Battling Headwinds:
Arizona’s Economy Struggles
Upward
Presented to the
Tucson Association of REALTORS®
February 13, 2015
George Hammond, Ph.D.
Director
Economic and Business Research Center
Visit the new
Arizona’s Economy
azeconomy.eller.arizona.edu
Real-time data at your fingertips.
The Arizona’s Economy App
Free at the Apple App Store and Google Play.
Follow EBRC on
Facebook and Twitter
@Eller_EBRC
Facebook.com/Eller.EBRC
mapazdashboard.arizona.edu
5
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Economy Overview
6
The Arizona Economy Now
► Arizona
► But
and Tucson continue to grow
growth is slow
► Construction
► Population
► Federal
7
and household growth are weak
fiscal drag still an issue
► Federal
► Gas
remains the missing link
procurement spending still falling
prices much lower
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Job Growth in Selected Regions
Over-the-Year
Percent
8
4
0
U.S.
Phoenix MSA
Tucson MSA
Rest of State
-4
-8
-12
06
8
07
08
09
10
11
12
13
14
15
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Job Replacement Rates
Percent
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
Percent of jobs lost during the
Great Recession that have been
replaced.
75.2
67.0
42.6
36.4
Phoenix MSA Tucson MSA Rest of State
9
122.8
Arizona
US
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Job Replacement Rates
Percent
400
350
300
Percent of jobs lost during the
Great Recession that have been
replaced.
250
200
150
100
50
0
10
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Working Age College Attainment Rate
Percent
60
40
20
0
11
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Working Age College Attainment Rate
12
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Patents Per 10,000 Workers
13
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Housing Permits
Tucson MSA
Permits
12,000
10,000
8,000
6,000
4,000
2,000
0
00
14
02
04
06
08
10
12
14
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
House Prices
$360,000
240
$320,000
220
$280,000
200
$240,000
180
$200,000
160
$160,000
140
$120,000
120
$80,000
100
$40,000
80
$0
60
96
98
00
02
04
06
08
10
12
14
PHX MSA Median House Price (MLS), SA
PHX MSA Home Price Index (Case Shiller), NSA
TUS MSA Median House Price (MLS), SA
15
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Federal Government Jobs
Arizona, Over-the-Year Growth
Percent
0.5
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
12
16
13
14
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Federal Procurement Spending
Arizona, $Billions
$Billions
16
14
12
10
8
6
Total
Dept. of Defense
4
2
0
2010
17
2011
2012
2013
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Tucson MSA Federal Government
Civilian and Military, Share of GDP in 2012
Percent
9
8
7.7
7
6
5
3.8
4
3
1.9
2
1
0
18
Tucson MSA
Phoenix MSA
U.S.
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Gasoline Price Dividend
(Very) Back of the Envelope
► If
gasoline prices fall by $1.00/Gal, and
stay there for a year
► That
means $2.67 billion for Arizonans to
spend on other priorities, other things the same
$371 million $1.70 billion $134 billion
Tucson MSA Phoenix MSA
U.S.
19
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Tucson MSA Outlook Overview
► Slow
growth gradually improves
► Construction
activity gains momentum as U.S.
residential mobility improves
► Federal government: a bit less of a drag
► Most of the job gains will be in serviceproviding sectors
► Modest income and sales growth
20
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Tucson MSA Job Growth
Percent
6
4
2
0
-2
Tucson
U.S.
-4
-6
00
21
02
04
06
08
10
12
14
16
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
Population & Permit Growth
Tucson MSA
Permits,
Population Change
28,000
Population Change
Housing Permits
24,000
20,000
16,000
12,000
8,000
4,000
0
-4,000
22
00 02 04 06 08 10 12 14 16 18 20 22 24
Tucson MSA Outlook
Actual
2013
Growth Rate
Nonfarm Jobs
Personal Income
Retail Sales
Population
Level
Housing Permits
23
Forecast
2014 2015
2016
0.7
1.5
2.7
0.6
0.8
2.7
0.5
1.1
1.1
3.2
1.2
0.9
1.3
4.4
3.7
1.0
3,491
3,398
3,416
3,572
UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT
AZMEX.ELLER.ARIZONA.EDU
Arizona-Mexico Economic Indicators