Download The Recovery is Proceeding at a Snail`s Pace

Occupational Administrators Council
Economic and Workforce
Overview
John Catapano
Research and Communications Coordinator
Center for Workforce Development
December 7th, 2011
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U.S. Economic Overview
The Recovery is Proceeding at a Snail’s Pace
(And it wasn’t much of a recovery to begin with)
Is a “Double Dip” on the Horizon?
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Growth in Real GDP
2007 Q1 to 2011 Q3 (annualized)
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Why Did the Recovery Stall?
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Stock market volatility
European debt crisis
Depressed housing market
Banks have been reluctant to
lend
Impact of healthcare reform
2012 elections
Debt ceiling debate
Concern about the deficit/debt
End of federal stimulus
• Less government spending
• High oil and commodity prices
• Turmoil in the Middle East
• Japanese earthquake and
tsunami
• Extension of Bush tax cuts
• Concerns over future taxes and
regulations
• Political polarization
• Downgrade of U.S. debt
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U.S. Private Sector Employment Growth
January 2007 to Present (month over month, in thousands)
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Percent Job Losses in Post WWII Recessions
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Percent Job Losses in Post WWII Recessions
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U.S. Unemployment Rate
January 2000 to Present
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U.S. Initial Claims for Unemployment Insurance
January 2007 to Present (in thousands)
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Consumer Confidence
1978 to Present
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Negative Jobs Feedback Loop
Limited Job
Growth
Business
Uncertainty
Modest
Consumer
Spending
Little Job
Security
Depressed
Consumer
Confidence
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Corporate Profits After Taxes
1960 to Present (in billions)
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Excess Reserves of Depository Institutions
1960 to Present (in billions)
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Job Losses and Gains Since Dec-07 Peak
(in thousands)
Recession
Recovery
Trade, Trans, Util,
Construction &
Other Serv
Mining
Prof & Bus Serv,
Manufacturing
Financial
Information
Activities
Leisure &
Hospitality
Education &
Health Serv
Government
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Labor Force Participation Rate
Selected Groups, 1960 to Present
Men
16-24
Year-Olds
Women
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Outlook and Summary
Recovery faces significant headwinds:
• Housing market is still a mess
• Less government spending/stimulus
• Structural unemployment
• Income inequality
Bright Spots:
• Strong corporate profits
• Banks are loosening purse strings
• Consumers are paying off debt
• Manufacturing is doing well, exports are up
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Arizona Economic Overview
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Employment Growth, AZ v. U.S.
January 2006 to Present (percent change, year ago)
Arizona
U.S.
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AZ Unemployment Rate
January 2000 to Present
Arizona
U.S.
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Arizona Industries
Employment Today Compared to a Year Ago
Job Added in
the Last Year
Peak-to-Trough
Employment Loss
Healthcare
+14,100
Never Lost Jobs
Leisure and Hospitality
+10,400
-11.5%
Construction
+4,600
-57.5%
Manufacturing
+4,700
-21.7%
Transportation and Warehousing
+4,100
-12.6%
Education
+2,900
Never Lost Jobs
Local Government
+2,600
-18.7%
Professional/Business Services
-800
-19.3%
Finance/Insurance
-300
-12.6%
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Arizona’s Budget Improving
• The budget is balanced! (but down 21% from FY2008)
• FY2010 was the bottom of the recession when revenues fell below
FY2004 level
• Arizona now has six straight quarters of general fund revenue
growth
• While revenue recovery has begun, it is difficult to forecast its
speed due to the uncertain economy
• Short-term surpluses:
– 2012 - $416m
– 2013 - $143m
– 2014 - $610m to $1.2b shortfall (1% temporary sales tax expires)
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Taxable Sales - Arizona
January 2005 to Present (percent change, year ago)
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Arizona’s Population
Census 2010
• Arizona was the second fastest growing state between 2000 and
2010 (24.6%). Nevada was first (35.1%)
• Total population of 6,392,017 – but less than 2009 projection
• Hispanic population grew 46.3% from 2000-2010
• Greater Phoenix has the 6th most Hispanics of all cities in U.S.
with 589,877
• Arizona accounted for 16.6% of the growth in children 10 yearsold or less nationwide between 2000 and 2010
• “Cultural generation gap” of 40%
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Arizona Won’t Truly Recover Until
Housing Improves
• Excess supply of homes – 70,000 in Greater Phoenix alone
• Home prices down over 50% - to late ‘90s levels
• Arizona is one of the worst performing states for mortgage
delinquencies and foreclosures
• New home construction has all but ceased
• Commercial real estate market is hurting
• Market will not recover until household formation and jobs return
• On the positive side - housing is now much more affordable, and
interest rates are at historic lows
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Outlook and Summary
Downside
• Weak job market
• Incomes and wages are lagging
• Housing fundamentals are poor
• Public sector employment and population
growth will be a drag on the Economy
• Population Mobility must Improve to Absorb
Excess Housing Stock and Build New Homes
Upside
• Hiring is Up
• Retail Sales are Up
• State Budget is Balanced – For Now
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Implications for MCCCD
• For MCCCD, the recession is a double-edged sword
– Enrollment is up
– But fewer resources are available
• District needs to look at new revenue streams
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Alternative delivery
Contract training
Alleviate structural unemployment (jobs mismatch)
Underserved and emerging populations
• Short-term – Slow population and economic growth, little help
from state
• Long-term - Arizona is projected to add 1.8m new jobs in the next
30 years. Many will be in Maricopa County. MCCCD will play a vital
role in training
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Questions?
[email protected]
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