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Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
Jim Rounds - Economic Outlook for Maricopa Event
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Jim Rounds - Economic Outlook for Maricopa Event

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Presentation given by guest speaker Jim Rounds of Elliott Pollack & Co. at the City of Maricopa's 2011 5th Annual Economic Outlook Forum event.

Presentation given by guest speaker Jim Rounds of Elliott Pollack & Co. at the City of Maricopa's 2011 5th Annual Economic Outlook Forum event.

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  • 1. A Precise and Absolutely Error Free Forecast of Future Conditions To: City of Maricopa 5 th Annual Economic Development Event December 8, 2011 By: Jim Rounds Senior V.P., Elliott D. Pollack & Company
  • 2. Going from Economic to Psychological? “Tell me about your mother”
  • 3. Going from Economic to Political?
  • 4. Going from Forecasting to Guessing? Many are not looking at the right numbers. Ben Bernanke – Fall 2011
  • 5. U.S. Conditions
  • 6. ?
  • 7. Signs of a Double Dip – Look for Declines in these Main Economic Categories <ul><li>Real GDP </li></ul><ul><li>Real Income </li></ul><ul><li>Employment </li></ul><ul><li>Industrial Production </li></ul><ul><li>Wholesale – Retail Sales </li></ul>
  • 8. Real Gross Domestic Product Percent Change Quarter Ago, Annualized 1971 – 2011 * Source: Bureau of Economic Analysis * Data through 3rd quarter 2011 No Recession Periods
  • 9. Real Disposable Personal Income Percent Change Year Ago 1971 – 2011 * Source: Bureau of Economic Analysis * Data through second quarter 2011 No Recession Periods
  • 10. US New Job Data Change from Prior Month (S/A) June 2010 – November 2011 Source: Bureau Labor of Statistics (000’s) No
  • 11. Industrial Production Percent Change Year Ago 1973 – 2011* Source: The Conference Board *Data through July 2011 No Recession Periods
  • 12. Real Retail Sales U.S. Percent Change Year Ago 1973 – 2011* Source: Federal Reserve *Data through August 2011 **Three-month moving average No Recession Periods
  • 13. Recession Indicators Summary: Still Moving Upward (Just VERY Slowly) <ul><li>Real GDP (watch closely early 2012) </li></ul><ul><li>Real Income </li></ul><ul><li>Employment (watch closely now) </li></ul><ul><li>Industrial Production </li></ul><ul><li>Wholesale – Retail Sales </li></ul>
  • 14. OR SAFE ?
  • 15. Other Measures…
  • 16. Hours Worked Percent Change from Year Ago 1976 – 2011* Source: Bureau of Labor Statistics *Data through second quarter 2011 Recession Periods
  • 17. Capacity Utilization Rate 1970 – 2011* Source: The Conference Board *Data through August 2011 Recession Periods
  • 18. Corporate Profit (Billions of Dollars, SA) 1975-2011* Source: BEA * Data through second quarter 2011 But… Recession Periods
  • 19. Corporate Profit By Industry ($Billions) 2011 q2 Source: BEA ?
  • 20. <ul><li>No Joke: Times Getting Tough for U.S. Bankers </li></ul><ul><li>by Francesco Guerrera Tuesday, October 25, 2011 </li></ul><ul><li>THE WALL STREET JOURNAL </li></ul><ul><li>… After a brief, if spectacular, rebound in profits in 2009—largely due to government aid received during the crisis and the unleashing of pent-up investor demand after it—banks' fortunes have taken a turn for the worse. </li></ul><ul><li>Some executives have even begun to wonder whether the industry is entering its own Great Depression—not a &quot;normal&quot; cyclical downturn but a prolonged slump that will leave a lasting mark on the sector's structure… </li></ul>
  • 21. <ul><li>Jobs are being created but not quickly enough. </li></ul><ul><li>Those that have jobs are spending a little more but will remain cautious. </li></ul><ul><li>Most of those that don’t have jobs probably won’t anytime soon. </li></ul><ul><li>Wealth levels are improving but people still feel poor. </li></ul>Consumer Summary:
  • 22. <ul><li>Profits are high, but… </li></ul><ul><li>Business spending on plant will be slow for now, but getting closer to seeing some limited investment. </li></ul><ul><li>Hiring will still be relatively slow, but more pressure to hire soon. </li></ul><ul><li>Lots of money sitting on the sidelines. Why? </li></ul>Business Summary:
  • 23. <ul><li>Consumers (& businesses) are worried , </li></ul><ul><li>Thus, they are saving more and trying to get out of debt , </li></ul><ul><li>So, spending less than normal, </li></ul><ul><li>Means less demand for products/services , </li></ul><ul><li>Means less demand for labor and capital , and falling profits, </li></ul><ul><li>Means more worry for the employed (aka consumers/businesses). </li></ul>Deleveraging & Liquidity Traps
  • 24. <ul><li>Federal Government was already borrowing and spending too much, </li></ul><ul><li>“ Stimulus” has also been inefficient, </li></ul><ul><li>Thus, cannot afford more (so no Keynesian spending opportunity), </li></ul><ul><li>Monetary policy is now of limited benefit as well, </li></ul><ul><li>Interest rates are low and little borrowing/lending. </li></ul><ul><li>Need more certainty. How? </li></ul>Deleveraging & Liquidity Traps
  • 25. What not to look at just yet…
  • 26. Consumer Confidence 1978 – 2011* Source: The Dismal Scientist *Data through September 2011 1985 Benchmark = 100 Recession Periods
  • 27. U.S. Unemployment Rate 1980 – 2011* Source: Bureau of Labor Statistics *Data through Sep 2011 Recession Periods
  • 28. Current State and Local Basics
  • 29. There is some good news…
  • 30. … And some bad news.
  • 31. 9 4 1 5 2 10 3 7 Job Growth 2006 11 15 6 22 8 Source: US BLS 13 Jobs growing Jobs declining Top 10 Hawaii Alaska
  • 32. 5 49 23 35 45 4 32 8 24 47 50 44 1 16 3 Alaska 2 13 18 30 Job Growth 2009 Source: US BLS 46 Jobs growing Jobs declining Top 10 Hawaii
  • 33. 11 8 October YTD 2011 vs October YTD 2010 30 4 13 32 2 45 9 Job Growth Update: Arizona Ranked 30 th 47 28 1 3 34 Alaska 7 49 21 26 36 14 10 18 6 20 5 17 Jobs growing Jobs declining Top 10 Hawaii
  • 34.  
  • 35. What to focus on during the coming years…
  • 36. <ul><li>Jobs </li></ul><ul><li>Population </li></ul><ul><li>Economic Base </li></ul>
  • 37. AZ New Job Data Change from Prior Month (S/A) May 2010 – October 2011 Source: Bureau Labor of Statistics (000’s) ?
  • 38. Greater Phoenix Employment* Annual Percent Change 1975–2012** Source: Department of Commerce, Research Administration *Non-agricultural wage & salary employment. Changed from SIC to NAICS reporting in 1990. ** 2011& 2012 forecast is from Elliott D. Pollack & Co. YTD Phx = 1.0%; AZ = 0.7% Y/Y Phx = 2.3%; AZ = 2.2% Recession Periods
  • 39. Greater Phoenix Population Annual Percent Change 1976–2012* Source: Arizona State University & Department of Commerce, Research Administration 2008 and 2009 are estimates put out by ADES and may be subject to substantial revision. * 2011 & 2012 forecast is from Elliott D. Pollack & Co. *2000-2010 estimates based on 2010 Census release ? Recession Periods
  • 40. U.S. Single-Family Starts 1978–2011 1/ Source: Census Bureau (Millions) 1/ Through June 2011 Over- supply Under- supply LTA: 1.2 Recession Periods
  • 41. Single-Family Permits vs. Population Demand Greater Phoenix 1975–2015 Source: PMHS / RL Brown # Permits * 2011 - 2015 forecast is from Elliott D. Pollack & Co. ? Recession Periods
  • 42. Home Prices Indices 2000 – 2011 (July) Source: Macro Markets, LLC; AMLS Weak Pop/Emp Investors ? Recession Periods
  • 43. Negative Equity in Homes Affects Ability to Sell or Buy Source: First American Core Logic 50% of homes with mortgages in Arizona have negative equity.
  • 44. <ul><li>Weak population numbers for now. </li></ul><ul><li>Weak employment numbers for now ( rates to lead the country soon though). </li></ul><ul><li>Based on current activity, the full recovery is still a ways away. </li></ul><ul><li>But…what’s ahead? </li></ul>Arizona Current Conditions Summary:
  • 45. We are who we are… …for now
  • 46. 9 4 1 5 2 10 3 7 Job Growth 2006 2014/2015? 11 15 6 22 8 Source: US BLS 13 Jobs growing Jobs declining Top 10 Hawaii Alaska
  • 47. But, can we also grow in terms of quality ?
  • 48. Positives?
  • 49. This is NOT a multi decade recovery… Think 2015 for full recovery for most, but growth before then.
  • 50. Greater Phoenix Employment* Source: Bureau of Labor Statistics *September 2011/September 2010 Sectors in Decline Net Change Other Services -300 Federal Government -400 Prof. & Bus. Services -4,100 Sectors Improving Net Change Education & Health Services 16,400 Transp, Trade, & Utilities 7,700 Leisure & Hospitality 6,700 Construction 4,900 Local Government 2,700 Financial Activities 2,600 Manufacturing 1,900 State Government 600 Mining 0 Information 0
  • 51. Phoenix-Mesa Employment Growth (Ranking among all metro areas greater than 1,000,000; 2011 October/October) Source: Arizona State University, U.S. Bureau of Labor Statistics YEAR RANK # of MSAs 1991 4 20 1992 5 20 1993 2 20 1994 1 20 1995 1 21 1996 1 23 1997 2 23 1998 1 24 1999 3 26 2000 8 26 2001 6 28 2002 5 28 2003 3 29 2004 4 29 2005 1 30 2006 1 31 2007 10 32 2008 29 32 2009 31 32 2010 31 32 2011 9 32
  • 52.  
  • 53.  
  • 54. Properties in the Foreclosure Process Maricopa County 2002 – 2011* Source: The Information Market *Data through August 2011. Recession Periods
  • 55. Housing Opportunity Index* Greater Phoenix vs. US 1992-2011** Source: NAHB *Data through Q2 2011. ** Years 2002 & 2003 only have one data figure
  • 56. One survey shows that over 80% of current single family RENTERS would like to soon own. Some of these homes are thus permanently absorbed.
  • 57. Benefiting from basic demographic changes…
  • 58. 5 9 10 Benefits of the “SUNBELT” Alaska Hawaii Industrial Northwest
  • 59. Negative Equity in Homes Affects Ability to Sell or Buy Source: First American Core Logic 50% of homes with mortgages in Arizona have negative equity. (National average about 25%)
  • 60. Retirement Home Buying Cycle Net Change in Maricopa County Population Ages 55 to 69 1991-2030 Source: U.S. Bureau of the Census, Arizona Department of Economic Security
  • 61. Trade-Up Home Buying Cycle Net Change in Maricopa County Population Ages 34 to 44 1991-2030 Source: U.S. Bureau of the Census, Arizona Department of Economic Security
  • 62. Starter Home Buying Cycle Net Change in Maricopa County Population Ages 25 to 34 1991-2030 Source: U.S. Bureau of the Census, Arizona Department of Economic Security
  • 63. Back to Normal Vacancy – Overall Region? <ul><li>Office = 2015? </li></ul><ul><li>Industrial = 2014? </li></ul><ul><li>Retail = 2015? </li></ul>
  • 64. Tax Revenues?
  • 65. STILL APPLIES State forecast revisions in our future?
  • 66. Economic Competitiveness
  • 67. Figure out who we are… Then try to improve the situation.
  • 68. Old Competitiveness Map – AZ will be Moving Up(???)
  • 69. What about the bad national press? Yes, SB1070
  • 70. <ul><li>Governor impeached </li></ul><ul><li>Real estate depression </li></ul><ul><li>Defense cutbacks </li></ul><ul><li>AZ Scam </li></ul><ul><li>Martin Luther King Holiday Crisis </li></ul><ul><li>Keating </li></ul><ul><li>Keating 5 </li></ul><ul><li>Every S&L taken over by RTC </li></ul>Between 1987 and 1992
  • 71. Related worker shortages won’t hit us until 2014/2015 or so.
  • 72. <ul><li>We will continue to grow faster than the rest of the country over the long run. </li></ul><ul><li>If we do things right we might even grow in terms of quality. </li></ul><ul><li>Coordination among all of the E.D. entities will be critical. </li></ul>Economic Development Summary:
  • 73. Something still needs to be done about statewide tourism promotion.
  • 74.  
  • 75. Future Conditions Summary
  • 76. Performance Measures? Falling far results in: - Strong rates of growth that seemingly don’t match the reported “levels” of activity. - Strong rankings that seemingly don’t match what we read in the paper. - Panic and opinions that the world is 100% different than before. Not necessarily true, we need to maintain some perspective.
  • 77. “ A Lost Decade,” but what does this tell us about the future?
  • 78. a) Underlying fundamentals remain, we will grow, but we will need to try harder. b) Break in underlying fundamentals, flat decade means no future. Basic Question:
  • 79. <ul><li>Jobs </li></ul><ul><li>Population </li></ul><ul><li>Economic Base </li></ul>
  • 80. 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 <ul><li>Economic and Fiscal Impact Analysis/Modeling </li></ul><ul><li>Real Estate Market and Feasibility Studies </li></ul><ul><li>Litigation Support </li></ul><ul><li>Revenue Forecasting </li></ul><ul><li>Keynote Speaking </li></ul><ul><li>Public Finance and Policy Development </li></ul><ul><li>Land Use Economics </li></ul><ul><li>Economic Development </li></ul>

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