This could affect the housing market, take a look and let me know what you think By Ronald J. Hansen The Republic | azcentral Wed Dec 4, 2013 7:33 PM Arizonans should expect only modest improvement in the job market next year, though that should still place the state among the fastest-growing nationally, several economists predicted Wednesday. The state could see job growth edging near 2.5 percent in 2014, a modest level by Arizona’s historical standards but better than the annual gains made since 2010, said Lee McPheters, a research economist at Arizona State University’s W.P. Carey School of Business. “We’re still several years away from a full recovery,” McPheters said at a news conference before ASU’s 50th annual economic forecast. “I would emphasize that the Arizona long-term outlook is still quite positive.” Arizona could add about 60,000 jobs next year, according to McPheter’s analysis. This year it is expected to gain nearly 52,000. Overall, the state has regained about 46 percent of the jobs lost during the recession; the nation as a whole has regained 83 percent. Some, like James Glassman, a senior economist for JPMorgan Chase, and Elliott D. Pollack, CEO of the consulting firm that bears his name, see the economy as poised for significant gains in the medium-term. “It’s difficult not to be optimistic about housing,” Pollack said, adding that Arizona’s relatively modest population growth is the major impediment to stronger growth in that key industry. Glassman said the broader economy is characteristically bouncing back on Wall Street before the labor market, but the two remain connected. “We’ve seen enough to know that the U.S. is getting back on its feet,” he said. Lee Ohanian, an economics professor at the University of California-Los Angeles, and an adviser to the Federal Reserve Bank of Minneapolis, was more dour about the national outlook and blamed policies like the 2009 federal stimulus for hampering growth. “We have made hardly any progress whatsoever,” he said. “It’s now five years after the worst of the financial crisis and we’ve recovered no ground.” Ohanian said states are able to outperform the nation and that Arizona’s pro-business environmentsuggests it should be among those that typically grow more quickly. Still, he could not explain why Arizona has been near the bottom in replacing its recession losses. “It’s interesting that Arizona isn’t seeing more of a recovery,” he said. “I still anticipate Arizona coming back.” “The state was really hard hit by the recession,” McPheters said. “Arizona went into the recession earlier. We were hit much harder and fell further. We came out later and, as a result, we still have quite a ways to go.” Pollack is heartened by the continued decline of homeowners who owe more than their homes are worth. Also, the state appears to be slowly regaining its status as a top destination for those on the move. Projected population gains for metro Phoenix suggest that the housing industry will need to dramatically step up homebuilding the rest of the decade, he said. There were fewer than 7,000 building permits in 2011. This year, Pollack expects that number could hit 13,000. Future population growth could require annual totals approaching 23,000, he said. Commercial construction seems destined to remain depressed until at least 2016, Pollack said. Glassman dismissed worries about Arizona’s lagging job creation to date. He noted the state will benefit from the improved conditions in real estate, which remains of outsized importance here. “When I think about the problems you faced with the damage that was done in the real-estate sector and the underwater mortgages, I am amazed that Arizona can say it’s recovering like everybody else,” Glassman said. “You’re just not as diverse as Texas.” He said the financial markets are signaling they are ready for the expected withdrawal of monetary stimulus by the Fed beginning next year. He said the quick rise in interest rates last spring after talk of “tapering” by Fed Chairman Ben Bernanke has already moved the markets “90 percent” toward any adjustment needed in winding down that program. Meanwhile, interest rates should remain stable as the economy moves past the “5th inning” of its recovery from the Great Recession, Glassman said. McPheters noted that Arizona is seventh in job growth in 2013 and has made population gains that will help as well. Income growth is 35th in the country, but that represents an improvement over the 2008 to 2011 period. The income picture is brighter in metro Phoenix. McPheters found that 48 percent of the new jobs nationally are in jobs making less than $40,000 annually, while in Phoenix it is 33 percent. In jobs paying between $40,000 and $60,000, Phoenix holds a 40 percent to 28 percent edge over the nation. Ohanian thinks immigration reforms that welcome foreign investors and innovators would help boost the national economy, as well as Arizona’s.
Posted on: Thu, 05 Dec 2013 03:06:28 +0000