By Elliott D. Pollack & Co.
As of today, Arizona has recovered 74% of the total job count from the previous peak (still down 81,700 jobs). The full recovery in terms of jobs count will come by next year based on any reasonable forecast. However, this doesn’t necessarily mean what people think. This doesn’t mean that the state will have fully recovered in terms of overall economic health.
Similar to the U.S., the recovery in Arizona isn’t evenly distributed among all sectors. Manufacturing and construction employment are still a fraction of where they once were. Full construction employment recovery (or even a return to a more normal level) is still years away. Full manufacturing recovery may not return for a considerable while longer, if it even happens at all. Thus, there are multiple things to consider when talking about the state’s economic recovery. Overall employment recovery is not the same thing as full recovery in the real estate market, and is not the same thing as a return to full health of the overall economy. But, we do know that we need recovery in multiple sectors (including real estate) to return to a more normal “Arizona economy.” We will continue to see steady improvement in these areas during the next three to four years, as long as the broader U.S. economy continues to grow.
Here are some select Arizona economic statistics:
- The Behavior Research Center’s Rocky Mountain Poll Arizona Consumer Confidence Index bounced back from 71.6 to 79.1. This is the highest level since January 2008 when it registered at 79.8 (see chart below). Maricopa County and Pima County saw similar rebounds registering at 83.8 and 78.8, respectively.
The number of residential foreclosures in Greater Phoenix in January was 337. This was down from 591 a year ago. The current level of foreclosures in now close to levels seen in 2002-2004 (see below).
The employment gains across the country were again impressive, with 257,000 new jobs in January. In addition, a combined 147,000 extra jobs were added to previous estimates for November and December. Multiple sectors showed gains while oil and gas extraction posted losses. This was expected based on the recent drop in oil prices. Overall this will be a net gain for the nation as consumers will see additional money in their pockets to spend on other goods and services, and businesses will spend a little less and profit more while transporting their products. States with a disproportionate share of their GDP related to the oil and gas industries will be negatively impacted until prices stabilize at what would be considered more normal prices. Enjoy it while it lasts.
- Despite the above, the U.S. unemployment rate climbed slightly to 5.7%. However, this is because more people started looking for work. Remember, the unemployment rate doesn’t capture those individuals that stopped looking for work or might be underemployed. There are additional statistics that capture these cases, but they are not included in the popular numbers that are most often reported. Thus, always take the unemployment rate as an important but incomplete economic indicator.
- Overall, the U.S. has recovered all of the lost jobs from the recession (in terms of count) and has added an additional 2.5 million. But, not all sectors have recovered evenly. Construction and manufacturing are still roughly a third of where they were during the previous employment peak.