Other Potential Title: “Dark Times in D.C.” One Point of Uncertainty … · 2020-05-07 · 1999 3 24 Phoenix-Mesa Employment Growth (Ranking among all metro areas greater than

1

Elliott D. Pollack & Company

To:2012 ATRA Outlook Conference

By:Jim Rounds, Senior Vice President


November 16, 2012

One Point of Uncertainty Down, Another 99 to Go...


Other Potential Title:

“Dark Times in D.C.”


Context


The economy we wanted…


What we got…


U.S. Outlook(by the numbers)

“I Win”

You

sure about

that?

2


Is the Glass Still Half Full?


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) ?


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


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!


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?


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


Real Disposable Personal IncomePercent Change Year Ago

1971 – 2012* Source: Bureau of Economic Analysis

* Data through second quarter 2012

Recession Periods


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


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


Why the weak economic activity

then?

Elliott D. Pollack & Company Elliott D. Pollack & Company

What is the tipping point?

4


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.


Recession? No.

Slow growth? Yes.


Arizona


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!


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


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


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


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


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


Projected Net Job Growth:

2013 = 73,6002014 = 88,500

= 162,100

FISCAL CLIFF IN ARIZONA?


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?


Addl. Detail:Greater Phoenix

6


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


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


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


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


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


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


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


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!


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.

?


Why be Optimistic?


Cyclical vs. Permanent?

8


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


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


5

910

Benefits of the “SUNBELT”

Alaska

Hawaii

Industrial Northwest


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%


� AZ will still be a top 10 (5?) economy.

� The economy has multiple gears.

� 2015/2016 is FULL recovery for AZ.

Closing Points:

9


The light at the end of the tunnel is visible.

Chin up!!!

(yes, this is a sewer)


ELLIOTT D. POLLACK

& Company

7505 East Sixth Avenue, Suite 100 Scottsdale, Arizona 85251

480-423-9200 P / 480-423-5942 F / www.arizonaeconomy.com / [email protected]

• 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

Documents

Other Potential Title: “Dark Times in D.C.” One Point of Uncertainty … · 2020-05-07 · 1999 3 24 Phoenix-Mesa Employment Growth (Ranking among all metro areas greater than