Economic Outlook 2014Robert Carreira, Ph.D.

BISBEE

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-9.0

-7.0

-5.0

-3.0

-1.0

1.0

3.0

5.0

7.0

2.1

United States Arizona Cochise County

Real GDP Growth (%)

United States Arizona

Cochise County

Pre-Recession High 138.4 mil (Jan 08)

2.69 mil(Oct 07)

39,650(Jun 08)

Recessionary Low 129.7 mil(Feb 10)

2.37 mil (Sep 10)

33,825(Oct 14)

Recessionary Job Losses

-8.7 mil-6.3%

-312,600-11.6%

-5,825-14.7%

Current (Oct 2014) 139.7 mil 2.59 mil 33,825 From High +1.3 million

1.0%-96,400

-3.4%-5,825-14.7%

From Low +10.0 mil7.7%

+216,2009.1%

00.0%

Jobs Needed for 5% Unemployment

1.2 mil 0.8%

54,2202.1%

1,8255.4%

Jobs

Peak Current (Oct 2014)

Change from Peak

Change from Peak (%)

Construction (incl. mining)2,900

(Jun 2006)1,175 -1,725 -59.4%

Manufacturing 925(Oct 2005)

550 -375 -40.5%

Trade, Transportation, and Utilities 7,075(Dec 2006)

5,825 -1,250 -17.7%

Information 675(Aug 2009)

350 -325 -48.1%

Financial Activities 1,150(Jul 2007)

1,025 -125 -10.9%

Professional and Business Services 6,100(Dec 2009)

4,000 -2,100 -34.4%

Educational and Health Services 5,025(Mar 2012)

4,775 -250 -5.0%

Leisure and Hospitality 4,325(Apr 2008)

3,725 -600 -13.9%

Other Services 1,100(Mar 2004)

900 -200 -18.2%

Federal Government 5,975(Jun 2006)

5,175 -800 -13.4%

State and Local Government 7,700(Jun 2008)

6,525 -1,175 -15.3%

Cochise County Jobs by Industry

Pre-Recession

LowRecessionary

HighOne Year

Ago(Oct 2013)

Current(Oct 2014)

United States

4.4%(May 2007)

10.0%(Oct 2009)

7.2% 5.8%

Arizona 3.5%(Jul 2007)

10.8%(Jan 2010)

7.8% 6.8%Cochise County

3.4%(May 2007)

9.4%(Oct 2013)

9.4% 7.9%

Bisbee 6.1%(May 2007)

10.2%(Oct 2013)

10.5% 9.0%

Unemployment

• Upside• State/national economy improvement = tourism• Emerging threats in Middle East = defense

spending

• Downside• Fort Huachuca• Government (federal, state & local)• Population declines

• Overall• Not looking good• Bisbee benefits from state/national recovery

Local Labor Market Outlook

Retail Sales

Bisbee Cochise County Arizona

2014 (Jan-Sep) -5.5% -5.3% 3.0%

2013 -2.3% 1.5% 7.3%

2012 -4.5% 4.5% 2.5%2011 5.6% -1.2% 7.1%2010 1.7% -4.8% -3.1%2009 -6.9% -4.2% -10.7%2008 -0.4% -6.5% -13.1%2007 3.4% -1.3% 4.3%Inflation-adjusted to CPI-U

Restaurant & Bar

Bisbee Cochise County Arizona

2014 (Jan-Sep) 3.3% 2.0% 6.2%

2013 8.3% -0.5% 2.2%

2012 13.6% -4.4% 5.0%2011 -8.8% -0.2% 2.1%2010 2.8% 0.0% 1.8%2009 -6.8% 0.3% -5.4%2008 -0.6% 0.2% -6.2%2007 -4.8% 0.1% -0.2%Inflation-adjusted to CPI-U

Accommodation

Bisbee Cochise County Arizona

2014 (Jan-Sep) 14.9% 0.9% 9.9%

2013 -10.8% -12.2% 0.4%

2012 5.6% -17.2% 1.7%2011 -2.7% -13.1% 2.0%2010 -13.2% 8.3% 0.8%2009 -27.3% -9.0% -16.5%2008 11.1% 1.0% -8.4%2007 20.6% 19.7% 1.4%Inflation-adjusted to CPI-U

• Retail• Struggling in Bisbee & countywide

• Bisbee: Visitors not spending as much / ALCO closure

• Countywide: Fort Huachuca declining activity & uncertainty

• Restaurant & Bar• Bisbee: Tourism• Countywide: Fort Huachuca

• Accommodation• Bisbee: Strong overnight tourism• Countywide: Construction projects, Fort Huachuca

Sales Outlook

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

1,1001,2001,3001,4001,5001,6001,7001,8001,9002,0002,100

50

60

70

80

90

100

110

120

1302,097

1,184

1,428

128

54

104

Cochise County Bisbee

Coch

ise C

ou

nty

Bis

bee

Home Sales (Single-family)

Jan-Sep 2014Cochise County: 1,085 (+4.0%)Bisbee: 67 (-15.6%)

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

*201

4

$50,000

$70,000

$90,000

$110,000

$130,000

$150,000

$170,000

$190,000

$210,000

$90,500

$140,000

$90,000

$139,900

$195,000

$119,000

Bisbee Cochise County

Median Home Price

* Jan-Sep

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

(Jan

-Sep

)0

5

10

15

20

25

30

35

3.5

1.6 1.6 2.9

9.9

13.0

26.4

32.0

18.4

23.1 22.4

1.5 0.91.8

3.8

11.4

14.0

24.7

30.0

26.4

27.626.9

Bisbee Cochise County

Foreclosures (% of sales)

1996

1998

2000

2002

2004

2006

2008

2010

2012

0

200

400

600

800

1,000

1,200

1,4001,265

159

New Home Construction (Cochise County)

• Foreclosures• Upward pressure on sales• Downward pressure on prices• Dampened demand for new construction

• Population declines = downward pressure on new construction

Real Estate & Construction Outlook

• Recession• Kept out of 2008-09 recession by Fort Huachuca• Cochise County recession began in 2011

• Upside• Improving state and national economies will help

tourism

• Downside• Defense/Fort Huachuca• Population declines• Foreclosures

Conclusion

THE END