Pollack: A look back at 2019



& Company


December 23, 2019

The Monday Morning Quarterback 

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

There was very little economic news last week and there will be little this week either mainly due to the timing of the holidays this year. New orders for durable goods were down mainly due to slower aircraft orders. Much of this seems to be related to the Boeing 737 Max mess. Other than that, orders (excluding transportation) were weak but still slightly up for the month and from a year ago. Mortgage rates were flat. And new home sales were up modestly from an October number that had been revised downward but was up significantly from a year ago. And in Arizona, lodging performance continued to improve.

That was about it. So, rather than skip the week, we thought we’d do a year in review and give you a quick rundown on what 2020 may hold.

Here are the facts. So far this year (11 months of data are currently available) national employment is up 1.6% or almost 2,348,000 jobs. The biggest employment winners (in percentage terms) are natural resources and mining, construction, educational and health services, leisure and hospitality and professional and business services. The unemployment rate is at a 50-year low. Real GDP is up 2.3% year-to-date after gains of 2.9% last year and 2.4% in 2017. Personal consumption expenditures (consumers account for almost 70% of economic activity) lead the way with a 2.6% gain year to date.

Federal spending is growing at almost twice the rate of inflation while state and local spending is growing at modestly less than the rate of inflation. Inflation, at around 2%, remains under control. And wage growth, while expanding at about 3.1%, still seems under control given the rate of unemployment and the amazing growth of employment given where we are in the cycle. And as of the close Friday, the S&P 500 was up 29.2% for the year. While clearly not sustainable, it’s the best performance in years. Enjoy the glow.

In Arizona, year-to-date employment is up 2.6% compared to 2.8% last year and 2.5% in 2017. Construction, manufacturing, and educational and health services led the way. In Greater Phoenix, employment is up 2.9% year-to-date and has created 82.3% of all the jobs created in the state so far in 2019. In 2018, Greater Phoenix employment grew by 3.3% and in 2017, it grew by 3.0%. So while the rate of growth is growing at slightly lower levels, the absolute numbers are very good.

By the way, Greater Phoenix is 3rd out of the 36 major employment markets in the U.S. in terms of percentage growth. Tucson so far this year is up 1.9% compared to 1.2% in 2018 and 1.3% in 2017. It accounted for 9.7% of the jobs created in the state year to date. And the new housing market is on fire with large gains in new permits over the last few months. Demographically, demand for housing of all types should remain strong in the new year. Thus, the local outlook, while calling for modestly slower growth, looks very good going into 2020.

Going into 2020, the national economic outlook is actually brighter than it was six months ago. Gone is the negatively sloped yield curve, the threat of a trade war, government shutdowns, significant worries about the housing market and the fear of a near term recession. Consumers (again: 70% of economic activity) seem to be in good shape as jobs are plentiful, real incomes are increasing (especially for the lower half of the income spectrum and blue collar workers) and, with the possible exception of student loan debt, are in good financial shape.

Business investment is slow but that will change if consumers continue to shop. By the way, it appears that 2019 had a strong holiday retail sales season. This was especially true of goods purchased on the internet which surveys suggest were up 18% over 2018. Department stores lagged, though, with sales slightly down from a year ago. All this is true despite this being the longest recovery/expansion in U.S. history. So, while real GDP will probably be slower in 2020 than in 2019, the coming year is likely to be one of continued growth. This is not to say we are not without problems. It is simply saying that those problems are not likely to keep 2020 from being a modestly slower yet respectable year for the economy. While a recession is possible, at this point it appears to be a low possibility event. That’s good news.

We at Elliott D. Pollack & Company wish you the best for 2020. May you enjoy a wonderful year. Indeed, we hope that our outlook for the New Year is 2020. (What? You don’t like puns?)

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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