3.8 77.7 1.2 39,544.4 7.6 47,134 3.6 13,715.7 6.7 1,047.1 2.0 8,249 9.4 395.7 3.7 53.0 6.6 342.7 3.2 66.4 3.6 51.4 4.3 42.1 4.4 78.9 1.5 42,373.2 7.2 49,055 4.1 14,550.5 6.1 1,066.6 1.9 7,723 -6.4 406.9 2.8 54.4 2.5 352.5 2.9 68.5 3.1 53.9 4.8 43.6 3.7 79.7 1.1 * Aggregate Retail Sales includes retail, food, restaurant & bars and gasoline sales. Source: Economic and Business Research Center, Eller College of Management, The University of Arizona 4. AZECJan09.qxd:AZECJan09.qxd 12/17/08 2:31 PM Page 5 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 ARIZONA MONTHLY DATA Civilian Labor Force (000s) ADOC Employment Unemployment Unemployment Rate, Seas. Adj. (%) Employees on Nonagricultural Payrolls (000s) ADOC Total Total Private Government Federal Government State and Local Government State and Local Government Education Hours Worked Per Week, Manufacturing, ADOC Average Hourly Earnings ($) ADOC 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 & EBR 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 TRAVEL AND TOURISM - MONTHLY DATA Visits to Parks & Other Recreational Areas, NPS & ASPB Northern Arizona Historical Scenic Water Based Recreation Southern Arizona Historical Scenic Water Based Recreation International Border Crossings, USCBP Passengers Pedestrians Vehicles % change versus year ago for most recent: month 12-months JUN 2008 JUL 2008 AUG 2008 SEP 2008 OCT 2008 3,085.8 2,931.9 153.9 4.8 3,100.0 2,931.8 168.2 5.1 3,105.8 2,924.6 181.2 5.6 3,142.9 2,951.8 191.1 5.9 3,159.1 2,964.5 194.6 6.1 3.5 1.2 60.2 56.4 2.2 1.1 30.4 24.8 2,608.1 2207.2 400.9 54.5 346.4 164.8 41.3 2,568.7 2181.4 387.3 54.4 332.9 152.0 40.4 2,603.3 2177.4 425.9 55.0 370.9 192.4 40.0 2,611.1 2168.4 442.7 54.7 388.0 210.5 39.9 2,608.9 2161.9 447.0 54.8 392.2 214.8 39.8 -2.6 -3.4 1.4 4.0 1.1 2.3 -2.7 -0.9 -1.6 3.2 2.5 3.2 4.4 -1.0 19.04 16.25 15.00 12.69 19.64 18.83 16.49 15.02 12.54 20.03 18.77 16.59 15.18 12.63 20.29 18.82 16.53 15.08 12.61 19.97 19.14 16.46 15.14 12.57 20.00 5.9 2.9 3.3 3.3 2.1 6.9 5.5 2.0 2.2 2.3 6,699,586 4,101,484 976,816 731,919 889,367 215,327 863,978 351,213 92,130 309,162 1,578,861 144,734 169,141 6,365,507 3,851,466 937,370 703,176 873,495 220,730 1,077,857 229,819 90,451 312,887 1,524,687 128,938 139,171 6,507,446 4,023,999 935,636 720,050 827,762 228,898 1,036,194 211,054 74,342 299,007 1,420,280 177,871 144,794 6,268,010 3,869,885 956,803 718,500 722,822 214,768 932,773 232,446 70,296 316,927 1,464,964 136,117 165,624 ... ... ... ... ... ... ... ... ... ... ... ... ... -3.6 -8.1 4.0 -7.7 22.3 -6.4 -7.2 -22.3 -7.1 1.3 -17.9 -15.0 -3.5 -1.9 -6.5 4.9 -2.5 23.1 -3.6 7.7 -2.2 2.9 -0.6 -14.4 -3.1 -2.2 3,037 2,067 95 875 2,404 1,813 36 555 1,848 1,459 65 323 1,825 1,133 26 666 1,300 877 33 391 -43.7 -53.2 -79.5 41.0 -43.3 -51.2 -50.6 -2.6 1,577 1,278 35 263 1,782 1,415 39 328 1,747 1,414 34 299 1,881 1,509 37 335 3,119 2,723 52 343 179.2 223.4 79.3 40.0 90.5 102.3 70.2 53.0 2,198,418 151,344 739,650 1,307,424 143,002 21,318 83,046 38,638 2,237,728 137,514 868,865 1,231,349 150,206 21,825 91,875 36,506 2,261,908 135,388 855,285 1,271,235 145,080 20,089 88,968 36,023 1,671,947 120,200 629,344 922,403 125,187 20,254 77,087 27,846 1,435,616 133,558 516,678 785,380 177,858 28,889 116,801 32,168 1.7 5.8 -1.6 3.2 -11.2 12.3 -18.4 2.9 0.1 -1.7 0.8 -0.1 4.1 2.7 5.9 -2.7 1,595,260 833,112 669,072 1,584,100 971,723 666,726 2,078,380 480,870 693,713 1,518,477 861,830 640,723 ... ... ... -3.9 -9.8 -2.6 1.3 -8.5 -3.5 See sources and abbreviations at the bottom of page 8. • For additional detail and history, subscribe to Arizona Economic Indicators Data Book. www.ebr.eller.arizona.edu 5. AZECJan09.qxd:AZECJan09.qxd 12/17/08 2:31 PM Page 6 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 PHOENIX-MESA METROPOLITAN REGION (MARICOPA AND PINAL) Civilian Labor Force (000s) ADOC Employment Unemployment Unemployment Rate, Seas. Adj. (%) Employees on Nonagricultural Payrolls (000s) ADOC Total Total Private Government 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 Hotel/Motel New Housing Units Authorized, Census C-40 & EBR 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 Sky Harbor International Airport, PSHIA Total Passengers Total Aircraft Movements TUCSON METROPOLITAN REGION (PIMA) Civilian Labor Force (000s) ADOC Employment Unemployment Unemployment Rate, Seas. Adj. (%) Employees on Nonagricultural Payrolls (000s) ADOC Total Total Private Government 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 Hotel/Motel New Housing Units Authorized, Census C-40 & 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 6. JUN 2008 JUL 2008 2,085.2 1,994.5 90.7 4.3 % change versus year ago for most recent: month 12-months AUG 2008 SEP 2008 OCT 2008 2,094.9 1,996.5 98.4 4.6 2,098.9 1,993.0 105.9 5.1 2,124.9 2,010.3 114.6 5.3 2,140.2 2,022.9 117.3 5.5 3.6 1.4 65.0 61.8 2.2 1.2 33.6 30.1 1,865.2 1,645.5 219.7 22.0 197.7 89.3 1,839.5 1,627.8 211.7 22.3 189.4 81.5 1,862.9 1,622.6 240.3 22.1 218.2 111.3 1,867.8 1,616.7 251.1 22.1 229.0 122.6 1,868.3 1,613.2 255.1 22.2 232.9 125.7 -2.6 -3.2 1.7 1.4 1.7 3.0 -0.9 -1.5 3.4 1.9 3.6 4.7 4,517,677 2,804,495 654,726 499,717 558,738 1,088,231 81,845 4,282,023 2,639,057 628,287 472,008 542,671 1,063,929 65,081 4,406,042 2,764,577 627,124 486,609 527,732 1,021,510 66,850 4,299,141 2,698,354 641,312 494,363 465,113 1,017,853 89,714 ... ... ... ... ... ... ... -3.9 -8.4 5.5 -8.9 22.8 -22.2 -4.8 -2.9 -7.8 6.1 -2.8 22.8 -16.6 -1.6 2,432 1,474 87 871 1,853 1,280 25 548 1,236 914 60 262 1,384 703 19 662 968 559 26 384 -27.3 -52.1 -56.8 260.8 -44.3 -54.7 -46.0 -4.3 1,520,060 5,748 264,450 1,488,025 5,974 249,084 1,346,471 5,660 237,892 1,354,579 6,179 219,223 1,143,223 5,384 212,337 2.2 56.0 -34.5 -24.4 -3.2 -19.3 3,431,977 42,276 3,486,964 42,636 3,316,110 41,257 2,861,437 37,843 3,165,766 39,434 -9.6 -13.1 -4.6 -4.7 459.2 437.1 22.1 4.7 462.3 438.5 23.8 4.8 464.0 439.1 24.9 5.4 472.4 445.4 27.0 5.6 475.4 447.8 27.6 5.8 3.0 0.9 53.3 48.7 1.2 0.2 29.5 27.7 368.8 295.8 73.0 11.0 62.0 34.4 364.2 292.6 71.6 11.0 60.6 33.0 370.4 292.4 78.0 11.2 66.8 39.5 372.8 291.7 81.1 11.2 69.9 43.3 372.1 290.7 81.4 11.3 70.1 44.1 -3.3 -4.3 0.5 5.6 -0.3 1.4 -1.9 -2.7 1.4 3.9 1.1 0.2 965,642 591,091 150,952 104,377 119,223 199,775 22,374 919,157 552,996 144,856 106,411 114,894 185,256 17,444 961,993 599,078 144,588 109,342 108,985 167,227 18,990 903,055 548,413 147,859 109,900 96,883 196,265 19,782 ... ... ... ... ... ... ... -4.2 -10.0 5.7 -4.9 24.6 -7.9 -12.0 -0.8 -5.1 6.3 -3.3 26.1 -9.3 -14.8 306 293 14 278 262 16 271 245 26 229 212 17 153 138 15 -71.8 -56.4 -93.4 -39.6 -47.0 40.5 266,202 1,034 257,449 240,837 945 254,854 215,369 903 238,504 203,049 934 217,397 186,356 823 226,435 -18.8 -6.9 -12.8 -29.2 -23.0 -7.4 353,152 17,404 352,542 16,702 324,006 17,129 287,577 15,643 334,055 15,834 -13.4 -27.8 -1.4 -7.8 AZECJan09.qxd:AZECJan09.qxd 12/17/08 2:31 PM Page 7 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 APACHE COUNTY Civilian Labor Force, ADOC Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADOC Total Total Private Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Contracting Hotel/Motel COCHISE COUNTY Civilian Labor Force, ADOC Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADOC Total Total Private Government Federal Government State and Local Government Sales ($000) ADOR Gross Retail Contracting Hotel/Motel New Housing Units Authorized, Census C-40 Total Units Single Family Units COCONINO COUNTY Civilian Labor Force, ADOC Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADOC Total Total Private Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Contracting Hotel/Motel New Housing Units Authorized, Census C-40 Total Units Single Family Units % change versus year ago for most recent: month 12-months JUN 2008 JUL 2008 AUG 2008 SEP 2008 OCT 2008 20,775 18,600 2,175 10.5 20,900 18,550 2,350 11.2 21,200 18,800 2,400 11.3 21,200 18,875 2,325 11.0 21,325 18,825 2,500 11.7 6.5 2.0 58.7 49.1 2.5 1.7 10.7 7.6 19,550 7,025 12,525 3,350 9,175 19,175 6,850 12,325 3,100 9,225 19,825 6,975 12,850 3,300 9,550 19,750 6,875 12,875 3,325 9,550 19,650 6,750 12,900 3,275 9,625 -1.6 -5.3 0.4 1.6 0.0 -0.7 -3.6 0.9 1.0 0.8 19,251 10,614 3,283 19,089 9,628 1,660 17,664 8,768 1,559 16,992 11,026 1,758 ... ... ... 22.0 38.2 27.6 41.0 14.7 18.2 59,075 56,125 2,950 5.0 58,900 55,750 3,150 5.3 58,425 55,250 3,175 5.4 59,025 55,625 3,400 5.8 58,675 55,275 3,400 5.8 1.4 -0.4 43.2 41.2 1.6 0.7 24.5 22.4 37,425 25,150 12,275 4,925 7,350 36,450 24,575 11,875 4,950 6,925 36,850 24,500 12,350 4,900 7,450 36,800 24,275 12,525 4,925 7,600 36,525 23,975 12,550 4,975 7,575 -3.7 -6.5 2.2 5.3 0.3 -1.7 -3.2 1.5 2.7 0.8 100,348 27,684 3,762 92,527 24,278 3,188 90,873 22,506 3,355 86,930 30,583 3,318 ... ... ... 1.6 9.0 -8.3 3.8 -3.4 0.4 36 36 25 25 20 20 25 25 25 25 -53.7 -53.7 -35.2 -35.2 74,200 70,800 3,400 4.6 74,500 70,800 3,700 5.0 73,600 69,900 3,700 5.0 74,500 70,700 3,800 5.1 74,200 70,300 3,900 5.3 4.2 2.3 56.0 49.7 2.8 1.9 23.9 20.2 65,900 46,200 19,700 3,200 16,500 64,800 45,900 18,900 3,000 15,900 65,100 45,600 19,500 3,200 16,300 65,300 44,900 20,400 3,100 17,300 64,700 44,100 20,600 3,000 17,600 -1.2 -2.6 2.0 3.4 1.7 -0.3 -0.5 0.1 0.9 -0.0 165,525 40,030 32,117 164,712 37,610 28,333 163,112 39,580 28,727 146,291 41,131 27,434 ... ... ... 0.3 -2.1 9.6 1.7 -0.0 9.4 20 20 27 25 17 17 18 18 15 15 -40.0 -40.0 -40.6 -43.1 See sources and abbreviations at the bottom of page 8. • For additional detail and history, subscribe to Arizona Economic Indicators Data Book. www.ebr.eller.arizona.edu 7. AZECJan09.qxd:AZECJan09.qxd 12/17/08 2:31 PM Page 8 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 GILA COUNTY Civilian Labor Force, ADOC Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADOC Total Total Private Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Contracting Hotel/Motel GRAHAM COUNTY Civilian Labor Force, ADOC Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADOC Total Total Private Government Federal Government State and Local Government Sales ($000) ADOR Gross Retail Contracting GREENLEE COUNTY Civilian Labor Force, ADOC Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADOC Total Total Private Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Contracting Hotel/Motel (Includes Graham County data.) ADHS: Arizona Department of Health Services ADOC: Arizona Department of Commerce ADOR: Arizona Department of Revenue ADOT: Arizona Department of Transportation ARMLS: Arizona Regional Multiple Listing Service ASPB: Arizona State Parks Board BEA: Bureau of Economic Analysis, U.S. Department of Commerce 8. % change versus year ago for most recent: month 12-months JUN 2008 JUL 2008 AUG 2008 SEP 2008 OCT 2008 22,025 20,850 1,175 5.3 21,950 20,675 1,275 5.8 22,125 20,725 1,400 6.3 22,225 20,750 1,475 6.6 22,300 20,775 1,525 6.8 5.4 2.8 60.5 52.2 2.9 1.9 25.8 21.9 14,600 9,600 5,000 550 4,450 14,200 9,425 4,775 550 4,225 14,550 9,575 4,975 550 4,425 14,425 9,425 5,000 525 4,475 14,425 9,425 5,000 525 4,475 -0.2 -0.8 1.0 16.7 -0.6 -0.2 -1.3 1.8 0.9 1.9 43,366 9,482 1,145 43,965 9,294 1,238 40,117 10,709 1,324 36,641 9,623 1,012 ... ... ... -1.4 6.5 -28.2 1.2 -0.8 -27.0 15,650 14,725 925 5.9 15,400 14,425 975 6.3 15,400 14,425 975 6.3 15,750 14,725 1,025 6.5 15,750 14,750 1,000 6.3 7.3 4.8 66.7 55.3 10.0 8.5 45.5 31.9 8,675 5,850 2,825 400 2,425 8,075 5,400 2,675 400 2,275 8,225 5,450 2,775 400 2,375 8,325 5,375 2,950 400 2,550 8,400 5,375 3,025 400 2,625 -2.6 -5.3 2.5 0.0 2.9 3.8 2.7 5.9 -4.6 7.7 27,947 9,416 24,673 6,892 29,134 6,605 24,995 5,954 ... ... -2.7 26.9 5.2 35.5 4,475 4,300 175 3.9 4,400 4,200 200 4.5 4,375 4,200 175 4.0 4,500 4,300 200 4.4 4,500 4,300 200 4.4 6.5 4.9 60.0 50.2 9.2 8.5 29.0 17.9 5,225 4,700 525 50 475 5,250 4,750 500 50 450 5,375 4,825 550 50 500 5,475 4,925 550 25 525 5,425 4,900 525 25 500 9.0 11.4 -8.7 -50.0 -4.8 11.1 12.6 0.0 -16.7 1.3 26,256 3,383 945 24,325 4,861 806 22,670 5,186 917 9,660 6,429 916 ... ... ... -21.5 -25.1 17.8 160.8 -29.2 -5.7 BLS: Bureau of Labor Statistics, U.S. Department of Labor Census C-40: U.S. Census Bureau, U.S. Department of Commerce EBR: Economic & Business Research Center, The University of Arizona NPS: National Park Service, U.S. Department of the Interior PSHIA: Phoenix Sky Harbor International Airport SAAR: Seasonally adjusted at annual rates TAA: Tucson Airport Authority TAR: Tucson Association of Realtors U.S. Bankruptcy Court: District of Arizona USCBP: U.S. Customs and Border Protection, U.S. Department of Homeland Security AZECJan09.qxd:AZECJan09.qxd 12/17/08 2:31 PM Page 9 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 LA PAZ COUNTY Civilian Labor Force, ADOC Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADOC Total Total Private Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Contracting Hotel/Motel MOHAVE COUNTY Civilian Labor Force, ADOC Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADOC Total Total Private Government Federal Government State and Local Government Sales ($000) ADOR Gross Retail Contracting Hotel/Motel New Housing Units Authorized, Census C-40 Total Units Single Family Units NAVAJO COUNTY Civilian Labor Force, ADOC Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADOC Total Total Private Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Contracting Hotel/Motel New Housing Units Authorized, Census C-40 Total Units Single Family Units % change versus year ago for most recent: month 12-months JUN 2008 JUL 2008 AUG 2008 SEP 2008 OCT 2008 7,375 6,875 500 6.8 7,425 6,850 575 7.7 7,300 6,700 600 8.2 7,375 6,725 650 8.8 7,275 6,650 625 8.6 -4.9 -8.3 56.3 64.3 -2.7 -4.2 26.1 29.9 4,875 2,400 2,475 325 2,150 4,700 2,250 2,450 325 2,125 4,750 2,225 2,525 325 2,200 4,775 2,200 2,575 325 2,250 4,775 2,200 2,575 325 2,250 -9.5 -15.4 -3.7 0.0 -4.3 -7.4 -15.8 2.1 2.6 2.1 21,654 1,529 508 23,124 2,819 527 19,076 1,819 470 15,361 2,761 349 ... ... ... 2.2 13.5 -3.0 6.7 -10.6 -4.5 93,800 88,300 5,500 5.9 93,900 87,900 6,000 6.4 93,600 87,000 6,600 7.1 94,200 87,300 6,900 7.3 94,400 87,000 7,400 7.8 2.3 -0.8 60.9 57.3 1.4 -0.3 36.3 34.4 52,500 43,900 8,600 500 8,100 51,400 43,100 8,300 500 7,800 51,500 42,800 8,700 500 8,200 51,400 42,500 8,900 500 8,400 50,700 41,900 8,800 500 8,300 -6.1 -7.3 0.0 0.0 0.0 -2.8 -4.1 4.2 0.0 4.4 162,820 37,579 4,001 159,305 40,925 3,877 150,754 27,506 4,490 136,290 35,503 3,640 ... ... ... -7.8 -4.1 -8.7 -5.9 -21.7 -7.8 55 55 29 29 66 27 42 42 46 46 -24.6 -24.6 -55.9 -60.6 40,025 36,675 3,350 8.4 39,950 36,350 3,600 9.0 39,850 36,075 3,775 9.5 39,900 36,125 3,775 9.5 39,900 35,900 4,000 10.0 3.4 -0.8 66.7 61.2 2.1 0.3 27.7 24.8 29,875 19,200 10,675 1,800 8,875 29,025 18,600 10,425 1,650 8,775 29,375 18,750 10,625 1,750 8,875 29,175 18,325 10,850 1,750 9,100 28,975 18,050 10,925 1,725 9,200 -4.4 -7.4 1.2 1.5 1.1 -2.1 -4.8 3.0 1.6 3.2 111,360 14,174 6,713 104,854 19,467 4,796 101,165 16,909 4,143 98,645 17,814 3,433 ... ... ... 13.0 -32.9 -8.2 9.5 -11.2 17.6 23 23 24 24 16 16 20 20 12 12 -60.0 -60.0 -41.2 -39.5 See sources and abbreviations at the bottom of page 8. • For additional detail and history, subscribe to Arizona Economic Indicators Data Book. www.ebr.eller.arizona.edu 9. AZECJan09.qxd:AZECJan09.qxd 12/17/08 2:31 PM Page 10 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 SANTA CRUZ COUNTY Civilian Labor Force, ADOC Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADOC Total Total Private Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Contracting Hotel/Motel New Housing Units Authorized, Census C-40 Total Units Single Family Units YAVAPAI COUNTY Civilian Labor Force, ADOC Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADOC Total Total Private Government Federal Government State and Local Government Sales ($000) ADOR Gross Retail Contracting Hotel/Motel New Housing Units Authorized, Census C-40 Total Units Single Family Units YUMA METROPOLITAN REGION Civilian Labor Force, ADOC Employment Unemployment Unemployment Rate (%) Employees on Nonagricultural Payrolls, ADOC Total Total Private Government Federal Government State and Local Government Sales ($000s) ADOR Gross Retail Contracting Hotel/Motel New Housing Units Authorized, Census C-40 Total Units Single Family Units JUL 2008 AUG 2008 SEP 2008 OCT 2008 18,300 16,850 1,450 7.9 17,925 16,050 1,875 10.5 18,350 15,975 2,375 12.9 18,450 16,000 2,450 13.3 18,500 15,975 2,525 13.6 5.1 0.2 53.0 45.6 5.4 3.9 25.0 18.6 14,600 10,900 3,700 1,525 2,175 13,575 10,200 3,375 1,525 1,850 13,825 10,175 3,650 1,525 2,125 13,675 10,050 3,625 1,500 2,125 13,700 10,025 3,675 1,525 2,150 -2.8 -3.1 -2.0 8.9 -8.5 2.0 1.9 2.4 7.1 -0.5 41,211 12,748 900 37,929 11,017 1,252 38,663 7,724 826 32,566 13,941 924 ... ... ... -14.3 64.9 -10.4 -6.3 1.3 17.7 16 16 17 17 16 16 9 9 9 9 -60.9 -57.1 -55.5 -55.2 102,400 97,700 4,700 4.6 102,400 97,200 5,200 5.1 101,900 96,300 5,600 5.5 103,300 97,200 6,100 5.9 103,000 96,700 6,300 6.1 2.8 0.3 65.8 61.3 3.0 1.9 33.3 29.2 64,900 52,400 12,500 1,400 11,100 63,200 51,300 11,900 1,400 10,500 64,000 51,600 12,400 1,400 11,000 64,000 51,100 12,900 1,400 11,500 63,700 50,700 13,000 1,400 11,600 -3.0 -3.6 -0.8 7.7 -1.7 0.0 -1.8 8.3 10.2 8.1 185,255 67,142 7,932 173,271 65,680 8,118 165,815 46,953 9,688 155,067 43,174 9,029 ... ... ... -7.3 -25.7 -2.5 -3.8 -14.0 2.0 66 64 42 42 35 35 37 37 33 31 -68.0 -65.6 -50.9 -54.0 83,200 68,400 14,800 17.8 85,100 68,100 17,000 20.0 86,800 67,100 19,700 22.7 85,200 67,800 17,400 20.4 83,500 67,200 16,300 19.5 4.6 -1.6 41.7 35.5 5.2 3.6 15.5 9.6 52,000 37,400 14,600 3,500 11,100 50,500 36,600 13,900 3,500 10,400 51,100 36,500 14,600 3,600 11,000 51,600 36,600 15,000 3,600 11,400 51,800 36,800 15,000 3,600 11,400 -2.6 -4.2 1.4 9.1 -0.9 1.0 0.5 2.2 5.3 1.3 140,137 57,073 3,617 132,328 43,032 2,852 136,445 37,279 3,454 138,743 32,906 4,315 ... ... ... 3.7 9.9 -0.9 5.2 6.9 1.2 72 70 52 50 83 83 40 40 25 25 -70.2 -70.2 -24.8 -27.9 See sources and abbreviations at the bottom of page 8. • For additional detail and history, subscribe to Arizona Economic Indicators Data Book. 10. % change versus year ago for most recent: month 12-months JUN 2008 AZECJan09.qxd:AZECJan09.qxd 12/17/08 2:31 PM Page 11 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 -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 (2000=100) BEA Gross Domestic Product Personal Consumption Expenditures % change versus year ago for most recent: quarter 4-quarters III 2007 IV 2007 I 2008 II 2008 III 2008 212.6 208.2 203.6 214.5 209.7 205.3 216.9 212.1 207.7 221.2 216.8 212.9 222.9 219.3 215.5 4.9 5.3 5.8 4.1 4.4 4.8 120.0 118.0 120.8 119.2 121.6 120.3 122.0 121.5 123.2 123.1 2.7 4.3 2.4 3.7 See sources and abbreviations at the bottom of page 8. • For additional detail and history, subscribe to Arizona Economic Indicators Data Book. 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