Arizona On Track for Full Recovery

by Mike Hunter

According to many of the nation’s top indicators, local university research teams and various economic scholars, Arizona is moving toward a full recovery. After the recent 49th Annual Economic Forecast Luncheon organized by ASU’s W. P. Carey School of Business, where an assembly of experts was gathered, it seemed to be good news — Arizona is on a fast track to recover.

“As of September, Arizona ranked fifth among states for job growth, and the Phoenix area was fourth among large metropolitan areas,” said Research Professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business. “Arizona is expected to add 60,000 jobs in 2013, led by professional and business services, retail, hospitality and healthcare. We should finally dip below 8-percent unemployment in 2013 — down to 7.6 percent.” His outlook suggests Arizona will see pre-recession employment levels by 2015.

“If we can avoid the fiscal cliff, then it looks like the economy could finally be in a self-sustaining recovery,” said Beth Ann Bovino, deputy chief economist at Standard & Poor’s. “We expect this year’s [2012] gross domestic product to hit 2.1 percent, stronger than previously projected. For 2013, we’re looking at about 2.3 percent. Reports also show a stronger jobs market and signs that households are willing to buy big items, such as cars and homes.” This bodes well for Arizona business owners who have been looking to positive indicators and for federal direction to begin hiring, borrowing and focusing on growth. Both McPheters and Bovino stipulate, however, that their optimism for Arizona is closely tied to positive outcomes on a national level.

Anthony Chan, Ph.D., chief economist for private wealth management at JPMorgan Chase & Co., reiterates his concern in the financial sector as to how markets will react to the “fiscal cliff.” “U.S. corporations are reluctant to go through global mergers and acquisitions or make big investments until they have a clearer picture,” said Chan. “Corporations are keeping high cash balances in order to deal with the uncertainty. They’re making near-record profits in some cases, and many values on the stock market look good. However, everyone’s waiting to see what will happen.”

Local housing is improving as well. Elliott D. Pollack, CEO of Scottsdale-based economic and real estate consulting firm Elliott D. Pollack and Company, noted that foreclosures are down, home prices are up more than 35 percent from a year ago, and new home sales are up with only a year’s worth of inventories. “Even though about 40 percent of Arizona homeowners are underwater on their mortgages, we’re starting to see a recovery,” said Pollack. “The single-family-home and apartment markets look great. Industrial real estate has improved quite a bit. Only
office and retail have quite a way to go.”


Arizona Economic Outlook Key Indicators

Indicator Actual
Personal Income
Millions $227,286 $236,378 $248,197
Percent Change 4.9 4.0 5.0
Non-agricultural Employment
Thousands $2,405.5 $2,453.6 $2,513.6
Percent Change 1.0 2.0 2.5
Manufacturing Employment
Thousands $149.7 $151.3 $152.8
Percent Change 0.8 1.1 1.0
Retail Sales
Millions $47,531 $49,900 $52,900
Percent Change 10.4 5.0 6.0
Single-family Housing Permits
Number Issued 10,306 16,490 24,700
Percent Change -4.2 60.0 50.0
Thousands 6,482 6,566 6,665
Percent Change 1.1 1.3 1.5
December Rate
(Seasonally Adjusted)
9.0 8.2 7.6

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