Welcome to 2017!
It should be quite an adventure economically. The stagnation narrative seems to be over. If President-elect Trump can get most of his economic tax, regulatory and infrastructure plans passed and can stay out of a trade war, growth should accelerate significantly, though likely not until later this year or next.
The most interesting aspect of this to me is that while tax cuts have been tried successfully several times in the 20th century, it has almost always been in the early stages of a recovery/expansion. Trump won’t even be inaugurated until the 91st month of this expansion. The longest recovery/expansion in modern U.S. history was 120 months. So, it’s unlikely that whoever was elected would be able to get the economy through the next 4 years without at least a minor recession. Time will tell.
In addition to stronger real GDP and job growth later this year and next, look for higher inflation and interest rates, higher after tax profits, repatriation of billions of dollars in corporate coffers that are now overseas, very tight labor markets, a reversal of the absolute declines in military spending that was a hallmark of the Obama administration and a tougher trade stance. No matter what happens, the words “interesting” and “different” come to mind when considering the months and years to come.
For Greater Phoenix and Arizona, as the U.S. starts to accelerate, so will the local economy. As employment markets get tighter, the propensity for people to move could increase. If so, Greater Phoenix could do better than currently expected. This is especially true for construction. In fact, the shortage of construction labor could be a big story in late 2017 and 2018.
In recent economic news, employment was up and the unemployment rate continued to decline. New orders for manufactured goods declined. But, the ISM manufacturing index rose. And construction spending also rose. In Greater Phoenix, both the number of people boarding and deplaning rose. And foreclosures were at levels that were below normal in 2002-2005. That’s a good showing.