Pollack: Economy lookin’ good



November 20th, 2017

The Monday Morning Quarterback

A quick analysis of important economic data released over the last week

The headline news this week was that the proposed Trump tax package passed the House. The big challenge, though, will be in the Senate.  In the Senate, the Republicans have just a two Senator advantage. Given the number of states whose ox will be gored, especially in high tax states, by provisions such as the loss of the state and local tax deduction and the more limited mortgage deduction, the passage of something that looks like the House version has to be considered problematic. There are, of course, other provisions that individual Senators could object to.  Also, the rider related to Obamacare that is in the Senate version creates other problems. Look for the tax bill coming out of the Senate to look considerably different from the House version.  What eventually is settled on, assuming a compromise, remains to be seen.

The good news is that the economy looks good going into the Christmas season.  This is important since so much of annual retail sales occur over the next 5 weeks. In October, retail sales slowed on a month over month basis, but, were up 4.6% over last year.

In Arizona, employment growth continues to be anemic.  Outside of the Greater Phoenix area, employment growth has been downright mediocre.  Thanks to growth in Metro Phoenix, the state is ranked 13th out of 50 for year to date employment growth.  Not great by historic standards, but, not bad overall.

U.S. Snapshot:

  • The consumer price index for all urban consumers (CPI-U) rose 0.1% in October on a seasonally adjusted basis.  Over the last 12 months, the all items index rose 2.0%.  The index for all items less food and energy increased 0.2% in October and stands 1.8% above a year ago.

  • Retail and food services sales for October were up 0.2% from the previous month and 4.6% above a year ago.

  • Manufacturer’s total sales were up a strong 1.4% in September over August.  They now stand 6.4% over a year ago.  In addition, the inventories to sale ratio declined to 1.36 in September from 1.38 in August and 1.40 a year ago.  This is a positive.

  • Home builder confidence in the market for newly built single family homes rose two points to a level of 70.  A year ago, the index stood at 63. Single family permits in October were up 7.7% from a year ago.

Arizona Snapshot:

  • The state’s seasonally adjusted unemployment rate declined to 4.5% in October from 4.7% in September.  Nationally, the unemployment rate fell to 4.1% in October compared to 4.2% in September.  A year ago, the Arizona rate was 5.0% and the U.S. rate was 4.8%.

  • October total nonfarm employment in the state was 1.2% above a year ago.  Year-to-date, employment is up 1.8% or 47,800 jobs.  This is an anemic performance for this point in the cycle. The sectors with the largest gains were Education and Health Services, Leisure and Hospitality, Professional and Business Services and Financial Services.

  • In Greater Phoenix, October jobs were up 1.7% from a year ago and 2.3% year-to-date.  This makes the Phoenix area 11th out of 34 major employment markets in the U.S.  While being in the top third isn’t bad, it has to be considered weak relative to the pre-2007 norm.

  • Greater Tucson’s employment picture is not pretty.  In October, jobs were down 1.0% from a year ago.  Year-to-date, jobs were up 0.1%.

  • Month’s supply of homes listed in the Greater Phoenix MLS stood at 3.0 compared to 3.5 a year ago.

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.  

For more information, contact –

Elliott D. Pollack & company
7505 East Sixth Avenue, Suite 100
Scottsdale, Arizona 85251

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November 2017