Arizona is continuing to grow following the recession, but the greater Quad Cities area is lagging compared to more populous areas of the state. Research Professor Lee McPheters, Ph.D., gave a presentation in Prescott recently, discussing the region’s recovery. As director of the JPMorgan Chase Economic Outlook Center at the W.P. Carey School of Business at Arizona State University, McPheters has been studying the state’s economy for more than 30 years. “If you define recovery as returning back to something in the range of 2.6 million jobs for Arizona, we still have a ways to go. We lost 300,000 plus jobs and we got about half of those back,” explained McPheters, who notes Arizona’s job growth is about 60,000 a year. “Prescott lost about 10,000 jobs and at the pace of recovery, it is going to be several years until Prescott returns to the level of strong growth we saw in 2006.”
Prescott Chamber of Commerce CEO David Maurer called some of McPheters statistics sobering. The presentation titled, “Are We There Yet? On the Road to Recovery,” showed Prescott, employment dropped by two percent between August 2012 and 2013, with a loss of 1,000 jobs. In contrast, Flagstaff gained 1,300 jobs during that timeframe and Phoenix added 42,200. And while growth statewide is on the slow upswing, statistics also show Arizona regained just 47 percent of its jobs lost since the start of the recession, with 53 percent still to be recovered.
When McPheters crunched the numbers for Prescott a year ago, his statistics were relatively optimistic, but the region lost some momentum. “I think the important parts of the Prescott economy have to do with visitors: accommodations, hotels and food service.” Growth in those sectors fell during the past 12 months.” Arizona follows national trends in consumer spending, which is down. “Typically, we ought to be growing somewhere around 3.5 percent over a year, and it is growing at about half that; consumers are very cautious right now and they account for 70 percent of the economy, and when you have 70 percent of the economy that is at half speed, then the whole economy is affected,” McPheters said. Consumer confidence has taken a further hit since the federal government shutdown began Oct. 1.
John Dunham is president of John Dunham and Associates, an economic research firm in Brooklyn, N.Y. He tells Quad Cities Business News that the economy is not destined to boom in the next 24 months. “We’re growing, which is better than shrinking, but we are not growing at any rapid rate in the country,” said Dunham, who shared some of McPheters’s outlooks, predicting a slow, steady growth pattern. Dunham, who specializes in the effects of public policy issues on products and services, says the Grand Canyon state has some advantages. “Arizona is just now opening up to a lot of new gas developments, in particular. That’s a good thing. The bad thing is, the state is so dependent on retirees, housing and immigration,” which Dunham says is beginning to run its course. He thinks the increase in interest rates and a slowdown of the state’s population growth will prevent another housing boom.
One of McPheters’s presentation slides shows Arizona remained in the top 10 states for population growth, according to U.S. Census statistics; and while it may not be defined as a housing boom, the ASU economist reports single family home permits in the state are expected to reach 27,340 in 2014.
Development does seem to be picking up, say some Arizonans. Larry Sullins is a contractor with a background building single-family homes. As the owner of North Sky Development, he is observing a shift in the economy. Not too long ago, Sullins says developers were unable to make a profit. “Now, if you watch your Ps and Qs and get your dirt at a good price, you can actually start to see margins come out,” he said, referring to a positive bottom line. “The more people that are building, the more plumbers and electricians are going back to work and the more that is going to trigger other things in the economy improving.”
McPheters summarized his recent report on the economy. “I think the main takeaway is our growth right now in Arizona is below normal but we are still doing better than most places. The national economy is growing at about half speed, and the Arizona economy follows the national business cycle,” said McPheters. “When the national economy picks up, and we are expected to see that in 2014 on to 2015, that is when I think you’ll see stronger growth in Arizona, maybe back to the four percent job growth that is really just normal for us. QCBN
The study quoted in the article can be accessed at
http://www.asufoundation.org/s/1469/foundation/PEP/index.aspx?sid=1469&gid=2&pgid=2856
By Theresa Bierer
Quad Cities Business News
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