Transcript Slide 1

The Land of Common NonSense
To:
ACMA
By:
Jim Rounds, Senior Vice President
Elliott D. Pollack & Company
February 6th, 2013
Elliott D. Pollack & Company
Context
Elliott D. Pollack & Company
The economy we wanted…
Elliott D. Pollack & Company
What we got…
Elliott D. Pollack & Company
United States Real Gross Domestic Product*
Annual Growth 1970 - 2014**
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%
2.5%
4.1%
3.5% 4.1%
3.2% 3.6%
4.1%3.7%
3.4%
2.9%
2.5%
4.8%
4.5%
4.4%
4.1%
1.9%
2%
4th Qt = -.1%
3.5%
3.1%
2.7%
2.5%
1.9%
1.8%
1.1%
3.0%
2.5%
2.6%
2.3%
2.0%
0.2%
0%
-0.6%
-0.2%
-0.2%
-0.3%
-0.3%
-1.9%
-2%
-3.5%
0
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201
201
-4%
* Based on chained 2005 dollars.
** 2012 - 2014 are forecasts from the Blue Chip Economic Indicators, January 2013
Elliott D. Pollack & Company
Recession Periods
Worried about GDP? No.
- Spending boost followed
by budget cuts,
- Inventories.
Elliott D. Pollack & Company
US New Job Data
Change from Prior Month (S/A)
June 2010 – January 2013
Source: Bureau Labor of Statistics
(000’s)
300
271
250
228
205
196
200
144
69
50
0
(50)
132
115
95
100
205
196
165 160
153
138
166174
150
(100)
225
209
247
230
-37-43
-86
(150) -130
(200)
(250)
Elliott D. Pollack & Company
78
125
112
87
157
U.S. Unemployment Rate
1976 – 2013*
Source: Bureau of Labor Statistics
Recession Periods
12%
10%
8%
6%
4%
2%
0%
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3
-7 n-7 n-7 n-7 n-8 n-8 n-8 n-8 n-8 n-8 n-8 n-8 n-8 n-8 n-9 n-9 n-9 n-9 n-9 n-9 n-9 n-9 n-9 n-9 n-0 n-0 n-0 n-0 n-0 n-0 n-0 n-0 n-0 n-0 n-1 n-1 n-1 n-1
n
Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja
*Data through January 2013
Elliott D. Pollack & Company
U.S. Underemployment Rate
1994 – 2012*
Source: Bureau of Labor Statistics
Recession Periods
20%
18%
16%
14%
Beaten down
by life.
12%
10%
8%
Unemployment
Rate
6%
4%
2%
12
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0%
*Data through August 2012
Elliott D. Pollack & Company
Financial Obligation Ratio**
1980 – 2012*
Source: Federal Reserve
Recession Periods
20.0%
19.0%
18.0%
17.0%
Paying less for
past
purchases!
16.0%
19
80
Q
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81
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82
Q
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83
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85
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20 2
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20 3
08
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20 4
10
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20 1
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Q
20 2
12
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15.0%
*Data through third quarter 2012
**Ratio of mortgage and consumer debt (including auto, rent and tax payments) to disposable income.
Elliott D. Pollack & Company
Ja
nJa 78
nJa 79
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Consumer Confidence
1978 – 2012*
Source: The Dismal Scientist
Recession Periods
150
140
130
120
110
100
Normal
Elliott D. Pollack & Company
Normal
Normal
New Normal?
90
80
70
60
50
40
30
20
*Data through December 2012
Real Retail Sales U.S.
Percent Change Year Ago
1973 – 2012*
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 12
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- 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 J
*Data through November 2012
**Three-month moving average
Elliott D. Pollack & Company
Real Disposable Personal Income
Percent Change Year Ago
1971 – 2012*
Source: Bureau of Economic Analysis
Recession Periods
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
* Data through third quarter 2012
Elliott D. Pollack & Company
Hours Worked
Percent Change from Year Ago
1976 – 2012*
Source: Bureau of Labor Statistics
Recession Periods
10%
8%
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 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 11Q 12Q
7
9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2
*Data through third quarter 2012
Elliott D. Pollack & Company
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Capacity Utilization Rate
1970 – 2012*
Source: The Federal Reserve Bank of St. Louis
Recession Periods
90
85
80
75
70
65
*Data through November 2012
Elliott D. Pollack & Company
Jan
-7
Feb 1
-7
Ma 2
r -7
Ap 3
r- 7
Ma 4
y -7
Ju n 5
-7 6
Ju l
Au 77
g- 7
8
Sep
-79
Oc
t-8
No 0
v- 8
De 1
c-8
2
Jan
- 84
Feb
-8
Ma 5
r -8
Ap 6
rMa 87
y -8
8
Ju n
-8 9
Ju l
-9
Au 0
g- 9
Sep 1
-92
Oc
t-9
No 3
v- 9
De 4
c-9
Jan 5
- 97
Feb
-9
Ma 8
r -9
9
Ap
r- 0
Ma 0
y -0
1
Ju n
-0 2
Ju l
-0
Au 3
g- 0
Sep 4
-05
Oc
t-0
No 6
v- 0
De 7
c-0
Jan 8
-1
Feb 0
-1
Ma 1
r -1
2
U.S. Leading Indicators
1971 – 2012*
Source: The Conference Board
Elliott D. Pollack & Company
Recession Periods
120
110
100
90
80
70
60
50
40
30
*Data through November 2012
FISCAL CLIFF
2013
Elliott D. Pollack & Company
Recession?
No.
Slow growth?
Yes.
Kicking the can…
Yes.
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
Source: US BLS
Alaska 2
34
20
46
44
50
45
Hawaii
36
49
Jobs growing
Top 10
Jobs declining
Elliott D. Pollack & Company
1
24
3
5
7
10
9
6
30
25
8
4
Job Growth 2012
Source: US BLS
Alaska
43
9
32
22
11
33
3
10
14
Hawaii
5
Jobs growing
Top 10
Jobs declining
Elliott D. Pollack & Company
1
34
50
7
8
48
6
2
4
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SRP Residential Utility Hookup Percentage Growth
Greater Phoenix 2003 – 2012*
Source: SRP
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
*Data through July 2012.
Elliott D. Pollack & Company
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19
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20
00
20
02
20
04
20
06
20
08
20
10
20
12
Residential Customers Over Prior Year
APS: Slowest Growth in over 50 years
1954 – 2012*
8%
7%
6%
5%
4%
3%
2%
1%
0%
Elliott D. Pollack & Company
*Data through third quarter 2012
Source: APS
Arizona Retail Sales
Percent Change Year Ago*
1999 – 2012**
Source: Arizona Department of Revenue
Recession Periods
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 10 10 11 12 12 12
n- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jula
J
J
J
J
J
J
J
J
J
J
J
J
J
J
*Data through November 2012
**3-month moving average
Elliott D. Pollack & Company
Arizona Restaurant and Bar Sales
Percent Change Year Ago*
1999 – 2012**
Source: Arizona Department of Revenue
Recession Periods
20%
15%
10%
5%
0%
-5%
-10%
-15%
99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 10 10 11 12 12 12
n- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jul- an- Jula
J
J
J
J
J
J
J
J
J
J
J
J
J
J
*Data through November 2012
**3-month moving average
Elliott D. Pollack & Company
Uncollected Taxes on E-Commerce (Millions)
Arizona
2000 – 2012**
Elliott D. Pollack and Company, AZDOR, ATRA, IMPLAN
PrimarySource:
Fiscal
Impact ($ millions)
Uncollected Taxes on E-Commerce
FORECAST
2012
2013
2000 - 2009
2010
2011
State Sales Tax ( 5% - Undistributed Portion)
$798.5
$127.4
$143.3
$161.3
State Sales Tax ( 0.6% - Education)
$129.8
$20.7
$23.3
County (Direct and State Shared Revenue)
$342.5
$60.0
Local (Direct and State Shared Revenue)
$588.6
$1,859.4
Total
2014
2015
$181.7
$204.9
$231.2
$26.2
$29.5
$33.3
$37.6
$67.5
$75.9
$85.6
$96.5
$108.9
$109.3
$122.9
$138.3
$155.9
$175.7
$198.3
$317.4
$356.9
$401.8
$452.7
$510.5
$576.1
Source: Elliott D. Pollack & Company; IMPLAN; AZ Dept. of Revenue; AZ Tax Research Association; Univ. of Tennessee
Elliott D. Pollack & Company
FISCAL CLIFF IN ARIZONA
Projected Net Job Growth:
2013 = 73,600
2014 = 88,500
= 162,100
Elliott D. Pollack & Company
?
?
FISCAL CLIFF IN ARIZONA
If the mandated spending cuts take place,
total loss to Arizona is projected at:
45,000 to 50,000 jobs.
We will still grow, but very slowly.
Remember, the “worst case” is not the
most likely scenario.
Elliott D. Pollack & Company
Addl. Detail:
Greater Phoenix
Elliott D. Pollack & Company
Arizona Employment*
Source: Bureau of Labor Statistics
Sectors in Decline
Information
Net
Change
-1,000
Sectors Improving
Net
Change
Professional & Bus Services
13,300
Other Services
-400
Trade, Transp, Utilities
12,200
Natural Resources & Mining
-100
Education & Health Services
10,200
Elliott D. Pollack & Company
Leisure & Hospitality
8,800
Construction
7,300
Government
6,200
Financial Activities
3,800
Manufacturing
3,600
*Dec. 2012/ Dec. 2011
Greater Phoenix Employment*
Source: Bureau of Labor Statistics
Sectors in Decline
Net
Change
Sectors Improving
Net
Change
Information
-600
Professional & Bus Services
9,700
Natural Resources & Mining
-100
Education & Health Services
9,700
Trade, Transp, Utilities
9,600
Leisure & Hospitality
6,200
Government
5,300
Construction
5,200
Financial Activities
3,500
Manufacturing
2,400
Other Services
900
Elliott D. Pollack & Company
*Dec. 2012/ Dec. 2011
ArizonaJobs in the Black
Over last 12 months:
12 months before that:
12 months before that:
12 months before that:
12 months before that:
63,900
22,900
7,000
(160,500)
(138,100)
* As of December 2012
Elliott D. Pollack & Company
Arizona Jobs
Source: BLS
Jobs lost Peak to Trough:
(Dec-07)
300,800
(Jul-10)
Jobs gained Trough to Current: 102,900
(Jul-10)
(Dec-12)
***We are 33% of the way back***
Elliott D. Pollack & Company
*Based on seasonally adjusted monthly data
Employment Levels:
Arizona back to Peak in 2015?
Source: ADOA
Recession Periods
3,000.0
2,800.0
Peak
2,600.0
2,400.0
2,200.0
2,000.0
1,800.0
1,600.0
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
Elliott D. Pollack & Company
Arizona Per Capita Personal Income
1978–2011
Source: Bureau of Economic Analysis
Recession Periods
$40,000
$30,000
$20,000
$10,000
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
Arizona Per Capita Personal Income
% of US: 1978–2011
Source: Bureau of Economic Analysis
Recession Periods
100%
95%
90%
85%
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
80%
U.S. Single-Family Starts
1978–20121/
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
1.1
LTA: 1.2
1.0
Undersupply
0.9
1.0
0.8
0.9
0.8
0.7
0.7
0.6
0.6
0.5
0.5
0.4
0.4
0.4
0.2
Elliott D. Pollack & Company
12
20
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 November 2012
Single Family Permits
Greater Phoenix 1975–2016*
Source: RL Brown & Elliott D. Pollack & company
# Permits
(000)
70
63.6
But population
growth also slid…
60
50
47.7
42.4
38.9
40
28.9
30
23.2
22.3
20
10
60.9
11.1
8.7
18.8
22.6
19.4
18.1
11.5 11.6
10.6
27.4
34.7
36.0
36.2
31.7 35.3
29.6
28.5
35.0
31.2
25.0
22.7
17.9
18.4
15.1
12.0 13.7
10.6
12.6
8.0
18.0
14.0
12.0
6.8
6.8
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13
20
15
0
*2012 – 2016 forecast is from Elliott D. Pollack & Company
Elliott D. Pollack & Company
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Greater Phoenix Percentage of Homes Purchased with
$$$ Cash $$$
2003 – 2012*
Source: Cromford Report
50%
40%
30%
20%
10%
0%
Elliott D. Pollack & Company
*Data through November 2012
Greater Phoenix Permits
Source: R.L. Brown
Year
Permits
% chg
2004
2005
60,872
63,570
27.6%
4.4%
2006
2007
2008
42,423
31,172
12,582
-33.3%
-26.5%
-59.6%
2009
2010
2011
2012*
8,027
6,822
6,794
11,615
-36.2%
-15.0%
-0.4%
71.0%
*Data through YTD December 2012 vs. YTD December 2011
Elliott D. Pollack & Company
Ja
n
O -89
ct8
Ju 9
l
A -90
pr
Ja 91
n
O -92
ct9
Ju 2
l-9
A 3
pr
Ja -94
n
O -95
ct9
Ju 5
l
A -96
pr
Ja -97
n
O -98
ct9
Ju 8
l
A -99
pr
Ja -00
n
O -01
ct0
Ju 1
l
A -02
pr
Ja -03
n
O -04
ct0
Ju 4
l
A -05
pr
Ja -06
n
O -07
ct0
Ju 7
l-0
A 8
pr
Ja -09
n
O -10
ct1
Ju 0
l-1
A 1
pr
Ja -12
n
O -13
ct1
Ju 3
l
A -14
pr
-1
5
Home Prices Indices
Greater Phoenix
1989 – 2012*
Source: Macro Markets, LLC; AMLS
MLS Index
Elliott D. Pollack & Company
Case-Shiller Index
Recession Periods
240
220
200
180
160
140
120
100
80
?
60
Trendline (4.0%)
*Data through October 2012.
Total Single Family Units Occupied by Renters
2000-2011
Greater Phoenix
Source: American Community Survey
25%
21.83%
20.32%
18.08%
20%
16.37%
15.25%
14.10%
15%
11.73%
12.41%
11.60% 11.30%
10%
11.75%
11.75%
?
5%
0%
Elliott D. Pollack & Company
Greater Tucson
Elliott D. Pollack & Company
Same basic story, just
different scale and
timing…
Elliott D. Pollack & Company
Greater Tucson MSA Employment*
Annual Percent Change 1975–2012**
Source: Department of Commerce, Research Administration
12%
10%
9.2%
8.6%
8.1%
8%
6.2%
6%
4%
3.3%
6.3%
4.6%
3.8%
3.1%
2%
2.7%3.7%
3.3%
2.4%
2.3%
1.8% 0.6%
0.3%
-0.1%
3.5%
4.0%
2.7% 3.8%
1.5% 2.8%
3.8%
3.4%
2.7%
1.5%
0.6%
0.1%
0.7%
0%
-0.7%
-2%
-1.0%
-1.3%
-2.2%
-4%
-5.1%
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
19
77
-6%
*Non-agricultural wage & salary employment. Changed from SIC to NAICS reporting in 1990.
**Data through November 2012
Elliott D. Pollack & Company
Recession Periods
Greater Tucson Employment*
Source: Bureau of Labor Statistics
Sectors in Decline
Education & Health Services
Net
Change
-1,000
Sectors Improving
Net
Change
Trade, Transp, Utilities
2,100
Other Services
-400
Business & Prof. Services
1,500
Information
-300
Leisure & Hospitality
1,300
Construction
900
Government
900
Financial Activities
500
Manufacturing
300
*Dec. 2012/ Dec. 2011
Elliott D. Pollack & Company
Pima County Retail Sales
Percent Change Year Ago
2000 – 2012*
Source: Arizona Department of Revenue
Recession Periods
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
nJa
00
01
na
J
nJa
02
nJa
03
nJa
04
05
na
J
nJa
06
07
na
J
08
na
J
9
0
nJa
nJa
10
an
-J
1
1
an
-J
2
1
*Data through November 2012
Elliott D. Pollack & Company
Greater Tucson Single Family Permits
2000–2012*
Source: Southern Arizona Housing Market Letter
2,000
1,750
1,500
1,250
1,000
750
500
250
Ja
n00
Ju
l- 0
0
Ja
n01
Ju
l- 0
1
Ja
n02
Ju
l- 0
2
Ja
n03
Ju
l- 0
3
Ja
n04
Ju
l- 0
4
Ja
n05
Ju
l- 0
5
Ja
n06
Ju
l- 0
6
Ja
n07
Ju
l- 0
7
Ja
n08
Ju
l- 0
8
Ja
n09
Ju
l- 0
9
Ja
n10
Ju
l- 1
0
Ja
n11
Ju
l- 1
1
Ja
n12
Ju
l- 1
2
0
*Data through December 2012
Elliott D. Pollack & Company
Recession Periods
Single Family Resale Median Price
Greater Tucson
2000 – 2012*
Source: Southern Arizona Housing Market Letter
Recession Periods
35%
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-0
Ja 0
n01
Ju
l-0
Ja 1
n02
Ju
l-0
Ja 2
n03
Ju
l-0
Ja 3
n04
Ju
l-0
Ja 4
n05
Ju
l-0
Ja 5
n06
Ju
l-0
Ja 6
n07
Ju
l-0
Ja 7
n08
Ju
l-0
Ja 8
n09
Ju
l-0
Ja 9
n10
Ju
l-1
11 0
-J
an
Ju
l-1
12 2
-J
an
Ju
l-1
2
Ju
l
Ja
n-
00
-20%
*Data through December 2012
Elliott D. Pollack & Company
Balance of State
Elliott D. Pollack & Company
Balance of State Employment*
Annual Percent Change 1975–2012**
Source: Department of Commerce, Research Administration
12%
10%
5.2%
4.9% 5.5%
5.2%
3.8%
3.9%
3.8%
2.4%
3.3%
3.9%
4%
4.9%
3.1%
2.0%
1.5%
1.6%
1.0%
2%
4.6%
4.2%
4.1%
2.8%
3.1%
2.2%
1.6%
1.7%
-0.3%
1.0%
0%
-2%
-1.4%
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
11
-6.3%
-10.9%
-6%
77
-1.8%
-5.3%
-4%
19
1.9%
0.8%
09
6%
6.7%6.6%
20
8%
8.1%
*Non-agricultural wage & salary employment. Changed from SIC to NAICS reporting in 1990.
**Data through December 2012
Recession Periods
Elliott D. Pollack & Company
Balance of State Employment*
Source: Bureau of Labor Statistics
Sectors in Decline
Net
Change
Sectors Improving
Net
Change
Other Services
-900
Professional & Bus Services
2,100
Financial Activities
-200
Education & Health Services
1,500
Information
-100
Leisure & Hospitality
1,300
Construction
1,200
Elliott D. Pollack & Company
Manufacturing
900
Trade, Transp, Utilities
500
*Dec. 2012/ Dec. 2011
Balance of State Retail Sales
Percent Change Year Ago**
2000 – 2012*
Source: Arizona Department of Revenue
Recession Periods
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
nJa
01
02
na
J
nJa
03
nJa
04
nJa
05
06
na
J
07
na
J
nJa
08
09
na
J
nJa
10
an
-J
1
1
an
-J
2
1
*Data through December 2012
** 3-month moving average
Elliott D. Pollack & Company
Balance of State Single Family Permits
1976–2013*
Source: University of Arizona
12.6
12
9.7
10
10.5
8.7
8.5
7.3
8
6.9
6.3
6
5.5
4.5
4.8
5.2
4.9
4
4.2
4.9 4.7 4.9 4.9
4.5
5.25.2
5.2
5.8
6.3
6.4
6.3
6.5
5.6
5.7
4.3
4.5
3.3
2.7
2.2
2
2.3
1.9 1.9
2.2
0
1976
1979
1982
1985
*2012 & 2013 are forecasts from the University of Arizona
Elliott D. Pollack & Company
1988
1991
1994
1997
2000
2003
2006
2009
2012
Recession Periods
Commercial
Elliott D. Pollack & Company
Multi-Family
Elliott D. Pollack & Company
Multi-Family Year-End Vacancy Rates
Maricopa County 1975–2014*
Source: ASU Realty Studies / Hendricks & Partners**
Recession Periods
18%
15%
14.1%
13.0% 13.4%
13.4%
12.5%
12%
10.6%
10.1%
9%
7.7%
6.9%
6.2%
6%
6.1%
3.9%
4.1%
3.3%
2.8%
6.1%
4.4%
10.2%
10.0%
9.5%
9.6%
9.4%
8.0%
8.2%
6.8%
5.1%
5.9%
4.8%
4.5%
4.5%
3.8%
4.0%
7.9% 7.8%
6.8%
10.8%
8.7%
7.8%
7.0%
6.4%
3%
19
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
2099
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
14
0%
*2012 -2014 are forecasts from the Greater Phoenix Blue Chip
**Data prior to 2005 is from ASU
Elliott D. Pollack & Company
Multi-Family Housing Market
Source: PMHS and Hendricks & Partners
Absorption
Completions
2007
(3,121)
3,800
2008
(4,466)
5,900
2009
9,100
6,231
2010
11,619
200
2011
7,729
248
2012q3
2,931
274
Elliott D. Pollack & Company
OFFICE
More
lights on?
Elliott D. Pollack & Company
Office Space Year-End Vacancy Rates
Maricopa County 1986–2014*
Source: CBRE
Recession Periods
35%
30%
25%
26.7%
26.4%
26.7%
25.4%
24.0%
22.8%
26.2%
25.5%
24.5%
23.9%
22.7%
22.1%
18.8%
18.3%
18.8%
20%
16.0%
14.8%
15%
11.7%
9.5%
9.9%
9.5% 9.2% 10.0%
19.1%
20.0%
16.4%
13.9%
12.6%
11.1%
10%
5%
19
8
19 6
8
19 7
8
19 8
8
19 9
9
19 0
9
19 1
9
19 2
9
19 3
9
19 4
9
19 5
9
19 6
9
19 7
9
19 8
9
20 9
0
20 0
0
20 1
0
20 2
0
20 3
0
20 4
0
20 5
0
20 6
0
20 7
0
20 8
0
20 9
1
20 0
1
20 1
1
20 2
1
20 3
14
0%
Elliott D. Pollack & Company
*2012 -2014 are forecasts from the Greater Phoenix Blue Chip
Greater Phoenix Office Market
Source: CBRE
Year
2006
2007
2008
2009
2010
2011
2012q3
Absorption (sf)
3,245,888
1,500,704
(603,112)
(677,329)
233,670
1,857,433
1,111,008
Chg in Inventory (sf)
**2,320,302
4,905,374
3,402,646
1,798,415
2,011,404
3,144,910
1,033,684
*Only includes multi-tenant space greater than 10,000 SF
** A number of buildings in downtown and mid-town are being converted to office condos.
Elliott D. Pollack & Company
As of third quarter 2012,
there are 300,975 square feet
of office space
under construction.
Elliott D. Pollack & Company
Source: CBRE
INDUSTRIAL
Slowly filling up?
Elliott D. Pollack & Company
Industrial Space Vacancy Rates
Maricopa County 1980 – 2014*
Source: CBRE
Recession Periods
20%
15%
10%
16.4%
15.2%
14.8%
14.6%
14.0% 13.6%
13.2%
12.8%
12.8%
11.1%
10.8%
9.4% 9.7%
8.4%
16.1%
14.7%
12.5%
10.3%
9.8% 9.7%
8.5%
8.4%
8.1%
7.4%
7.4%
7.1%
6.6% 7.0%
6.7%
5.7%
5.6%
12.4%
11.9%
11.0%
10.6%
5%
0%
80 981 982 983 984 985 986 987 988 989 990 991 992 993 994 995 996 997 998 999 000 001 002 003 004 005 006 007 008 009 010 011 012 013 014
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
Elliott D. Pollack & Company
* 2012 - 2014 are forecasts from the Greater Phoenix Blue Chip
Greater Phoenix Industrial Market
Source: CBRE
Year
2006
2007
2008
2009
2010
2011
2012q3
Elliott D. Pollack & Company
Absorption (sf)
6,032,175
8,359,835
629,838
(4,649,352)
4,455,097
7,753,111
6,093,132
Chg in Inventory (sf)
7,829,959
13,914,181
13,467,215
4,753,218
2,451,202
2,842,185
2,132,574
As of third quarter 2012,
there are 5.4 million square feet
of industrial space
under construction.
Elliott D. Pollack & Company
Source: CBRE
RETAIL
Elliott D. Pollack & Company
Retail Space Vacancy Rates
Maricopa County 1985–2014*
Source: CBRE**
Recession Periods
20%
14.2%
13.1%
13.5%
12.7%
11.8%
15%
10.0%
10%
8.9%
6.6%
12.2%
12.2% 11.9%
11.4%
11.3%
10.3%
11.1%
9.8% 8.7%
7.9%7.5%
7.4%
7.5%
6.6%7.3%
6.3% 5.3%
6.1%
6.2%
5.3%
5.5%
5.1%
5%
0%
85 986 987 988 989 990 991 992 993 994 995 996 997 998 999 000 001 002 003 004 005 006 007 008 009 010 011 012 013 014
9
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
* 2012-2014 are forecasts from GPBC
** Data prior to 1992 is from Grubb & Ellis
Elliott D. Pollack & Company
Greater Phoenix Retail Market
Source: CBRE
Year
2006
2007
2008
2009
2010
2011
2012q3
Elliott D. Pollack & Company
Absorption (sf)
5,244,597
9,424,362
3,395,986
(1,117,100)
(75,352)
(152,647)
1,179,828
Chg in Inventory (sf)
4,582,618
11,104,865
6,229,205
4,405,985
902,380
24,543
(58,535)
NOTE: 325,000 sf were deleted from inventory during
2011 and 175,000 through q2 2012 due to market data
updates and demolitions.
As of third quarter 2012,
there are 0.9 million square feet
of retail space
under construction.
Elliott D. Pollack & Company
Source: CBRE
Why be Optimistic?
Elliott D. Pollack & Company
Housing?
Elliott D. Pollack & Company
Many renting will buy.
Many doubled-up will buy.
Some population growth is back.
Employment growth is occurring.
Retirees less bound to crappy states.
Investors will not suddenly dump and run.
Still producing less than “normal.”
Fundamentals remain in place.
“Normal” returns in 2015-ish.
Growth rates will be strong now though.
Elliott D. Pollack & Company
Cyclical vs.
Permanent?
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
2ND
1960 - 1970
3RD
3RD
4TH
1970 - 1980
2ND
3RD
4TH
1980 - 1990
3RD
3RD
5TH
1990 - 2000
2ND
2ND
3RD
2000 – 2010
2ND
12th
8TH
Elliott D. Pollack & Company
Is the Cycle Our Enemy or Friend?
(Non-farm Emp. Percent Change 1980 – August 2012)
11%
9%
7%
5%
3%
1%
-1%
-3%
-5%
-7%
Do you want to always be the same?
Or, most of the time EXCEED the US?
-9%
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 12
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- 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
U.S.
Elliott D. Pollack & Company
Arizona
Recession Periods
Greater Phoenix Population
Annual Percent Change 1976–2013*
Source: Arizona State University & Department of Commerce, Research Administration
6%
5.1%
4.7%
4.6%
4.3%
4.2%
4.4%
4.2%
4.3%
4.3% 4.3%
4.2%
4.2%
3.9%
3.7%
4%
3.8%
3.3% 3.1%
3.0%
3.6%
3.8%
3.7%
3.5%
2.9%
2.8%
2.5%
2.1%
3.0%
3.1%
2.7%
2.6%
2.4%
1.9%
2%
1.8%
1.3%
0.5%
1.1%
0.6%
0.3%
0%
1976
1979
1982
1985
1988
1991
1994
1997
.
Elliott D. Pollack & Company
2000
2003
2006
2009
2012
Recession Periods
* 2012 & 2013 forecast is from Elliott D. Pollack & Co.
Growth Factors Still Intact?
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Climate
Lifestyle
Geographic Location
Pro-Growth Attitude
Competitive Tax Structure
Focused Incentives/Investment (i.e. transportation)
Leadership with Common Sense
Low Cost of Living
Congressional Delegation Working for State
Business & Government in Same Direction
ETC, ETC, ETC.
Elliott D. Pollack & Company
Competitiveness Map – 2012(2013?)
Source : CBRE
Source: CBRE
Elliott D. Pollack & Company
Benefits of the “SUNBELT”
Industrial Northwest
9
10
5
Hawaii
Alaska
Elliott D. Pollack & Company
Where do they come from?
1.
2.
3.
4.
5.
California – Complete disaster.
Northeast – Too damn cold.
Rust Belt – No jobs.
Florida – Need help finding their
luggage though.
Others…
Elliott D. Pollack & Company
Top 10 States
Percent of Homes with Mortgages with Negative Equity
Source: Core Logic
Nevada
Florida
Arizona
Georgia
Michigan
California
Illinois
Ohio
Maryland
Rhode Island
0.0%
Elliott D. Pollack & Company
58.6%
42.7%
39.7%
35.8%
32.8%
29.0%
25.8%
U.S.= 22.3%
24.1%
23.2%
22.6%
20.0%
40.0%
60.0%
80.0%
Closing Points:
AZ will still be a top 5 economy.
 The economy has multiple gears.
 2015/2016 is FULL recovery for AZ.


The long term potential remains intact!
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