ELLIOTT D. POLLACK
FOR IMMEDIATE RELEASE
March 27th, 2017
The Monday Morning Quarterback
A quick analysis of important economic data released over the past week
This week’s Arizona data is puzzling at first glance. It shows the effect of lower absolute population growth on the state and on employment.
First, the good news. According to the U.S. Census Bureau, Maricopa County had the highest absolute population growth between July 1, 2015 and July 1, 2016 of any county in the country. The county gained a reported 81,360 people during that period. That’s a 2.0% gain (Pinal County during the same period was up 3.0%). The second most rapidly growth county, Harris County (Houston), gained only 56,587 people.
Now, the bad news. What is a surprise is that the fastest growing county in the country had a population increase that, in absolute terms, was surprisingly anemic relative to history. This is because of the lingering effects on population flows, both nationally and locally, of the Great Recession. There are substantially fewer people moving from outside of the U.S. into the U.S., fewer people moving from state to state within the U.S. and fewer people moving between counties with a state compared to pre-2007. In other words, mobility has declined. A lot.
Certainly, many reasons for the decline are correcting. The percent of homeowners with mortgages that are under water is declining. Jobs are becoming easier to get. Millennials are aging and, thus, are more likely to marry. Student loan debt is still an issue, but, those who have been paying their debt down are more likely to be in a position to move. Boomers will eventually retire and many will move to warmer weather climates. But, there is a question as to how fast and to what extent mobility will recover. This could continue to be a problem for an economy that has historically grown at a more rapid pace than it is now even though it is the fastest growth area in the country. It means slower rates of growth in jobs, housing, retail sales and so on. But, it does indicate that the area is still able to attract people who vote with their feet.
This is probably the major reason why the level of employment growth is much lower than in previous cycles. It is also likely to be contributing to the relatively slow growth in year over year job growth. For example, the latest employment data release last week shows that the Greater Phoenix area is up 2.5% over a year ago. In this cycle, it is a satisfactory number. However, in both absolute and relative terms, it is just ok. And, as we pointed out last week, the year over year rate of growth is weaker than it was last year at this time. This is across the board in virtually all employment sectors. Again, we will be keeping an eye on this.
- New orders for manufactured durable goods in February increased 1.7% over January and 5.0% over a year ago. This is the second straight month of gains.
- Mortgage rates (30-year fixed rate) were down modestly last week to 4.23% from 4.30% a week earlier and are at levels that were prevalent between mid 2013-late 2014.
- New home sales were up 6.1% last month compared to January and were up 12.8% over a year ago.
- Existing home sales, while down 3.7% from January, were up 5.4% over a year ago in February.
- Arizona’s unemployment rate was 5.1% on a seasonally adjusted basis in February. That’s up from 5.0% in January. The U.S. unemployment rate in February was 4.7%. A year ago, Arizona stood at 5.5% and the U.S. was at 4.9%.
- Arizona’s labor force was up 3.1% in February over a year ago. This indicates that more of those who left the labor force between 2008-2015 are returning.
- The state gained 27,100 nonfarm jobs in February. Only 1 of 11 sectors (trade, transportation and utilities) reported a loss. Jobs were up 2.0% over a year ago.
- The unemployment rate in Greater Phoenix was 4.4% last month. Jobs grew by 2.5% over a year ago. Year-to-date, non-farm jobs are up 2.6%.
- The unemployment rate in Greater Tucson was 4.7% last month. Jobs were up 0.5% over a year ago. Year-to-date, non-farm jobs are up 0.4%.
- Hotel occupancy in the state was 74.0% in February. That’s up from 73.6% a year ago. Demand was up 1.6% and supply was up 1.0% from year earlier levels.
- In Southern Arizona, strong permit activity for January and February led to a 42% increase for the first two months of the year.