Transcript Slide 1

Freudian Economics
To:
GFOAz Budget Forum
October 21, 2011
By:
Jim Rounds
Senior V.P., Elliott D. Pollack & Company
Elliott D. Pollack & Company
Freudian Economics
The Stooges Go to Washington
To:
GFOAz Budget Forum
October 21, 2011
By:
Jim Rounds
Senior V.P., Elliott D. Pollack & Company
Elliott D. Pollack & Company
Freudian Economics
D.C. Budget Balancing Tools:
LOTS OF SEATS STILL AVAIL!
To:
GFOAz Budget Forum
October 21, 2011
By:
Jim Rounds
Senior V.P., Elliott D. Pollack & Company
Elliott D. Pollack & Company
Going from
Economic to
Psychological
“Tell me about your
mother”
Elliott D. Pollack & Company
Going from
Economic to
Political…
“Whoop whoop!”
Elliott D. Pollack & Company
Basic Question:
a) Slow growth, STALL, slow growth, but better 2012, 2013…
b) Slow growth, fundamental change, longer term problems?
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
Real Gross Domestic Product
Percent Change Quarter Ago, Annualized
1971 – 2011*
Source: Bureau of Economic Analysis
Recession Periods
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%
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1 Q 72 Q 74 Q 75 Q 77 Q 78 Q 80 Q 81 Q 83 Q 84 Q 86 Q 87 Q 89 Q 90 Q 92 Q 93 Q 95 Q 96 Q 98 Q 99 01 Q 02 Q 04 Q 05 Q 07 Q 08 Q 10 Q
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20
20
20
* Data through 2nd quarter 2011
Elliott D. Pollack & Company
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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1
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1 Q 72 Q 74 Q 75 Q 77 Q 78 Q 80 Q 81 Q 83 Q 84 Q 86 Q 87 Q 89 Q 90 Q 92 Q 93 Q 95 Q 96 Q 98 Q 99 01 Q 02 Q 04 Q 05 Q 07 Q 08 Q 10 Q
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19
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19
19
19
19
19
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19
19
19
19
19
19
19
20
20
20
20
20
20
20
* Data through second quarter 2011
Elliott D. Pollack & Company
U.S. Y/Y Job Losses - Recent Recessions
Duration in Months – BLS - August
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
15
18
21
24
1974 Recession
1980/81 Recessions
2001 Recession
Current Recession
Elliott D. Pollack & Company
27
30
1991 Recession
33
36
39
US New Job Data
Change from Prior Month (S/A)
June 2010 – September 2011
Source: Bureau Labor of Statistics
(000’s)
250
200
150
100
50
0
(50)
(100)
(150)
(200)
Elliott D. Pollack & Company
Se
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(250)
Ja
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Ja -73
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Ja -74
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Ja -76
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Ja -77
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Ja -78
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Ja -79
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Ja -80
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Ja -81
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Ja -82
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Ja -83
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Ja -84
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Ja -85
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Ja -86
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Ja -87
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Ja -88
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Ja -89
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Ja -90
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Ja -91
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Ja -92
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Ja -93
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Ja -94
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Ja -95
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Ja -96
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Ja -97
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Ja -98
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Ja -99
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Ja -00
n
Ja -01
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Ja -02
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Ja -06
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Ja -07
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Ja -08
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n11
Industrial Production
Percent Change Year Ago
1973 – 2011*
Source: The Conference Board
Recession Periods
16%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
-14%
-16%
*Data through July 2011
Elliott D. Pollack & Company
Real Retail Sales U.S.
Percent Change Year Ago
1973 – 2011*
Source: Federal Reserve
Recession Periods
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
n- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- an- ana
J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J
*Data through August 2011
**Three-month moving average
Elliott D. Pollack & Company
Recession Indicators Summary:
Still Moving Upward
(Just VERY Slowly)
Real GDP
 Real Income
 Employment (watch closely)
 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…
20
10
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0Q 71Q 73Q 74Q 76Q 77Q 79Q 80Q 82Q 83Q 85Q 86Q 88Q 89Q 91Q 92Q 94Q 95Q 97Q 98Q 00Q 01Q 3 Q 4 Q 6 Q 7 Q 9 Q 0 Q
7
0
0
0
0
0
1
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19
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19
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19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
•Data through second quarter 2011.
Elliott D. Pollack & Company
Ja
nJa 78
nJa 79
nJa 80
nJa 81
nJa 82
nJa 83
nJa 84
nJa 85
nJa 86
nJa 87
nJa 88
nJa 89
nJa 90
nJa 91
nJa 92
nJa 93
nJa 94
nJa 95
nJa 96
nJa 97
nJa 98
nJa 99
nJa 00
nJa 01
nJa 02
nJa 03
nJa 04
nJa 05
nJa 06
nJa 07
nJa 08
nJa 09
nJa 10
n11
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 September 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.

Will the additional uncertainty translate into reduced
consumer spending?
Elliott D. Pollack & Company
Business
Depends on the sector…
Elliott D. Pollack & Company
19
7
19 5Q
7 1
19 5Q
7 4
19 6Q
7 3
19 7Q
7 2
19 8Q
7 1
19 8Q
7 4
19 9Q
8 3
19 0Q
8 2
19 1Q
8 1
19 1Q
8 4
19 2Q
8 3
19 3Q
8 2
19 4Q
8 1
19 4Q
8 4
19 5Q
8 3
19 6Q
8 2
19 7Q
8 1
19 7Q
8 4
19 8Q
8 3
19 9Q
9 2
19 0Q
9 1
19 0Q
9 4
19 1Q
9 3
19 2Q
9 2
19 3Q
9 1
19 3Q
9 4
19 4Q
9 3
19 5Q
9 2
19 6Q
9 1
19 6Q
9 4
19 7Q
9 3
19 8Q
9 2
19 9Q
9 1
20 9Q
0 4
20 0Q
0 3
20 1Q
0 2
20 2Q
0 1
20 2Q
0 4
20 3Q
0 3
20 4Q
0 2
20 5Q
0 1
20 5Q
0 4
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0 3
20 7Q
0 2
20 8Q
0 1
20 8Q
0 4
20 9Q
1 3
20 0Q
1 2
Oc 1Q1
t-1
1
Corporate Profit
(Billions of Dollars, SA)
1975-2011*
Source: BEA
Elliott D. Pollack & Company
Recession Periods
2,000
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 q2
Source: BEA
550
500
438.9
?
450
400
350
300
249.9
250
200
150
112.7
103.6
90.8
100
26.8
50
15.2
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%
2.0%
71
19
Q
1
73
19
Q
1
75
19
Q
1
77
19
Q
1
79
19
Q
1
81
19
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1
83
19
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1
85
19
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1
87
19
Q
1
89
19
Q
1
91
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1
93
19
Q
1
95
19
Q
1
97
19
Q
1
99
19
Q
1
01
20
Q
1
03
20
Q
1
05
20
Q
1
07
20
Q
1
09
20
Q
1
11
20
Q
1
*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%
This is when
hiring occurs.
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
1
1 1
1 1
1
1 1
1
1 1
1
1 1
1 1
1
1
1 1
1
1 1
1
1 1
1 1
1
1 1
1
1 1
1
1
6 Q 77 Q 78 Q 79 Q 80 Q 81 Q 82 Q 83 Q 84 Q 85 Q 86 Q 87 Q 88 Q 89 Q 90 Q 91Q 92Q 93Q 94Q 95Q 96Q 97Q 98Q 99Q 00Q 01Q 02Q 03Q 04Q 05Q 06Q 07Q 08Q 09Q 10Q 11 Q
7
9
9
9
9
9
9
9
9
9
0
0
0
0
0
0
0
0
0
0
0
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
Ja
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Ja -71
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Ja -72
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Ja -75
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Ja -78
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Ja -80
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Ja -82
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Ja -83
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Ja -90
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n11
Capacity Utilization Rate
1970 – 2011*
Source: The Conference Board
Recession Periods
90
85
80
This is where
investment
occurs.
75
70
65
*Data through August 2011
Elliott D. Pollack & Company
Business Summary:

Profits are high, but…

Business spending on plant will be slow for now,
but getting closer to seeing some limited
investment. Delayed?

Hiring will still be relatively slow, but more
pressure to hire soon. Delayed?

Lots of money sitting on the sidelines.
Elliott D. Pollack & Company
U.S. Summary:
Recovering but not recovered.
Lots of small shocks thus far but none have
been game changers (Europe could possibly
be one though; anything unexpected
possible?).
Stimulus package doesn’t address the real
problem. Feds need to balance their
checkbook.
Elliott D. Pollack & Company
Basic Question:
a) Slow growth, STALL, slow growth, but better 2012, 2013…
b) Slow growth, fundamental change, longer term problems?
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 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 Update: Arizona Ranked 32nd
August 2011 v August 2010
Alaska
6
25
8
16
29
1
2
45
24
18
Hawaii
5
32
Jobs growing
Top 10
Jobs declining
Elliott D. Pollack & Company
4
30
39
15
7
20
9
10
21
50
19
11
3
35
AZ New Job Data
Change from Prior Month (S/A)
May 2010 – August 2011
Source: Bureau Labor of Statistics
(000’s)
20
?
15
10
5
0
(5)
(10)
(15)
Elliott D. Pollack & Company
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(20)
In 2008, 2009, and 2010 no
one showed up! Or, at least
very few.
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 - August
2.0%
1980/81
2001
1991
= 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
33
1991 Recession
36
39
42
Greater Phoenix Employment*
Source: Bureau of Labor Statistics
Sectors in Decline
Net
Change
Net
Change
Sectors Improving
Federal Government
-1,000
Education & Health Services
Prof. & Bus. Services
-4,200
Leisure & Hospitality
7,100
Transp, Trade, & Utilities
4,900
Construction
2,300
Financial Activities
2,300
Manufacturing
1,900
Other services
1,800
Elliott D. Pollack & Company
14,700
State Government
600
Local Government
400
Mining
300
Information
200
*August 2011/August 2010
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%
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20
05
20
03
20
01
20
99
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97
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95
19
93
19
91
19
89
19
87
19
85
19
83
19
81
19
79
19
19
77
-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
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/AZ* Back to Peak by 2015? 2016?
Source: ADOA
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
-9 ul-9 n-9 ul-9 n-9 ul-9 n-9 ul-9 n-9 ul-9 n-0 ul-0 n-0 ul-0 n-0 ul-0 n-0 ul-0 n-0 ul-0 n-0 ul-0 n-0 ul-0 n-0 ul-0 n-0 ul-0 n-0 ul-0 n-1 ul-1 n-1 ul-1 n-1 ul-1 n-1 ul-1 n-1 ul-1 n-1
n
Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja J Ja
*As of August 2011
Elliott D. Pollack & Company
For individual
communities: similar
issues, just different
scale of impact.
Elliott D. Pollack & Company
Greater Tucson MSA Employment*
Annual Percent Change 1975–2012**
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%
0.7%
0.7%
0.3%
0%
-0.1%
-0.7%
-1.3%
-2%
-1.0%
-2.3%
-4%
-5.1%
11
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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
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 1977–2011**
Source: Department of Commerce, Research Administration
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
8.2%
6.7% 6.6%
3.9%
1.6%
1.0%
5.0%
3.9%
4.1%4.6%
2.8%
1.7%
2.0%1.6%
0.8%
3.2%4.2%
1.3%
2.2%
-0.2%
-2.2%
-5.3%
-2.3%
-5.5%
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
19
79
-10.9%
77
19
4.9% 5.5%5.2% 5.2%
3.9%
3.9%
3.3%
2.6%
2.2%
1.5%
*Non-agricultural wage & salary employment. Changed from SIC to NAICS reporting in 1990.
** Data through August 2011
Elliott D. Pollack & Company
Recession Periods
Single Family
Housing
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
19
90
19
88
19
86
19
84
19
82
19
80
19
19
78
0.0
1/ Through June 2011
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
83,475
80,000
60,175
51,725
60,000
30,200
40,000
20,000
23,850
20,000
14,725
15,250 14,800
18,725
17,550
13,600
13,55013,925
0
Elliott D. Pollack & Company
19,400
24,725
16,755
Home Prices Indices
2000 – 2011 (June)
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 l-11
n
Ju Jan Ju Jan
Ju Jan
Ju Jan Ju Jan
Ju Jan
Ju Jan Ju Jan
Ju Jan
Ju Jan Ju Jan
Ju
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 with
mortgages in Arizona
have negative equity.
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
Commercial Summary:
Flat or only slightly improving
indicators but declining prices?
Maybe. Will vary by location
though.
When do investors come in?
Elliott D. Pollack & Company
Back to Normal Vacancy?
• Office =
2014 - 2015
• Industrial =
2014 - 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
Phoenix-Mesa Employment Growth
(Ranking among all metro areas greater than 1,000,000; 2011 August/August)
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
5
# 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 August 2011.
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 Q2 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 with
mortgages 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
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
Job Growth 2006 2013/2014?
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
Economic
Competitiveness
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:

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
Elliott D. Pollack & Company
Arizona Summary
Elliott D. Pollack & Company
Performance Measures?
Falling far results in:
- Strong rates of growth that seemingly don’t
match the reported “levels” of activity.
- Strong rankings that seemingly don’t match
what we read in the paper.
- Panic and opinions that the world is 100%
different than before. Not necessarily true,
we need to maintain some perspective.
Elliott D. Pollack & Company
Full Recovery:
STILL 2015 / 2016?
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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