December 21st, 2015
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
As 2015 winds down, we took a look back at what the year produced. The oft-repeated phrase, “the economy grows, but slowly by historic standards”, has become our new reality. This is especially true in Arizona. We have been so affected by the slowdown in movement between states that has taken place nationally. Not only are we not achieving the volume of people who would normally move here, but, the loss of the demand for goods and services by those people means we also lose the ripple effect of those people.
Simply, the unemployment rate is not nearly as low as normal for this point in the cycle in Arizona and the number of jobs being created is not nearly as rapid. Thus, there is less need for people who are looking for a job to move here. It is an interactive process. The slower population growth has slowed the absorption of excess commercial real estate space which, in turn, lessens the need for more space and, therefore, slows construction employment growth. In fact, the lack of a meaningful recovery in construction employment is one of the major reasons employment growth overall has been so anemic by historic standards.
While the post-2007 world in Arizona has a different reality from the pre-2007 world, 2016 should continue the improvement. In fact, Greater Phoenix has finally recovered all of the jobs lost in the Great Recession and is now in an employment expansion. That’s more than can be said for the rest of the state that has a way to go to recover the lost jobs.
The good news is that construction should pick up over the next couple of years, especially in housing and office. This, on top of everything else going on, should help the recovery in construction employment.
As for the Feds actions, it should be viewed as a vote of confidence that the economy is finally, after more than 7 years, strong enough to start the process of normalizing interest rates that have been held artificially low. That’s good news.
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.
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