ELLIOTT D. POLLACK
& Company
FOR IMMEDIATE RELEASE
April 15th, 2019
The Monday Morning Quarterback A quick analysis of important economic data released over the last week
The economy continues to move forward but at a slower rate. This was expected. According to the national Blue Chip Economic Indicators panel, the economy is expected to continue to grow through this year and next. The Blue Chip panel believes that Real GDP will grow by 2.3% this year and another 1.9% next year. (See chart below). While this is slower than the 2.9% or 2018, it is still very respectable for an expansion that would be the longest in American history.
The economy will be powered by growth in personal consumption expenditures (consumer spending) of 2.4% this year and 2.1% next. That compares to 2.6% in 2018. Business fixed investment is also forecasted to grow by 4.0% this year and 3.1% next. This follows the tax cut induced 6.9% of 2018. Overall, the consensus is for slowing but moderate growth, continued low unemployment and modestly higher hourly wages that will grow more rapidly than the rate of inflation. To put wages in context, the employment cost index grew by 3.2% at an annual rate in March while the base rate of inflation (CPI-U less food and energy) grew at a rate of less than 2%.
If the consensus forecast is correct, the outlook remains very healthy. Certainly, the apparent change in FED policy will help.
In other news, consumer sentiment remains at a high level. Job openings fell in February but remain in excess of 7 million. Manufacturers’ new orders were flat. And mortgage rates remain in the low 4% range.
The Arizona economy also continues to perform well. In particular, the number of listings remains low in Tucson and the apartment market in both markets continues to have low and decking vacant rates. The supply/demand imbalance as would be expected has led to apartment rents far outrunning inflation.
U.S. Snapshot:
The Blue Chip Economic Indicators estimate real GDP growth at 2.3% this year. This is down from March’s growth rate of 2.4%. The 2020 forecast remained at 1.9%.
The consumer sentiment index decreased on April’s preliminary reading. April’s index of 96.9 is below March’s 98.4 and last year’s level of 98.8.
Job openings decreased by 7.1% from January but remain above 7 million.
Manufacturers’ new orders decreased in February following a flat January. Inventories increased 0.3% in February over January and 3.6% over a year ago.
The consumer price index increased 0.4% in March and is up 1.9% year-over-year. All items less food and energy increased 2.0% compared to a year ago. This is right on the FED’s long term inflation growth rate target of 2.0%.
Arizona Snapshot:
The median sales price increased to $219,000 in Tucson according to the MLS of Southern Arizona. This is partly due to the decrease in the number of active listings (5.7% decline).
According to Berkadia, the vacancy rate in apartments for Greater Phoenix was 4.7% and 5.0% in Greater Tucson in the first quarter of 2019. The average rent increased for both metro areas. Greater Phoenix saw 8.9% growth to $1,096 and 7.7% growth to $784 in Greater Tucson.
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
480-423-9200
