Friday, February 27, 2015
Wednesday, February 25, 2015
Friday, February 6, 2015
Tuesday, February 3, 2015
Monday, February 2, 2015
The Monday Morning Quarterback #AZRealEstate #ScottsdaleRealEstate
ELLIOTT D. POLLACK
& Company
FOR IMMEDIATE RELEASE
February 2nd, 2015
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
Often
overlooked in the discussion of the Arizona and Greater Phoenix
economies is what we can learn from what has happened to population
growth. Population growth itself is an industry in the state. When
people move here, they bring their own set of demands for goods and
services that create more jobs and, thus, spur more population growth.
When a person moves here, they need a place to live; they buy food,
clothes and cars; they need doctors, bankers and plumbers. When an area
grows at 3-4 times the national average in terms of population, it
creates a lot of new demand and a lot of jobs.
Historically,
Arizona and Greater Phoenix have also had a very low unemployment rate
relatively early in an economic recovery. Thus, historically, rapid
population growth pulls in a lot of new people to fill those jobs. In
this cycle, the unemployment rate has been high and the level of
employment growth slower than normal. Thus, most of the jobs have been
filled locally. When you combine that with a drastic decline (33%) in
the mobility rate of people in the U.S., the result is much slower
population growth here.
Slower
population growth has severe impacts on the economy. First, all those
jobs that exist to take care of rapidly growing population vanish.
This, combined with the free fall in construction after 2007, caused the
jobs situation in the state to be far worse than one would expect from
the decline in the national economy alone. Second, there were homes and
apartments, offices and retail space built in anticipation of population
growth that never occurred. This substantially lengthened the
absorption period for the excess supply and has led to construction
employment having virtually no recovery so far in this cycle.
The
only good news is that we now have an idea of what will happen to the
state and its political subdivisions if it were to not grow much faster
than the U.S. as a whole. In 2006, the state was 2nd out of 50 states in
employment growth. By 2010, it was 49th. It is now back to 13th out of
50 states. Greater Phoenix employment was the most rapidly growing
major metro area out of 27 in the U.S. in 2006. By 2010, it was dead
last. It is now 11th out of 28 in terms of percentage employment
growth. That is a significant recovery and sets a floor for where we
would be if the state continued to grow at 1.3% vs. a pre-2008 long term
average of 3.4%. The good news is that it actually understates how
Arizona would do because the excess supply in construction has yet to be
absorbed to a point where there is construction needed for the new
population. That will surely happen at some point and will push our
ranking up even further. Thus, even with the current rate of growth, we
would do relatively well. It is only when we compare it to what we
have learned to expect that we seem to be doing so poorly.
I
have been a practicing economist in Arizona since 1969. Over the past
45 years, there have been numerous projections reporting that the state
would start to slow tomorrow.
Up until 2008, they were virtually all wrong. And even with those
projections, the rate of growth was expected to slow relatively modestly
each year. The current slowdown and certainly the extent of the
slowdown was caused by factors that, for the most part, appear to be
transitory in nature. The difficulty is in determining when mobility
will improve nationally. That is not easy to do. We believe that the
state should be growing in the 2.25%-2.5% range by 2018. But, only time
and economic events will tell. The good news, though, is that while a
meaningful recovery is still not at hand and the longer term rate of
growth is most likely to be well below the long term average, the
current rate of population growth in Arizona and Greater Phoenix are
likely to, in retrospect, prove to be an aberration.
U.S. Snapshot:
Arizona Snapshot:
 
About EDPCo
Elliott
D. Pollack & Company (EDPCo) offers a broad range of economic and
real estate consulting services backed by one of the most comprehensive
databases found in the nation. This information makes it possible for
the firm to conduct economic forecasting, develop economic impact
studies and prepare demographic analyses and forecasts. Econometric
modeling and economic development analysis and planning are also part of
our capabilities. EDPCo staff includes professionals with backgrounds
in economics, urban planning, financial analysis, real estate
development and government. These professionals serve a broad client
base of both public and private sector entities that range from school
districts and utility companies to law firms and real estate
developers.
For more information, contact -
Elliott D. Pollack & company
7505 East Sixth Avenue, Suite 100 Scottsdale, Arizona 85251 480-423-9200 |
Subscribe to:
Posts (Atom)