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Elliott D. Pollack & Company
To:2012 ATRA Outlook Conference
By:Jim Rounds, Senior Vice President
Elliott D. Pollack & Company
November 16, 2012
One Point of Uncertainty Down, Another 99 to Go...
Elliott D. Pollack & Company
Other Potential Title:
“Dark Times in D.C.”
Elliott D. Pollack & Company
Context
Elliott D. Pollack & Company
The economy we wanted…
Elliott D. Pollack & Company
What we got…
Elliott D. Pollack & Company
U.S. Outlook(by the numbers)
“I Win”
You
sure about
that?
2
Elliott D. Pollack & Company
Is the Glass Still Half Full?
Elliott D. Pollack & Company
US New Job Data Change from Prior Month (S/A)June 2010 – September 2012
Source: Bureau Labor of Statistics
-58 -51-27
220
121120110
220246251
5484 96 85
202
112
157
223
275259
143
6887
45
148
171
142
181
-167
(250)
(200)
(150)
(100)
(50)
0
50
100
150
200
250
300
Jun-10
Jul-10
Aug-
10Sep
-10
Oct
-10
Nov-
10D
ec-1
0Jan
-11
Feb-1
1M
ar-11
Apr-
11M
ay-11
Jun-11
Jul-11
Aug-
11Sep
-11
Oct
-11
Nov-
11D
ec-1
1Jan
-12
Feb-1
2M
ar-12
Apr-
12M
ay-12
Jun-12
Jul-12
Aug-
1212-
Sep12-
Oct
(000’s) ?
Elliott D. Pollack & Company
U.S. Underemployment Rate1994 – 2012*
Source: Bureau of Labor Statistics
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
*Data through August 2012
Recession Periods
Beaten down by life.
Unemployment Rate
Elliott D. Pollack & Company
Financial Obligation Ratio**1980 – 2012*
Source: Federal Reserve
15.0%
16.0%
17.0%
18.0%
19.0%
20.0%
1980
Q1
1981
Q2
1982
Q3
1983
Q4
1985
Q1
1986
Q2
1987
Q3
1988
Q4
1990
Q1
1991
Q2
1992
Q3
1993
Q4
1995
Q1
1996
Q2
1997
Q3
1998
Q4
2000
Q1
2001
Q2
2002
Q3
2003
Q4
2005
Q1
2006
Q2
2007
Q3
2008
Q4
2010
Q1
2011
Q2
*Data through second quarter 2012**Ratio of mortgage and consumer debt (including auto, rent and tax payments) to disposable income.
Recession Periods
Paying less for past
purchases!
Elliott D. Pollack & Company
Consumer Confidence1978 – 2012*
Source: The Dismal Scientist
20
30
40
50
60
70
80
90
100
110
120
130
140
150
Jan-
78Ja
n-79
Jan-
80Ja
n-81
Jan-8
2Ja
n-83
Jan-8
4Ja
n-85
Jan-8
6Ja
n-87
Jan-
88Ja
n-89
Jan-
90Ja
n-91
Jan-
92Ja
n-93
Jan-
94Ja
n-95
Jan-
96Ja
n-97
Jan-
98Ja
n-99
Jan-
00Ja
n-01
Jan-
02Ja
n-03
Jan-
04Ja
n-05
Jan-0
6Ja
n-07
Jan-0
8Ja
n-09
Jan-
10Ja
n-11
Jan-
12
*Data through October 2012
Recession Periods
Normal NormalNormal New Normal?
Elliott D. Pollack & Company
Real Retail Sales U.S. Percent Change Year Ago
1973 – 2012* Source: Federal Reserve
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Jan-
73Ja
n-74
Jan-
75Ja
n-76
Jan-
77Ja
n-78
Jan-
79Ja
n-80
Jan-
81Ja
n-82
Jan-
83Ja
n-84
Jan-
85Ja
n-86
Jan-
87Ja
n-88
Jan-
89Ja
n-90
Jan-
91Ja
n-92
Jan-
93Ja
n-94
Jan-
95Ja
n-96
Jan-
97Ja
n-98
Jan-
99Ja
n-00
Jan-
01Ja
n-02
Jan-
03Ja
n-04
Jan-
05Ja
n-06
Jan-
07Ja
n-08
Jan-
09Ja
n-10
Jan-
11Ja
n-12
*Data through June 2012**Three-month moving average
Recession Periods
3
Elliott D. Pollack & Company
Real Disposable Personal IncomePercent Change Year Ago
1971 – 2012* Source: Bureau of Economic Analysis
* Data through second quarter 2012
Recession Periods
Elliott D. Pollack & Company
Hours WorkedPercent Change from Year Ago
1976 – 2012* Source: Bureau of Labor Statistics
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
1976
Q1
1977
Q1
1978
Q1
1979
Q1
1980
Q1
1981
Q1
1982
Q1
1983
Q1
1984
Q1
1985
Q1
1986
Q1
1987
Q1
1988
Q1
1989
Q1
1990
Q1
1991
Q1
1992Q
119
93Q
119
94Q1
1995
Q1
1996Q
119
97Q
119
98Q1
1999
Q1
2000Q
120
01Q
120
02Q1
2003
Q1
2004Q
120
05Q
120
06Q1
2007
Q1
2008Q
120
09Q
1201
0Q1
2011
Q1
2012Q
1
Recession Periods
*Data through second quarter 2012
Elliott D. Pollack & Company
Capacity Utilization Rate1970 – 2012*
Source: The Federal Reserve Bank of St. Louis
65
70
75
80
85
90
Jan-
70Ja
n-71
Jan-
72Ja
n-73
Jan-
74Ja
n-75
Jan-
76Ja
n-77
Jan-
78Ja
n-79
Jan-
80Ja
n-81
Jan-
82Ja
n-83
Jan-
84Ja
n-85
Jan-
86Ja
n-87
Jan-8
8Ja
n-89
Jan-9
0Ja
n-91
Jan-
92Ja
n-93
Jan-
94Ja
n-95
Jan-
96Ja
n-97
Jan-
98Ja
n-99
Jan-
00Ja
n-01
Jan-
02Ja
n-03
Jan-
04Ja
n-05
Jan-0
6Ja
n-07
Jan-0
8Ja
n-09
Jan-
10Ja
n-11
Jan-
12
*Data through June 2012
Recession Periods
Elliott D. Pollack & Company
Why the weak economic activity
then?
Elliott D. Pollack & Company Elliott D. Pollack & Company
What is the tipping point?
4
Elliott D. Pollack & Company
What does the government need to do?
• Need significant cuts in the rate of spending.• Modest tax increases (???) designed not to hurt
incentives to produce.• But, significant spending cuts or tax increases
will hurt the economy next year.• Therefore, they need to phase it in!!!
******* Prediction: Back-loaded multi-year planwith “pain” towards the end. Maybe puttingthe whole issue off for another year as well.
Elliott D. Pollack & Company
Recession? No.
Slow growth? Yes.
Elliott D. Pollack & Company
Arizona
Elliott D. Pollack & Company
Arizona Outperforms the U.S.*(Non-farm Emp. Percent Change 1980 – August 2012)
-9%
-7%
-5%
-3%
-1%
1%
3%
5%
7%
9%
11%
Jan-
81Ja
n-82
Jan-
83Ja
n-84
Jan-
85Ja
n-86
Jan-
87Ja
n-88
Jan-
89Ja
n-90
Jan-
91Ja
n-92
Jan-
93Ja
n-94
Jan-
95Ja
n-96
Jan-
97Ja
n-98
Jan-
99Ja
n-00
Jan-
01Ja
n-02
Jan-
03Ja
n-04
Jan-
05Ja
n-06
Jan-
07Ja
n-08
Jan-
09Ja
n-10
Jan-
11Ja
n-12
U.S. Arizona Recession Periods
*As long as population flows continue!
Elliott D. Pollack & Company
9
4
15
2
10
3
7
Job Growth 2006
11
15
6
22
8
Source: US BLSSource: US BLS
13
Jobs growing
Jobs declining
Top 10
Hawaii
Alaska
Elliott D. Pollack & Company
5
49
24
3645
4
30
8
25
46
50
44
1
3
Alaska 2
2034
Job Growth 2009Source: US BLSSource: US BLS
Jobs growing
Jobs declining
Top 10
Hawaii
6
7
910
5
Elliott D. Pollack & Company
19
49
43
2544 38
3
42
28
Job Growth 2010
50
Hawaii
40
1
35
12
Alaska 2
47
1748
4
8
5
37
Jobs growing
Jobs declining
Top 10
6
7
9
10
Source: US BLSSource: US BLS
Elliott D. Pollack & Company
23
25
29 6
3
44
22
34
38
1
2
Alaska 17
5010
Jobs growing
Jobs declining
Top 10
Hawaii
30
4
12
9
8
Job Growth 2011Source: US BLSSource: US BLS
5
7
Elliott D. Pollack & Company
5
6
25
11 9
3
47
34
33
12
1
4
Alaska 42
32
Jobs growing
Jobs declining
Top 10
Hawaii
18
10
2
8
Job Growth 2012YTD September 2012 vs YTD September 2011
Source: US BLS
507
Elliott D. Pollack & Company
Projected Net Job Growth:
2013 = 73,6002014 = 88,500
= 162,100
FISCAL CLIFF IN ARIZONA?
Elliott D. Pollack & Company
If the mandated spending cuts take place, total loss to Arizona is projected at:
45,000 to 50,000 jobs.
(This does not take into account any slowdown caused by tax increases.)
We will still grow, but very slowly.
FISCAL CLIFF IN ARIZONA?
Elliott D. Pollack & Company
Addl. Detail:Greater Phoenix
6
Elliott D. Pollack & Company
Year Rank # MSA’s
2000 9 25
2001 7 26
2002 5 25
2003 3 25
2004 3 25
2005 1 26
2006 1 27
2007 9 28
2008 24 28
2009 24 25
2010 24 24
2011 12 24
2012* 4 25
Year Rank # MSA’s
1991 4 19
1992 4 19
1993 2 19
1994 1 19
1995 1 20
1996 1 21
1997 1 22
1998 1 23
1999 3 24
Phoenix-Mesa Employment Growth(Ranking among all metro areas greater than 1,000,000)
Source: Arizona State University, U.S. Bureau of Labor Statistics
*Year-to-date, August 2012
Elliott D. Pollack & Company
Arizona Employment*Source: Bureau of Labor Statistics
Sectors in Decline
Net
Change
Other Services -2,000
Information -1,200
*September 2012/ September 2011
Sectors Improving
Net
Change
Professional & Bus Services 16,200
Trade, Transp, Utilities 10,900
Education & Health Services 10,200
Leisure & Hospitality 7,000
Financial Activities 5,400
Construction 4,500
Government 3,800
Manufacturing 2,100
Natural Resources & Mining 200
Elliott D. Pollack & Company
Employment Levels: Greater Phoenix back to Peak in 2015?
Source: ADOA
1,000.0
1,200.0
1,400.0
1,600.0
1,800.0
2,000.0
2,200.0
2,400.0
Jan-
95Ju
l-95
Jan-
96Ju
l-96
Jan-
97Ju
l-97
Jan-
98Ju
l-98
Jan-
99Ju
l-99
Jan-
00Ju
l-00
Jan-
01Ju
l-01
Jan-
02Ju
l-02
Jan-
03Ju
l-03
Jan-
04Ju
l-04
Jan-
05Ju
l-05
Jan-
06Ju
l-06
Jan-
07Ju
l-07
Jan-
08Ju
l-08
Jan-
09Ju
l-09
Jan-
10Ju
l-10
Jan-
11Ju
l-11
Jan-
12Ju
l-12
Jan-
13Ju
l-13
Jan-
14Ju
l-14
Jan-
15
Recession Periods
Peak
Elliott D. Pollack & Company
0%
2%
4%
6%
1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012
2.1%
3.7%
4.2%
4.7%
3.9%
3.3%
3.0%
3.1%
4.3%
5.1%
4.2%4.4%
2.9%
2.5%
1.3%
2.4%
2.8%
3.5%
4.3%
4.6%
4.2%4.2%
3.8%
4.3%4.3%
2.6%
2.7%
3.1%
3.6%3.8%
3.7%
3.0%
1.9%
0.5%
0.3%
0.6%
1.1%
1.8%
Greater Phoenix PopulationAnnual Percent Change 1976–2013*
Source: Arizona State University & Department of Commerce, Research Administration
.
* 2012 & 2013 forecast is from Elliott D. Pollack &
Recession Periods
Elliott D. Pollack & Company
U.S. Single-Family Starts1978–20121/
Source: Census Bureau
1.4
1.2
0.9
0.70.7
1.1 1.1 1.1
1.21.1
1.11.0
0.9
0.8
1.0
1.11.2
1.1
1.21.1
1.3 1.31.2
1.3
1.4
1.5
1.6
1.7
1.5
1.0
0.6
0.4 0.50.4
0.7
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
(Millions)
1/ Through April 2012
Recession Periods
Over-supply
Under-supply
LTA: 1.2
Elliott D. Pollack & Company
Single Family Permits
Greater Phoenix 1975–2016*Source: RL Brown & Elliott D. Pollack & company
8.711.1
22.3
28.9
18.8
11.5
10.611.6
19.4 18.1
22.6
23.2
17.9
15.112.0
10.613.7
18.4
22.7
27.428.5
29.6
31.736.0
35.334.7
36.2
38.9
47.7
60.9
63.6
42.4
31.2
12.6
8.06.8
6.8
12.014.0
18.0
25.0
35.0
0
10
20
30
40
50
60
70
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
# Permits(000)
*2012 – 2016 forecast is from Elliott D. Pollack & Company
But population
growth also slid…
7
Elliott D. Pollack & Company
Greater Phoenix Percentage of Homes Purchased with
$$$ Cash $$$2003 – 2012*
Source: Cromford Report
0%
10%
20%
30%
40%
50%
Jan-
03A
pr-0
3Ju
l-03
Oct
-03
Jan-
04A
pr-0
4Ju
l-04
Oct
-04
Jan-
05A
pr-0
5Ju
l-05
Oct
-05
Jan-
06A
pr-0
6Ju
l-06
Oct
-06
Jan-
07A
pr-0
7Ju
l-07
Oct
-07
Jan-
08A
pr-0
8Ju
l-08
Oct
-08
Jan-
09A
pr-0
9Ju
l-09
Oct
-09
Jan-1
0A
pr-1
0Ju
l-10
Oct
-10
Jan-
11A
pr-1
1Ju
l-11
Oct
-11
Jan-
12A
pr-1
2Ju
l-12
*Data through July 2012 Elliott D. Pollack & Company
Greater Phoenix PermitsSource: R.L. Brown
Year Permits % chg
2004 60,872 27.6%
2005 63,570 4.4%
2006 42,423 -33.3%
2007 31,172 -26.5%
2008 12,582 -59.6%
2009 8,027 -36.2%
2010 6,822 -15.0%
2011 6,797 -0.4%
2012* 9,279ytd 75.9%*Data through YTD September 2012 vs. YTD September 2011
Elliott D. Pollack & Company
Home Prices IndicesGreater Phoenix
1989 – 2012* Source: Macro Markets, LLC; AMLS
60
80
100
120
140
160
180
200
220
240
Jan-
89O
ct-8
9Ju
l-90
Apr
-91
Jan-
92O
ct-9
2Ju
l-93
Apr
-94
Jan-
95O
ct-9
5Ju
l-96
Apr
-97
Jan-
98O
ct-9
8Ju
l-99
Apr
-00
Jan-
01O
ct-0
1Ju
l-02
Apr
-03
Jan-
04O
ct-0
4Ju
l-05
Apr
-06
Jan-
07O
ct-0
7Ju
l-08
Apr
-09
Jan-
10O
ct-1
0Ju
l-11
Apr
-12
Jan-
13O
ct-1
3Ju
l-14
Apr
-15
MLS Index Case-Shiller Index Trendline (4.0%)
Recession Periods
*Data through July 2012.
?
?
No!
Elliott D. Pollack & Company
Home Prices IndicesGreater Phoenix
1989 – 2012* Source: Macro Markets, LLC; AMLS
60
80
100
120
140
160
180
200
220
240
Jan-
89O
ct-8
9Ju
l-90
Apr
-91
Jan-
92O
ct-9
2Ju
l-93
Apr
-94
Jan-
95O
ct-9
5Ju
l-96
Apr
-97
Jan-
98O
ct-9
8Ju
l-99
Apr
-00
Jan-
01O
ct-0
1Ju
l-02
Apr
-03
Jan-
04O
ct-0
4Ju
l-05
Apr
-06
Jan-
07O
ct-0
7Ju
l-08
Apr
-09
Jan-
10O
ct-1
0Ju
l-11
Apr
-12
Jan-
13O
ct-1
3Ju
l-14
Apr
-15
MLS Index Case-Shiller Index Trendline (4.0%)
Recession Periods
*Data through August 2012.
?
Elliott D. Pollack & Company
Why be Optimistic?
Elliott D. Pollack & Company
Cyclical vs. Permanent?
8
Elliott D. Pollack & Company
How Arizona Ranks Among the States in Percentage Growth
Source: U.S. Bureau of Census; Bureau of Labor Statistics; Bureau of Economic Analysis
PERSONALDECADE POPULATION EMPLOYMENT INCOME
1950 - 1960 4TH 3RD 2ND
1960 - 1970 3RD 3RD 4TH
1970 - 1980 2ND 3RD 4TH
1980 - 1990 3RD 3RD 5TH
1990 - 2000 2ND 2ND 3RD
2000 – 2010 2ND 12th 8TH
Elliott D. Pollack & Company
Growth Factors Still Intact?
1. Climate2. Lifestyle3. Geographic Location4. Pro-Growth Attitude5. Competitive Tax Structure6. Focused Incentives/Investment7. Leadership with Common Sense8. Low Cost of Living9. Congressional Delegation Working for State10. Business & Government in Same Direction11. ETC, ETC, ETC.
Elliott D. Pollack & CompanySource: CBRE
Competitiveness Map – 2012(2013?)Source : CBRE
Elliott D. Pollack & Company
5
910
Benefits of the “SUNBELT”
Alaska
Hawaii
Industrial Northwest
Elliott D. Pollack & Company
Top 10 StatesPercent of Homes with Mortgages with Negative
EquitySource: Core Logic
22.6%
23.2%
24.1%
25.8%
29.0%
32.8%
35.8%
39.7%
42.7%
58.6%
0.0% 20.0% 40.0% 60.0% 80.0%
Rhode Island
Maryland
Ohio
Illinois
California
Michigan
Georgia
Arizona
Florida
Nevada
U.S.= 22.3%
Elliott D. Pollack & Company
� AZ will still be a top 10 (5?) economy.
� The economy has multiple gears.
� 2015/2016 is FULL recovery for AZ.
Closing Points:
9
Elliott D. Pollack & Company
The light at the end of the tunnel is visible.
Chin up!!!
(yes, this is a sewer)
Elliott D. Pollack & Company
ELLIOTT D. POLLACK
& Company
7505 East Sixth Avenue, Suite 100 Scottsdale, Arizona 85251
480-423-9200 P / 480-423-5942 F / www.arizonaeconomy.com / info@edpco.com
• Economic and Fiscal Impact Analysis/Modeling
• Real Estate Market and Feasibility Studies
• Litigation Support
• Revenue Forecasting
• Keynote Speaking
• Public Finance and Policy Development
• Land Use Economics
• Economic Development
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