Pollack: Herd immunity

The Monday Morning Quarterback
A quick analysis of important economic data released over the last week

By Elliot D. Pollack & Co.

The economic recovery continues with all eyes on the continued rollout of COVID-19 vaccinations. And we received great news in Arizona on that front. Governor Ducey just recently announced that vaccination appointments will be open to every Arizonan 16 or older starting March 24th to match residents up with new supply and appointment availability. Reaching herd immunity in the state is our key to unlocking our full economic potential and will help those industries most badly impacted by COVID-19 restrictions. That means more jobs, more productivity, and more tourism dollars injected into the state. It also means more Arizona residents can start making plans to vacation safely and help stimulate other parts of the country.

As for the data, many of the monthly indicators that were released this past week reporting on February activity were negatively impacted by the severe winter storms that hit many areas of the country. This included a decline in retail sales, industrial production, homebuilder confidence, and permit activity. And because most of this was storm-related, we expect improvements in all of these categories next month.

And on that last metric, what a difference Arizona experienced last month compared to the rest of the country. While the U.S. total single family permits dropped 10% year-over-year in February, Greater Phoenix experienced a 24% increase and Greater Tucson saw a whopping 50% increase in new home permits.

U.S. Snapshot:

  • Leading indicators rose (0.2%) again in February. Improvement despite the bad weather is a good sign and points to continued economic growth.
  • Retail sales declined 3.0% in February. The extreme cold felt across the country was the primary factor. A rebound in March is expected as the weather issues have dissipated and the distribution of the new round of fiscal stimulus have started.
  • Industrial production was severely impacted from the winter storm. The index fell 2.2% in February breaking the four-month streak of positive monthly gains. The index remains 4.2% below a year ago.
  • Homebuilder confidence fell slightly in March according to the NAHB index. March’s level of 82 is down from 84 in February. Increases in lumber prices and interest rates were the major contributors to the drop.
  • Permits had a double-digit decline according to the U.S. Census Bureau. Total permits were down 10.8% and single family 10.0% for the month. All signs point to the slowdown being temporary and likely due to the bad weather experienced last month

Arizona Snapshot:

  • Permits for both major metros in the state showed strong growth in February according RL Brown. Permits increased 24% in Greater Phoenix and over 50% in Greater Tucson. Year-to-date, Greater Tucson is up 42.3% and Greater Phoenix is up 19.6%.
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