Transcript Slide 1

Freudian Economics
To:
GFOAz
By:
Jim Rounds
Senior V.P., Elliott D. Pollack & Company
Elliott D. Pollack & Company
Credit Rating Downgrade:
Fully Justified?
AAA
AA+
Elliott D. Pollack & Company
Did S&P cause the
recent problems?
Or did Washington
D.C.’s incompetence
contribute?
Elliott D. Pollack & Company
Going from
Economic to
Psychological
“Tell me about your
mother”
Elliott D. Pollack & Company
So how does one
forecast under these
conditions?
(Just guess and pretend to be smart…Shhhhh!!)
Elliott D. Pollack & Company
Look past
the insanity
to the
numbers...
Elliott D. Pollack & Company
U.S. Conditions
Elliott D. Pollack & Company
Signs of a Double Dip –
Look for Declines in these Main
Economic Categories
Real GDP
 Real Income
 Employment
 Industrial Production
 Wholesale – Retail Sales

Elliott D. Pollack & Company
United States Real Gross Domestic Product*
Annual Growth 1970 - 2012**
Source: U.S. Bureau of Economic Analysis & Blue Chip Economic Indicators
8%
7.2%
5.8%
6%
5.4% 5.6%
5.3%
4.5%
4.6%
4%
3.4%
3.1%
4.1%
3.5% 4.1%
3.2%
3.6%
4.1%
3.7%
3.4%
2.9%
2.5%
2.5%
4.8%
4.5%
4.4%
4.1%
2.5%
1.9%
2%
3.5%
3.1%
2.7%
3.0%
2.5%
1.8%
1.9%
1.8%
1.1%
0.2%
0%
-0.6%
-0.2%
-0.2%
-0.3%
-0.3%
-1.9%
-2%
-3.5%
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-4%
* Based on chained 2005 dollars.
** 2011 - 2012 are forecasts from the Blue Chip Economic Indicators, August 2011
Elliott D. Pollack & Company
Recession Periods
U.S. Y/Y Job Losses - Recent Recessions
Duration in Months – BLS - July
2.0%
1.0%
1991
2001
0.0%
-1.0%
1980/81
-2.0%
1974
-3.0%
-4.0%
-5.0%
-6.0%
0
3
6
9
12
1974 Recession
2001 Recession
Elliott D. Pollack & Company
15
18
21
1980/81 Recessions
Current Recession
24
27
30
1991 Recession
33
36
39
US New Job Data
Change from Prior Month (S/A)
June 2010 - July 2011
Source: Bureau Labor of Statistics
(000’s)
250
200
?
150
100
50
0
(50)
(100)
(150)
(200)
Elliott D. Pollack & Company
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Real Disposable Personal Income
Percent Change Year Ago
1971 – 2011*
Source: Bureau of Economic Analysis
Recession Periods
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
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* Data through second quarter 2011
Elliott D. Pollack & Company
Recession Indicators Summary:
Still Moving Upward
(Just Slowly)
Real GDP
 Real Income
 Employment
 Industrial Production
 Wholesale – Retail Sales

Elliott D. Pollack & Company
Household Net Worth ($$$)
1970 – 2011*
Source: Federal Reserve
($
in trillions)
Recession Periods
70
60
50
40
30
But still feel poor…
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•Data through first quarter 2011.
Elliott D. Pollack & Company
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Consumer Confidence
1978 – 2011*
Source: The Dismal Scientist
Recession Periods
150
140
130
120
110
1985 Benchmark = 100
100
90
80
70
60
50
40
30
20
*Data through July 2011
Elliott D. Pollack & Company
Consumer Summary:

Jobs are being created but not quickly enough.

Those that have jobs are spending a little more but
will remain cautious.

Most of those that don’t have jobs probably won’t
anytime soon.

Wealth levels are improving but people still feel poor.

Congress and the President have done little to
positively influence confidence. In fact they actually
caused harm this time around.
Elliott D. Pollack & Company
Business
Depends on the sector…
Elliott D. Pollack & Company
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Corporate Profit
(Billions of Dollars, SA)
1975-2011*
Source: BEA
Elliott D. Pollack & Company
Recession Periods
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
*Data through second quarter 2011
Corporate Profit By Industry ($Billions)
2011 q1
Source: BEA
550
491.5
500
450
400
350
300
217.6
250
200
120.2
150
98.9
71.6
100
23.5
50
14.9
0
Financial
Manuf acturing
Elliott D. Pollack & Company
Retail Trade
Inf ormation
Wholesale Trade
Transp. &
Warehousing
Utilities
U.S. Real Exports
as a Percent of Real GDP
1971 – 2011*
Source: Bureau of Economic Analysis
Recession Periods
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
1
Q
1
20
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Q
1
2.0%
*Data through second quarter 2011
Elliott D. Pollack & Company
Hours Worked
Percent Change from Year Ago
1976 – 2011*
Source: Bureau of Labor Statistics
Recession Periods
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
1
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1
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0
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0
0
0
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0
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1
1 1
1
1 1
1
1 2
2 2
2
2 2
2
2 2
2
2 20
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 1
*Data through second quarter 2011
Elliott D. Pollack & Company
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Capacity Utilization Rate
1970 – 2011*
Source: The Conference Board
Recession Periods
90
85
This is where
investment
occurs.
80
75
70
65
*Data through June 2011
Elliott D. Pollack & Company
Business Summary:

Profits are high, but…

Business spending on plant will be slow, but
getting closer to seeing some limited investment.

Hiring will still be relatively slow, but more
pressure to hire by the end of the year.

Lots of money sitting on the sidelines.
Elliott D. Pollack & Company
Going from
Economic to
Political…
“I didn’t do it”
Elliott D. Pollack & Company
U.S. Summary:
Recovering but not recovered.
Lots of small shocks thus far but none
have been game changers (oil spikes,
Middle East, Japan, etc.)
Debt Ceiling/S&P Downgrade?
Possibly delayed the recovery further!
Elliott D. Pollack & Company
ARIZONA
Elliott D. Pollack & Company
Job Growth 2006
Source: US BLS
Alaska
10
7
9
5
4
1
3
22
Hawaii
2
Jobs growing
15
8
11
6
Top 10
Jobs declining
Elliott D. Pollack & Company
13
Job Growth 2007
Source: US BLS
Alaska
7
8
15
5
2
28
1
36
Hawaii
22
Jobs growing
11
10
6
20
9
4
3
Top 10
Jobs declining
Elliott D. Pollack & Company
45
Job Growth 2008
Source: US BLS
Alaska
8
34
42
46
45
Hawaii
17
47
Jobs growing
15
2
1
7
11
10
9
4
14
3
6
Top 10
Jobs declining
Elliott D. Pollack & Company
50
Job Growth 2009
Alaska
2
Source: US BLS
30
47
44
50
45
Hawaii
35
49
Jobs growing
18
1
23
3
5
32
13
16
24
8
4
Top 10
Jobs declining
Elliott D. Pollack & Company
46
Job Growth 2010
Alaska
2
6
48
17
28
40
50
44
Hawaii
1
43
12
10
19
25
49
Jobs growing
Top 10
Jobs declining
Elliott D. Pollack & Company
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9
4
47
8
7
35
42
3
37
5
Job Growth Update: Arizona Ranked 36th
June 2011 v June 2010
Alaska
11
25
3
8
13
20
1
2
23
Hawaii
5
36
Jobs growing
Top 10
Jobs declining
Elliott D. Pollack & Company
29
38
6
9
7
44
17
28
19
12
47
10
4
33
How did
we go
from 2nd
to 49th in
the
rankings?
Elliott D. Pollack & Company
How did AZ go from 2nd to 49th?





Financial meltdown.
Credit crunch/freeze.
Overextended consumer.
Excess single family inventory.
Housing prices decline.






Loss of wealth incl. home equity.
Can’t sell homes or retire.
Homebuilding crash.
Population inflows weaken in AZ.
Household formations decline.
Household size increases.

Excess commercial construction


Elliott D. Pollack & Company
Construction job losses.
All sector job loses.
How does AZ go from 49th to 2nd?



Slow recovery.
Credit frees up slowly.
Consumers more confident.



Overall US economy improves.
Stock market improves.
Limited AZ job and population growth.




Excess housing absorbed.
Smaller household size.
Housing prices rise.
Construction kicks in.


Elliott D. Pollack & Company
All sector job gains; more robust %s.
Even more people move to AZ.
In 2008, 2009, and 2010 no
one showed up! Or, at least
very few.
Elliott D. Pollack & Company
For individual
communities: Similar
issues, just different
scale of impact.
Elliott D. Pollack & Company
Greater Phoenix Population
Annual Percent Change 1976–2012*
Source: Arizona State University & Department of Commerce, Research Administration
6%
5.1%
4.7%
4.6%
4.3%
4.2%
4%
4.4%
4.2%
4.3%
3.9%
?
4.2%
4.3% 4.3%
4.2%
3.8%
3.7%
3.5%
3.3% 3.1%
3.0%
2.9%
3.2% 3.4%
3.4%
3.1% 3.3%
2.8%
2.7%
2.5%
2.5%
2.4%
2.1%
2.0%
1.6%
2%
1.5%
1.3%
1.0%
1.0%
0%
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2008 and 2009 are estimates put out by ADES and may be subject to substantial revision.
* 2011 & 2012 forecast is from Elliott D. Pollack & Co.
Elliott D. Pollack & Company
Recession Periods
*2000-2010 estimates based on 2010 Census release
Greater Phoenix Y/Y Job Losses - Recent Recessions
Duration in Months – BLS - April
2.0%
1980/81
1991
2001
= Job Growth
0.0%
-2.0%
-4.0%
-6.0%
1974
-8.0%
-10.0%
0
3
6
9
12
15
18
21
24
1974 Recession
1980/81 Recession
2001 Recession
Current Recession
Elliott D. Pollack & Company
27
30
1991 Recession
33
36
39
AZ New Job Data
Change from Prior Month (S/A)
May 2010 – June 2011
Source: Bureau Labor of Statistics
(000’s)
20
About
400
not
S/A
15
10
5
0
(5)
(10)
About
-57k
not
S/A
(15)
Elliott D. Pollack & Company
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Greater Phoenix Employment*
Annual Percent Change 1975–2012**
Source: Department of Commerce, Research Administration
13.3%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
8.7%
5.8%
4.9%
7.3%
7.2%
6.6%
5.4%
5.4% 4.6%
4.9%
3.5%
4.8% 5.9%
3.5% 2.5%
3.7%
3.0%
2.2%
-0.1%
6.2%
5.4%
3.9%
1.5%
1.2%
1.1%
2.0%
1.6%
1.0%
-0.1%
-0.3%
-2.5% -2.1%
-3.7%
11
20
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20
07
20
05
20
03
20
01
20
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19
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19
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19
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19
19
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-7.9%
75
19
11.2%
9.3%
10.4%
*Non-agricultural wage & salary employment. Changed from SIC to NAICS reporting in 1990.
** 2011& 2012 forecast is from Elliott D. Pollack & Co.
Elliott D. Pollack & Company
Recession Periods
Greater Tucson MSA Employment*
Annual Percent Change 1975–2011**
Source: Department of Commerce, Research Administration
12%
9.2%
10%
8%
8.1%
6.2%
6%
4%
8.6%
3.3%
6.3%
4.6%
3.8%
3.1%
2.7%3.7%
3.3%
2.3%
2.4%
1.8% 0.6%
2%
3.5%
4.0%
2.7% 3.8%
2.8%
1.5%
3.8%
3.4%
2.7%
1.5%
0.7%
0.3%
0.7%
0%
-0.1%
-0.7%
-1.3%
-2%
-0.5%
-1.0%
-2.3%
-4%
-5.1%
11
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20
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20
05
20
03
20
01
20
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19
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19
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19
85
19
83
19
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19
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19
19
77
-6%
*Non-agricultural wage & salary employment. Changed from SIC to NAICS reporting in 1990.
**2011 & 2012 are forecasts from the University of Arizona
Elliott D. Pollack & Company
Recession Periods
Balance of State Employment*
Annual Percent Change 1977–2010
Source: Department of Commerce, Research Administration
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
8.1%
6.7% 6.7%
4.1%
1.6%
1.0%
4.9%
4.1%4.6%
3.1%4.2%
3.1%
2.0%
2.7%
1.7%
1.6%
1.0%
2.1%
0.8%
-1.4%
-2.3%
-5.3%
-6.3%
09
20
07
20
05
20
03
20
01
20
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91
19
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19
87
19
85
19
83
19
81
19
19
79
-10.9%
77
19
4.9% 5.5%5.3% 5.3%
3.8%
3.9%
3.8%
3.3%
2.4%
1.5%
*Non-agricultural wage & salary employment. Changed from SIC to NAICS reporting in 1990.
Recession Periods
Elliott D. Pollack & Company
This is NOT a multi decade
recovery…
Think 2015 – 2016 for full
recovery, but growth before
then.
Elliott D. Pollack & Company
Employment Levels:
Greater Phoenix Back to Peak by 2015? 2016?
Source: ADOC
Recession Periods
2,400.0
2,200.0
Peak
2,000.0
1,800.0
1,600.0
1,400.0
1,200.0
1,000.0
5 5 6 6 7 7 8 8 9 9 0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 0 1 1 2 2 3 3 4 4 5
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Elliott D. Pollack & Company
Single Family
Housing
Elliott D. Pollack & Company
Across the US,
underproduction has been
occurring.
This helps with the
oversupply.
Elliott D. Pollack & Company
U.S. Single-Family Starts
1978–20111/
Source: Census Bureau
(Millions)
Recession Periods
2.0
1.7
1.8
1.6
1.6
1.5
1.4
Oversupply
1.5
1.4
1.4
1.2
1.2
1.2
1.2
1.1
1.1 1.1 1.1
1.3 1.3
1.1
1.1
1.0
1.0
1.2
1.1
1.2
1.3
LTA: 1.2
1.1
1.0
Undersupply
0.9
1.0
0.9
0.8
0.8
0.7
0.7
0.6
0.6
0.4 0.5
0.4
0.4
0.2
Elliott D. Pollack & Company
10
20
08
20
06
20
04
20
02
20
00
20
98
19
96
19
94
19
92
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90
19
88
19
86
19
84
19
82
19
80
19
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78
0.0
1/ Through June 2011
In AZ, because of the weak
population inflows, this
underproduction only
recently started.
Elliott D. Pollack & Company
Single-Family Permits vs. Population Demand
Greater Phoenix 1975–2015
Source: PMHS / RL Brown
# Permits
Recession Periods
70,000
63,570
60,892
60,000
47,720
50,000
36,151
35,308
34,701
31,715
27,426
29,609
28,543
40,000
28,851
22,281
30,000
31,172
23,222
22,652
22,598
18,843
18,125
17,944
19,447
15,085
18,379
10,614
13,698
11,485
11,625
12,000
10,649
20,000
11,081
10,000
42,423
38,914
36,001
8,705
25,000
?
15,000
12,582
8,027 5,000
8,000
6,822
7,000
* 2011 - 2015 forecast is from Elliott D. Pollack & Co.
Elliott D. Pollack & Company
15
20
13
20
11
20
09
20
07
20
05
20
03
20
01
20
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
19
81
19
79
19
77
19
19
75
0
Single-Family Vacant Units
Maricopa County 1993–2010
Source: PMHS
120,000
106,125
101,625
100,000
80,000
60,175
51,725
60,000
40,000
20,000
23,850
20,000
14,725
15,25014,800
18,725
17,550
13,925
13,550
13,600
30,200
19,400
24,725
16,755
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
0
Elliott D. Pollack & Company
How Investors Impact the Market:
Investors temporarily
create demand.
How many of those
homes will come
back on the market
and add to the supply?
But, how many will be kept as permanent rental
units or purchased by current renters?
Elliott D. Pollack & Company
Home Prices Indices
2000 – 2011 (May)
Source: Macro Markets, LLC; AMLS
Recession Periods
250
230
210
190
170
150
Weak Pop/Emp
130
?
110
90
Investors
70
00 l-00 -01 l-01 -02 l-02 -03 l-03 -04 l-04 -05 l-05 -06 l-06 -07 l-07 -08 l-08 -09 l-09 -10 l-10 -11
n
n
n
Ju Jan
Ju Jan
Ju
Ju Jan
Ju Jan
Ju Jan
Ju Jan
Ju Jan
Ju
Ju Jan
Ju Jan
Ja
Ja
Ja
MLS Index
Elliott D. Pollack & Company
Case-Shiller Index
Trendline (4.0%)
Negative Equity in Homes
Affects Ability to Sell or Buy
Source: First American Core Logic
50% of homes in
Arizona have negative
equity.
Elliott D. Pollack & Company
Persons per Household
Elliott D. Pollack & Company
Commercial
Elliott D. Pollack & Company
Commercial
Markets
(Not making things worse
anymore)
Elliott D. Pollack & Company
Revenue Question:
How long will commercial
values be depressed?
Elliott D. Pollack & Company
U.S. Problem Commercial Real Estate Loans Rise
Delinquency Rates at Commercial Banks
1991 – 2011*
Source: Federal Reserve
Recession Periods
14
12
Temporary
before flat
again? Maybe.
I just don’t
know for sure.
10
8
6
4
2
0
91
19
Q
1
91
19
Q
4
92
19
Q
3
93
19
Q
2
94
19
Q
1
4
3
2
1
4
3
2
1
4
3
2
1
4
3
2
1
4
3
2
1
4
3
4 Q 95 Q 96 Q 97 Q 97 Q 98 Q 99 Q 00 Q 00 Q 01 Q 02 Q 03 Q 03 Q 04 Q 05 Q 06 Q 06 Q 07 Q 08 Q 09 Q 09 Q 10 Q
9
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
* Data through first quarter 2011
Elliott D. Pollack & Company
U.S. Commercial1 Mortgage Maturities
1980–2020*
Source: Foresight Analytics
Recession Periods
$250
$225.9 $226.5
$218.9
Post 2004 - Upside Down?
$197.2
$177.9
$200
$166.4
$150
$199.4
$198.0
$183.7
$177.3
$134.0
$118.3
$100
$50
$101.9
$76.7
$88.1
$79.4 $78.5
$73.1 $79.6
$65.3
$67.1
$53.6 $62.7
$60.0
$58.3
$44.6
$46.7
$39.2
$48.3
$48.4$43.7
$34.2
$23.9
$30.0
$21.2
$26.6
$17.6
$18.9
$87.1
$44.8
$34.2
Borrowed
Loan Due
$0
80 9 81 9 82 9 83 9 84 9 85 9 86 9 87 9 88 9 89 9 90 9 91 9 92 9 93 9 94 9 95 9 96 9 97 9 98 9 99 0 00 0 01 0 02 0 03 0 04 0 05 0 06 0 07 0 08 0 09 0 10 0 11 0 12 0 13 0 14 0 15 0 16 0 17 0 18 0 19 0 20
9
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Elliott D. Pollack & Company
1/ Includes mainly office, retail, industrial and hotels
Note: Forecast is from Foresight Analytics
Commercial Property
Values?
Elliott D. Pollack & Company
So which influence will be bigger?
• Pop/Emp related gains may be offset by new
leases adjusting for lower rents/less space,
at least in 2011/2012.
• This means the possibility of relatively flat
rental and vacancy rates in 2011/2012.
• 2012-2013 should see more improvement.
Elliott D. Pollack & Company
How does this impact commercial
property values?
Flat activity often means flat prices. But,
values through 2010 were propped up by:
- Owners depleting reserve funds (done);
- Extend and Pretend (still pretending?);
- Interest rates low (continues but small
increases coming);
- Multi-year leases carrying higher rents
(fewer).
Elliott D. Pollack & Company
Commercial Summary:
Flat or only slightly improving
indicators but declining prices?
Maybe. Will vary by location
though.
Elliott D. Pollack & Company
When do we get back to
normal vacancy rates in
commercial?
Elliott D. Pollack & Company
Back to Normal Vacancy?
• Office =
2014 - 2015
• Industrial =
2013 - 2015
• Retail =
2014 - 2015
Elliott D. Pollack & Company
Tax Revenues
Elliott D. Pollack & Company
State forecast revisions in our future?
Gains Needed to Reach Previous Peak
100%
90%
Now
Required Percent
Gain
80%
Corporate Income Tax: -58% / 139%
70%
60%
Individual Income Tax: -36% / 55%
50%
?
40%
30%
Sales Tax: -23% / 30%
20%
10%
0%
1
6
11
16
21
26
Realized
Percent Loss
Elliott D. Pollack & Company
31
36
41
46
But, local revenues related
to single family and
commercial taxation will
remain weak.
Elliott D. Pollack & Company
Hey Jim, your speeches
suck. How about some
positive news?
Enjoy the rock!!!
Elliott D. Pollack & Company
Positives?
Elliott D. Pollack & Company
Pre 2007
• A leader in population growth,
• A leader in employment growth,
• A leader in income growth.
Elliott D. Pollack & Company
Post 2007
• Below average performance in
many economic categories,
but this is a temporary
condition and is already
improving…
Elliott D. Pollack & Company
How Arizona Ranks Among the States in Percentage
Growth
Source: U.S. Bureau of Census; Bureau of Labor Statistics; Bureau of Economic Analysis
DECADE
POPULATION
EMPLOYMENT
PERSONAL
INCOME
1950 - 1960
4TH
3RD
4TH
1960 - 1970
3RD
3RD
4TH
1970 - 1980
2ND
3RD
3RD
1980 - 1990
3RD
3RD
5TH
1990 - 2000
2ND
2ND
3RD
2000 – 2006
3rd
2nd
3RD
2007—2010
44th
49th
46th
Elliott D. Pollack & Company
Phoenix-Mesa Employment Growth
(Ranking among all metro areas greater than 1,000,000; 2011 June/June)
Source: Arizona State University, U.S. Bureau of Labor Statistics
YEAR
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Elliott D. Pollack & Company
RANK
4
5
2
1
1
1
2
1
3
8
6
5
3
4
1
1
10
29
31
31
10
# of MSAs
20
20
20
20
21
23
23
24
26
26
28
28
29
29
30
31
32
32
32
32
32
Properties in the Foreclosure Process
Maricopa County 2002 – 2011*
Source: The Information Market
Recession Periods
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Ju
l- 1
1
Ja
n11
Ju
l- 1
0
Ja
n10
Ju
l- 0
9
Ja
n09
Ju
l- 0
8
Ja
n08
Ju
l- 0
7
Ja
n07
Ju
l- 0
6
Ja
n06
Ju
l- 0
5
Ja
n05
Ju
l- 0
4
Ja
n04
Ju
l- 0
3
Ja
n03
Ju
l- 0
2
Ja
n02
0
*Data through July 2011.
Elliott D. Pollack & Company
Also now more competitive in
terms of housing prices (and
commercial prices).
Elliott D. Pollack & Company
q1
_
q3 92
_
q1 92
_
q3 93
_
q1 93
_
q3 94
_
q1 94
_
q3 95
_
q1 95
_
q3 96
_
q1 96
_
q3 97
_
q1 97
_
q3 98
_
q1 98
_
q3 99
_
Q 99
1_
Q 00
3_
Q 00
1_
Q 01
3_
Q 01
1_
Q 02
1_
Q 04
3_
Q 04
1_
Q 05
3_
Q 05
1_
Q 06
3_
Q 06
1_
Q 07
3_
Q 07
1_
Q 08
3_
Q 08
1_
Q 09
3_
Q 09
1_
Q 10
3_
Q 10
1_
11
Housing Opportunity Index*
Greater Phoenix vs. US
1992-2011**
Source: NAHB
100
90
80
70
60
50
40
30
20
10
0
Phoenix MSA
Elliott D. Pollack & Company
U.S.
*Data through Q1 2011.
** Years 2002 & 2003 only have one data figure
Negative Equity in Homes
Affects Ability to Sell or Buy
Source: First American Core Logic
50% of homes in
Arizona have negative
equity.
(National average about 25%)
Elliott D. Pollack & Company
Benefits of the “SUNBELT”
Industrial Northwest
9
10
5
Hawaii
Alaska
Elliott D. Pollack & Company
What
about the
bad
national
press?
Yes,
SB1070
Elliott D. Pollack & Company
Between 1987 and 1992
•
•
•
•
•
•
•
•
Governor impeached
Real estate depression
Defense cutbacks
AZ Scam
Martin Luther King Holiday Crisis
Keating
Keating 5
Every S&L taken over by RTC
Elliott D. Pollack & Company
No long-term effects
in the past.
Going forward?
Elliott D. Pollack & Company
Benefiting from basic
demographic changes…
Elliott D. Pollack & Company
Retirement Home Buying Cycle
Net Change in Maricopa County Population Ages 55 to 69
1991-2030
Source: U.S. Bureau of the Census, Arizona Department of Economic Security
30,000
25,000
20,000
15,000
10,000
5,000
Elliott D. Pollack & Company
29
20
27
20
25
20
23
20
21
20
19
20
17
20
15
20
13
20
11
20
09
20
07
20
05
20
03
20
01
20
99
19
97
19
95
19
93
19
19
91
0
Trade-Up Home Buying Cycle
Net Change in Maricopa County Population Ages 34 to 44
1991-2030
Source: U.S. Bureau of the Census, Arizona Department of Economic Security
25,000
20,000
15,000
10,000
5,000
0
Elliott D. Pollack & Company
29
20
27
20
25
20
23
20
21
20
19
20
17
20
15
20
13
20
11
20
09
20
07
20
05
20
03
20
01
20
99
19
97
19
95
19
93
19
19
91
-5,000
Starter Home Buying Cycle
Net Change in Maricopa County Population Ages 25 to 34
1991-2030
Source: U.S. Bureau of the Census, Arizona Department of Economic Security
25,000
20,000
15,000
10,000
5,000
Elliott D. Pollack & Company
29
20
27
20
25
20
23
20
21
20
19
20
17
20
15
20
13
20
11
20
09
20
07
20
05
20
03
20
01
20
99
19
97
19
95
19
93
19
19
91
0
One survey shows that over
80% of current single family
RENTERS would like to soon
own.
Some of these homes are thus
permanently absorbed.
Elliott D. Pollack & Company
Economic
Competitiveness
Elliott D. Pollack & Company
Arizona’s government
officials are even
getting involved…
Elliott D. Pollack & Company
Government isn’t going to
turn everything around by
itself.
But, govt. can impact the
economy at the margin
(with the right policies).
Elliott D. Pollack & Company
Old Competitiveness Map –
AZ will be Moving Up!
Elliott D. Pollack & Company
Being addressed
now…
Elliott D. Pollack & Company
2010 Corporate Real Estate Executive Survey
1
Workforce skills
2
State and local tax scheme
3
Transportation infrastructure
4
Flexibility of incentives programs
5
Availability of incentives
6
Utility infrastructure
7
Land/building costs and supply
8
State economic development strategy
9
Permitting and regulatory structure
10
Higher education resources
Source: Site Selection Magazine
Elliott D. Pollack & Company
What about the
rest?
Elliott D. Pollack & Company
2010 Corporate Real Estate Executive Survey
1
Workforce skills
2
State and local tax scheme
3
Transportation infrastructure
4
Flexibility of incentives programs
5
Availability of incentives
6
Utility infrastructure
7
Land/building costs and supply
8
State economic development strategy
9
Permitting and regulatory structure
10
Higher education resources
Source: Site Selection Magazine
Elliott D. Pollack & Company
In 2012?
Economic Development Summary:
 Policymakers
finally started to understand how
our economy functions.
 We
now have some economic development
“tools.”
 But,
we need to see if the state and locals, the
“tool man,” can use the tools properly and with a
common vision, or “blueprint.”
Elliott D. Pollack & Company
Economic Development Summary:
I
am very happy with what I am seeing so far at all
levels.
 Guv/Legis/ACA/Cities/Counties/IDA’s/Etc.
 ACA
is developing into a statewide leader.
 Some
quality coordination is taking place.
 More
is to be done in terms of government policy,
but we had a good start, and there is some
interest in continuing the reform effort in 2012.
Elliott D. Pollack & Company
Economic Development Summary:

We will continue to grow faster than the rest
of the country over the long run.

If we do things right we might even grow in
terms of quality.

Coordination among all of the E.D. entities
will be critical.
Elliott D. Pollack & Company
Something still needs
to be done about
statewide tourism
promotion.
Elliott D. Pollack & Company
Arizona Summary
Elliott D. Pollack & Company
AZ Summary:
Lagging the US in terms of full
recovery; recently started
expanding the employment base;
and just started to absorb the
excess housing.
Elliott D. Pollack & Company
Full Recovery:
2015-ish
Fully recovered in terms of:
1) Housing oversupply;
2) Commercial vacancy rates;
3) Retail sales activity;
4) Employment levels.
5) Tax revenues? Probably.
Elliott D. Pollack & Company
There is even a BOOM for Arizona
out there…somewhere.
Elliott D. Pollack & Company
But, can we also grow in terms
of quality?
Elliott D. Pollack & Company
ELLIOTT D. POLLACK
& Company
• Economic and Fiscal Impact Analysis/Modeling
• Real Estate Market and Feasibility Studies
• Litigation Support
• Revenue Forecasting
• Keynote Speaking
• Public Finance and Policy Development
• Land Use Economics
• Economic Development
7505 East Sixth Avenue, Suite 100 Scottsdale, Arizona 85251
480-423-9200 P / 480-423-5942 F / www.arizonaeconomy.com / [email protected]
Elliott D. Pollack & Company
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