Tag Archives: arizona economy

phoenix

Arizona economy rising, report shows

Phoenix and the broader Arizona economy are expanding again after an extremely difficult recession, although growth will be more modest than the boom times of a decade ago, according to a report released today by BMO Economics.

The labor market is a bright spot, with the city remaining consistent in its job growth performance.  “The city has been a consistent job growth outperformer so far during the recovery and, after a soft patch earlier in the year, growth has accelerated again,” said Robert Kavcic, Senior Economist, BMO Capital Markets.  “If the recent growth clip persists – and we believe that it should – the Phoenix economy should be able to add roughly 85,000 new jobs by the end of 2016.”

“It’s encouraging that the economic health of Arizona, and Phoenix in particular, continues to improve,” said Steve Zandpour, newly-appointed Arizona Regional President, BMO Harris Bank. “It’s nice to see construction activity again. Projects that had been on hold for quite a while have broken ground, adding another positive stimulus to the community.”

The Valley’s economic diversity will help it continue to recover at a solid pace.  “Phoenix boasts a diverse economy with exposure to a wide range of industries in high-tech manufacturing, construction, finance and professional services,” stated Kavcic. “Of the 250,000 jobs lost during the recession, nearly three-quarters of them have recovered.”

The finance and insurance sector employs more than 125,000 people – a record high, in the city.  The fast-growing biotechnology sector also has a strong presence in the region, with two new structures recently approved at the Phoenix Biomedical Campus, including a $136 million investment by the University of Arizona.

On the housing side, the foreclosure rate across Arizona has tumbled to below 1 percent – now among the lowest in America – while higher home prices have reduced the share of mortgages in a negative equity position.  “Fundamentals support a continued, albeit more modest, housing market recovery in the city,” said Mr. Kavcic.

To view a full copy of the report, visit www.bmocm.com/economics.

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68-Unit Apartment Community in Mesa Sells for $4M

 

 

Cassidy Turley completed the sale of Country Club Greens, a 68-unit apartment community on 2.4 acres at 350 W. 13th Place in Mesa for $4M.

The buyer was Clear Sky Capital CCG L.P. of  Phoenix and the seller was California Bank & Trust. Executive Vice Presidents David Fogler and Steven Nicoluzakis with Cassidy Turley Arizona’s Multi-Family Group brokered the transaction.

Built in 1986, the property has nine one bed/one bath and 59 two bed/two bath fully remodeled rental units that include new energy efficient appliances and upgraded kitchen and bathroom cabinets.

The complex also has a swimming pool and spa and on-site leasing office. Country Club Greens is located one mile south of the Loop 202 on Country Club.

In other news, Cassidy Turley completed a 2,800 SF lease for Voxpop, the shopper marketing radio network, at 2141 E. Camelback Rd.. Justin Himelstein and Jason France with Cassidy Turley Arizona’s Office Tenant Representation group represented Voxpop.

The marketing company relocated from an office at University and 35th St. to the Camelback Corridor submarket. Judith Tucker with Camroad Properties represented the landlord, Two Corners Financial Group, LLC.

Voxpop began in 2003 in Mexico and is the largest in-store marketing radio network reaching more than 40M people in more than 1,800 stores. In 2009 the company expanded its operations in the U.S.

The company currently has partnerships with retailers in Arizona, Texas and California, including Arizona-based Bashas’, AJ’s Fine Foods and Food City locations. Voxpop is a strategic messaging company that started by providing background music for stores and grew into providing targeted advertising and marketing messages for grocery customers.

The client list includes national companies such as Nestle, Coca-Cola, Tyson, General Mills and Kraft.

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Nearly $1 billion infused into Arizona’s economy from universities’ research

Last year, nearly $1 billion was infused into Arizona’s economy as a result of research at Arizona’s public universities, according to the recently released Arizona Board of Regents 2011 research report. The report details research expenditures as well as the economic, social and scholarly impact that results from research in the Arizona University System, indicating a significant positive impact on the state through new jobs, knowledge and dollars reinvested in the community.

“Research at Arizona State University, Northern Arizona University and the University of Arizona provides a tremendous benefit to our community and the world around us,” said Regent Rick Myers, chair of the Arizona Board of Regents. “Research leads not only to transformational discoveries that directly benefit the people of this state and beyond, but it generates jobs, facilitates partnerships, reinvests dollars into the community, attracts top faculty talent, and makes the undergraduate learning experience more rich through instruction and hands-on learning with elite faculty. Research at our universities is a very complex but extremely successful enterprise and its international reputation is a point of pride for our state.”

Last year, the Board of Regents adopted a series of performance metrics to manage and measure university and system productivity and progress in four key areas, including research excellence. Research metrics measure progress in total research expenditures, number of doctoral degrees awarded, number of invention disclosures transacted, number of patents issued, intellectual property income and national public research university ranking. In fiscal year 2011, the research enterprise met or exceeded the enterprise goals in invention disclosures, U.S. patents issued, intellectual property income, and start-up companies. Research expenditures fell just short of reaching the 2011 goal of $1,009.3 billion by $12.7 million. The universities are implementing measures to ensure the 2012 goal of $1,045.6 billion is met.

Through research activity at the universities, millions of dollars are reinvested annually into the community. In 2011, Arizona’s public universities generated nearly $1 billion in research expenditures, dollars that become purchases and lead to employment within Arizona.

Biltmore Bank - AZ Business Magazine May/June 2012

Father-Son Bank On Arizona Business

Family-built Biltmore Bank of Arizona has assets totaling more than $260 million

The Lehmann family has a lot of baggage.

“When I finished grad school back in 1969, I got two job offers,” says Richard J. Lehmann. “One was with Ford Motor Company; the other with Citibank.”

The banking gig, however, meant moving to Europe, which actually sealed the deal.

“I was lucky enough to study abroad — and bum around Europe — while still in school, and both my wife and I are always up for adventure,” Lehmann says.

Over the next seven years, Lehmann’s rapidly growing career took him from Hamburg to Düsseldorf to Frankfurt to Kronberg, where his youngest son, Greg, was born. With two young children and extended family a continent away, the Lehmann family moved back to the U.S. in 1977, with Lehmann still focusing on international banking.

“Talk about a commute,” Lehmann says.

But the move wouldn’t take, just yet, and the family was back on the move in 1985 when Lehmann packed their bags for London to take a position overseeing all Middle East, European and African clients for Citibank.

Arizona, however, would eventually come calling.

The family finally unpacked its bags in Arizona in 1988, when Lehmann became chairman and CEO of Valley National Bank.

But just as the elder Lehmann was unpacking his bags in the Valley, youngest son Greg was picking up and moving to Vermont to study anthology in college.

While there, just as his father did, Greg spent a semester studying overseas (Asia), where he would return after graduation to volunteer with the building of schoolhouses in the developing nation of Nepal. Motivated, but lonely living alone in a small Nepalese village, Greg moved to New York City in the 1990s and took a job in advertising with such brands as Mercedes Benz and MLB, and then one with an Internet company. He even helped re-brand the Cleveland Cavaliers when LeBron James was drafted.

By the early 2000s, with dad retired (and unretired) most recently from Bank One, where he worked as the bank’s president and COO, Greg was busy, too — getting married and starting a family in New York.

And then everything changed.

When Richard hosted his son’s family for Christmas in the early 2000s, he made a singular comment: “So, I am thinking of starting a bank.”

“Floored, my initial reaction was ‘Yeah sure, Dad.’ But as Christmas gave way to the New Year, I saw he was serious — and serious about recruiting me.”

By 2003, Richard and long-time colleague Jeffrey Gaia, with others, began planting the seeds for the Biltmore Bank of Arizona. After a lifetime of servicing some of the biggest businesses across the globe, Lehmann wanted to get personal.

“Truly understanding the needs of Arizona businesses and working with them face-to-face to ensure exceptional client service is our singular focus,” Richard says. “We wanted to be a part of each of our client’s growth — and the growth of the Arizona economy.”

Inspired, Greg packed his family’s bags and moved to the Valley for good in 2004, helping to launch the Biltmore Bank of Arizona with his father.

The father-son team proved a perfect fit. The Biltmore Bank now has two locations, 50 employees and assets totaling more than $260 million. They service hundreds of businesses in Arizona each day through customized loan solutions, SBA lending, treasury management, business checking, and online and mobile banking.

While other banks have closed in recent years due to the sagging economy, Biltmore has flourished, most recently receiving a cash infusion from Grandpoint Financial that will allow them to grow and invest with its current and prospective clients and consider possible acquisitions in the future.

“In order for us to support the continued growth, we need to have a strong balance sheet and a formidable capital position,” Richard says. “Arizona businesses will bounce back, and now we have the capital to help them.”

For more information on Biltmore Bank, visit Biltmore Bank’s website at biltmorebankaz.com.

Arizona Business Magazine May/June 2012

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GPEC: Plans To Revive The Economy

Look past the Valley’s long, slow climb out of a difficult recession to the next 10, 20, even 100 years and you see a potential hotbed of wealth and productivity: a regional economy that has diversified from its traditional reliance on growth and housing. That’s the vision painted by board members and financial supporters of the Greater Phoenix Economic Council ( GPEC ), which has been working since 1989 to leverage the many strengths of the entire metro area.

In the 22 years since its inception, GPEC already has assisted 488 companies in their moves to the Valley, which by its own count translates into 88,610 jobs, $9.96 billion
in capital investment and $3.1 billion in payroll.

In the next century, look for GPEC to shape the following sectors and services:

Municipalities

The greatest influence GPEC will have on Valley cities will be to help leaders think of themselves as a unified economy, says Mayor Scott Smith of Mesa, which is one of the 19 cities and towns that contribute financially to GPEC.

“That sounds like a simple thing, but it’s actually been a very challenging task,” Smith says, with the East Valley vying against the West Valley, city fighting city, and “Phoenix fighting everyone else” for economic development opportunities.

In the coming decades, economic activity will continue to consolidate in cities, Smith says. Already, about 85 percent of the nation’s gross domestic product is generated in cities and it is estimated that 90 percent of the new jobs created will be in metro areas. GPEC will continue to play a major role in helping cities get beyond parochialism and work together to create a regional economic powerhouse.

“The Sun Corridor is not some figment of someone’s imagination,” says Smith, referring to the corridor stretching from the middle of Yavapai County south to Tucson that is expected in the next century to merge into one integrated metro area. “We see it growing every day.”

“GPEC plays a central role in that,” he says. “We are learning how to work better together.”

Technology

The Arizona of the future will do a better job developing a culture of innovation for small, high-tech companies, says Steve Shope, president of Sandia Research Corporation and a
GPEC board member.

A short-term goal that may reap long-term benefits would be to help companies attain funding through the U.S. government’s Small Business Innovation Research program, which awards funds for research and development that has the potential to be commercialized.

“In Arizona, we’re not doing a very good job of bringing that money into the state,” says Shope, who would like to see the figure double to $50 million.

The state needs a better representation of venture capital in general, he says, and thus needs to nurture venturecapital-ready companies.

Shope is a member of GPEC’s new Innovation Council, which he says is developing a framework for how it will operate and hopes to have a master plan this year.

Another way GPEC will shape the future of the technology industry is by continuing to focus on clean tech companies, particularly renewable energy companies and those involved in residential construction and high-efficiency housing.

Unmanned aerial vehicles, a subset of Arizona’s already mature aerospace and defense industry, is a sector that “is in the Model T stage, but has potential for gigantic growth,” Shope says.

Housing

Looking back, one can see how homebuilding and construction became primary drivers of the state’s economy, says Andy Warren, president of Maracay Homes and a GPEC board member.

Looking forward to the next century, GPEC will play a major role in helping to diversify the Valley’s economy so housing plays a less dominant role in it. If GPEC can do that, Arizonans won’t be held hostage to vicious boom-and-bust cycles inherent in the real estate industry.

“If GPEC is successful, the housing industry will be a less significant player in our economy over the next century and that will be a wonderful thing,” Warren says. “The amplitude of those cycles can be pretty extreme.”

It has been estimated that Arizona has lost 300,000 jobs in the recession, with the bulk of those coming from the construction and retail sectors.

GPEC’s efforts to lure high-wage, high-quality jobs in the clean technology, healthcare and aerospace sectors and its efforts to strengthen manufacturing will be instrumental in diversifying the economy of the future, he says.

A key to that strategy is GPEC’s commitment to supporting competitive tax incentives and policies that promote growth, and its work bringing together officials and policy makers throughout the region. “It’s a great collaborative effort,” he says.

Law

When GPEC reaches out to businesses considering a site in the Valley, one of the first things business leaders ask is, “‘Do you have the legal talent in Arizona and in Phoenix to do the things we want done?’” says Barry Halpern, a GPEC board member and partner at Snell & Wilmer.

In that respect, GPEC and the legal community have a symbiotic relationship that will only deepen in the next century as GPEC brings more sophisticated and diverse industries to the Valley, Halpern says.

The legal profession in the Valley — already a diverse community — will have to rise to the needs of emergent industries.

Almost all aspects of economic development require legal representation, including the demand for capital financing or the need for representation in emerging niches like the solar industry, agrees Scott Henderson, a shareholder at Polsinelli Shughart and a GPEC board member.

“GPEC will shape the legal practice as it attracts more businesses and more industry and those businesses will require a greater depth of legal talent,” Henderson says. “To that extent, local law firms will want to play a greater role in the growth of the state. The growth of the economy helps everybody—lawyers are no exception.”

Banking

The near future for banking in Arizona is brightening as lending activity has increased and most banks’ biggest problems are behind them, says Jim Lundy, GPEC vice chairman and president and CEO of Alliance Bank of Arizona.

“The recovery is slow, it’s bumping along the bottom, but it is there,” says Lundy, who also serves as chairman of the Arizona Bankers Association.

The long-term prognosis for banks is a bit harder to predict, but Lundy says he is sure of one thing: it is inextricably linked with a diversified Arizona economy that is not dependent on population growth.

In that sense, GPEC’s goal of fostering cooperation between cities and creating a diversified economy will directly shape the industry.

“Our success and our growth depends on companies that actually produce something,” Lundy says. All the important emerging industries — like healthcare, clean tech and aerospace — create spin-offs in the economy that are good business for the banking sector.

“We need successful enterprises to make those loans to,” he says. “At the end of the day, if the banking sector is going to grow successfully it needs GPEC and its role in helping get Arizona’s economy growing again.”

Education

It’s not hard to figure out why leaders in the field of education sit on GPEC’s board of directors: education is essential to economic development, and vice versa.

“As we look to the future, we see that growing the right talent for the new markets that will be out there is imperative,” says GPEC chairman Bill Pepicello, president of the University of Phoenix.

That may require more coordination between Arizona’s “robust” array of higher education institutions—statefunded universities, community colleges and private institutions. “I envision campuses as multi-functional areas that are working cooperatively on the ground and online to serve Arizona,” he says.

Arizona’s education of the future will also need to be “efficient and effective,” says Rufus Glasper, chancellor of the Maricopa County Community College District.

In the next 30 years, he says more than 1.8 million new jobs will be created in Arizona and these jobs will require students who are competent in what is know as the STEM fields: science, technology, engineering and math.

Educational delivery systems will include more online, hybrid and fast-track training, he says, and willuse mobile devices and social media to create more access to new ideas, networks and educational exchanges.

Like Pepicello, Glasper envisions closer relationships between secondary schools, post-secondary colleges and universities.

Manufacturing

The Midwest has always been known as the heavy industry manufacturing hub of the United States. But Arizona in the next century could attract more technology manufacturing, says Steven Zylstra, president and CEO of the Arizona Technology Council, which has worked alongside GPEC in the past to nurture the tech industry here.

“To the surprise of a lot of people, manufacturing is actually coming back to the United States,” he says. Wages and manufacturing costs in China are rising, so companies that sent manufacturing overseas are finding that once they pay for shipping, it’s cheaper at home.

Areas of promise include the manufacturing of medical devices, bioscience-related products, renewable-energy equipment and the semiconductor industry.

When it comes to the semiconductor industry, that optimism is warranted, agrees Jason Bagley, a government affairs manager at Intel in Arizona.

Intel has always manufactured most of its leading-edge products in the United States, he says, and plans to continue doing so. Since 1996, it has invested $12 billion in manufacturing in Arizona, not including two projects currently under construction in Chandler.

For more information about GPEC visit, gpec.org

Arizona Business Magazine January/February 2012

GPEC - AZ Business Magazine January/February 2012

GPEC Leads Cooperative Effort To Draw More ‘Clean Tech’ Industry To Arizona

Insight into innovation: GPEC leads cooperative effort to draw more ‘clean tech’ industry to Arizona

Green technology is still a relatively small part of Arizona’s economy, but its potential for growth is a bright spot on the state’s horizon.

“At a time when other economic engines have been sputtering, anticipated green job growth among Arizona’s green economy firms is quite promising,” say authors of a report prepared for state economic development officials by The Council for Community and Economic Research. It is one of two recent reports that assesses the industry and its growth potential.

While there is no standard definition of “green tech” or “clean tech,” it has been described by Clean Edge, a clean-tech research firm, as “a diverse range of products, services, and processes that harness renewable materials and energy sources, dramatically reduce the use of natural resources, and cut or eliminate emissions and wastes.” So even defining “green tech” or “clean tech” can be difficult, The Council for Community and Economic Research acknowledges.

That is why the Greater Phoenix Economic Council ( GPEC ) is embarking on a 12- to 18-month study to better define Arizona’s clean tech sector, says its president and CEO Barry Broome.

It’s a big undertaking, Broome says, but an important one given the impact that clean tech, particularly renewable energy, will likely play in driving the state’s future economy.

In fact, Broome predicts that renewable energy — particularly solar energy companies and the extensive supply chains that grow up around them, as well as companies that produce energy-efficient technologies — will become major players in Arizona in the future.

“It’s going to be our biggest industry outside of healthcare,” he says. “In 10 years, 100 percent (of homes built in Arizona) will be solarized at some level.”

That economy includes not just traditional solar manufacturers, but also materials producers — companies that make smart meters, water-use monitors and biodegradable drywall, for example.

The numbers

Overall, Arizona was home to 30,716 green jobs in 2010, about 1.3 percent of total statewide employment, according to the research report, titled “Green Jobs in Arizona 2010.”

But it says green jobs were expected to grow at a healthy 8.6 percent clip in 2011, outpacing the projected rate of 0.7 percent for all other jobs.

A second report by Battelle, a non-profit research organization, parallels the assessment that the green economy in Arizona is still emerging, but can expect strong future growth, particularly in renewable energy, greenhouse gas reduction and energy-efficiency sectors.

One key factor in this growth is a state leadership that creates a business climate that promotes innovation, the report says.

Faces behind the numbers

If you want to put a name to those numbers, turn to Greg Armstrong, chief operation officer for Rioglass Solar, a Spanish company that makes tempered glass reflectors and is the primary manufacturer for Abengoa Solar, which is building a 280-megawat solar power plant near Gila Bend.

Rioglass placed its U.S. headquarters and manufacturing operation in Surprise and plans another $45 million in capital investments.

The company was considering sites in Denver, Albuquerque and even Mexico when it visited the Surprise location, Armstrong says. The method GPEC used to draw Rioglass Solar to Arizona is a good example of what the state needs to continue to do to lure renewable energy companies, he says.

GPEC organized a meeting on site, in a tent, that brought together all the principal players in the effort: state officials, Surprise representatives, utility employees and economic development officials.

That was a first for Rioglass, Armstrong says, and an indication of what came next:  Surprise waived some fees involved in the expensive process of siting the plant, invested in infrastructure upgrades and created an expedited permit package that enabled Rioglass to break ground in January and take occupancy by July.

For more information about GPEC, visit gpec.org.

Arizona Business Magazine January/February 2012

 

Centennial Series - AZ Business Magazine January/February 2012

Centennial Series: Arizona’s History Impacts The Way We Live Our Lives

100 Years of Change: From ‘Sesame Street’ to scientific breakthroughs, Arizona’s history impacts the way we live our lives

During Arizona’s first century, every elementary school student in the state learned about the five Cs that drove Arizona’s economy — copper, cotton, cattle, citrus and climate.

There is a chance that if you ask Arizona elementary school students what C words drive the state’s economy now, their best answers might be casinos or Cardinals, whose University of Phoenix Stadium has been filled with fans, and hosted both a Super Bowl and a BCS championship game since it opened in 2006.

A lot has changed since copper and cotton drove the state, but that doesn’t lessen the impact Arizona’s first 100 years had on the way we live our lives today.

Here are a baker’s dozen events, people or projects from Arizona’s history, its first 100 years, that shaped the state or helped the state make history:

Gaming

In 1988, the U.S. Congress passed the Indian Gaming Regulatory Act (IGRA) in response to the proliferation of gambling halls on Indian reservations. IGRA recognized gaming as a way to promote tribal economic development, self-sufficiency, and strong tribal government.

By the end of 1994, 10 casinos were in operation in Arizona. Currently, 15 tribes operate 22 casinos in the state, creating a huge boost for Arizona tourism and the economy.

To put it into perspective, a study commissioned by the Ak-Chin Indian Community in 2011 showed that Harrah’s Ak-Chin Casino Resort alone accounts for 1,094 jobs, $36,713,700 in payroll, and a total economic impact on the community of $205,322,355. And those numbers represent figures before the resort added a 152-room hotel tower in July 2011.

Air travel

In 1935, the City of Phoenix bought Sky Harbor International Airport for $100,000. In 2010, the airport served 38.55 million passengers, making it the ninth busiest in the U.S. in terms of passengers and one of the top 15 busiest airports in the world, with a $90 million daily economic impact. The airport handles about 1,252 aircraft daily that arrive and depart, along with 103,630 passengers daily, and more than 675 tons of cargo handled.

“As much as anywhere in the U.S., Phoenix is a creature of good air connections,” says Grady Gammage Jr., an expert on Arizona’s history. “There is no good rail service (in Arizona). There are no real transportation corridors. Sky Harbor has had a huge impact.”

Road travel

Another transportation milestone occurred in 1985 when the Maricopa Association of Governments approved a $6.5 billion regional freeway plan for Phoenix and voters approved a 20-year, one-half cent sales tax to fund it. By 2008, the Arizona Department of Transportation had completed the construction and Phoenix boasted 137 miles of loop freeways that link the metro area.

The loop freeways have had a significant impact on shaping Phoenix and, ultimately, Arizona, says Dennis Smith, MAG executive director.

“The loop freeways resulted in a distribution of job centers around the Valley,” Smith says. “That allows every part of the Valley to achieve its dream and have employment closer to where the homes are. That distributes the wealth throughout the Valley.”

Smith says the freeways also extended the Valley’s reach to Yavapai, Pinal and Pima counties, creating a megapolitan area known as the Sun Corridor.

Master-planned neighborhoods

Arizona is home to countless master-planned residential communities, but the first one — Maryvale — opened in 1955 in West Phoenix as the post-war years exerted their influence. Its developer, John F. Long, wanted to plan and build a community where young people could buy an affordable home, raise a family and work, all in the same area. He named the development after his wife, Mary, and its influence is felt to this day.

“Because Maryvale was a master-planned community and because John did affordable housing, the master plan included a lot of parks, school sites and shopping areas,” says Jim Miller, director of real estate for John F. Long Properties. “It really was where people could live and work. If you lived in Maryvale, you weren’t more than three-quarters of a mile from a park or school. That forced a lot of other builders to adopt the same type of philosophy.”

The first homes sold for as little as $7,400, with a $52-a-month mortgage. The first week the models went on the market, 24,000 people stopped by to take a look.

Retirement communities

A year before Maryvale opened, Ben Schleifer introduced a different lifestyle to an older demographic. In 1954, Schleifer opened Youngtown in West Phoenix, the first age-restricted retirement community in the nation, according to research by Melanie Sturgeon, director of the state’s History and Archives Division. No one younger than 50 could live there. By 1963, Youngtown had 1,700 residents and Arizona was on its way to becoming a retirement mecca.

But it was builder Del E. Webb and his construction companies that firmly established the concept of active, age-restricted adult retirement in Arizona with the opening of Sun City on Jan. 1, 1960, next to Youngtown and along Grand Avenue. According to Sturgeon’s research and a magazine observing Sun City’s 50th anniversary, about 100,000 people showed up the first three days to see the golf course, recreation center, swimming pool, shopping center and five model homes. Traffic was backed up for miles. The first homes sold for between $8,500 and $11,750. Sun City had 7,500 residents by 1964 and 42,000 by 1977, the same year Webb decided the community was big enough and he began construction on Sun City West.

Law

Ernesto Arturo Miranda was a Phoenix laborer whose conviction on kidnapping, rape, and armed robbery charges based on his confession under police interrogation resulted in the landmark 1966 U.S. Supreme Court case (Miranda v. Arizona), which ruled that criminal suspects must be informed of their right against self-incrimination and their right to consult with an attorney prior to questioning by police. This warning is known as a Miranda warning.

After the Supreme Court decision set aside Miranda’s initial conviction, the state of Arizona retried him. At the second trial, with his confession excluded from evidence, he was again convicted, and he spent 11 years in prison.

Healthcare

The first successful surgery and use of an artificial heart as a bridge to a human heart transplant was conducted at the University Medical Center in Tucson by Dr. Jack Copeland in 1985. His patient lived nine days using the Jarvik 7 Total Artificial Heart before he received a donor heart.

It also put the spotlight on Arizona as a place where cutting-edge research and healthcare was taking place.

Copeland made several other contributions to the artificial heart program, including advancing surgical techniques, patient care protocols and anticoagulation. He also performed the state’s first heart-lung transplant and the first U.S. implant of a pediatric ventricular assist device. In 2010, Copeland moved to a facility in San Diego, where he continues to make an impact on health care.

Entertainment

Joan Ganz Cooney, who received her B.A. degree in education from the University of Arizona in 1951, was part of a team who captured the hearts and imaginations of children around the world with the development of Sesame Workshop, creators of the popular “Sesame Street.” Now in its 42nd season, the children’s television show uses puppets, cartoons and live actors to teach literacy, math fundamentals and behavior skills. Today, Cooney serves as a member of Sesame Workshop’s executive committee. In 2007, she was honored by Sesame Workshop with the creation of The Joan Ganz Cooney Center, which aims to advance children’s literacy skills and foster innovation in children’s learning through digital media.

Military bases

Williams Air Force Base in Mesa, which broke ground for its Advanced Flying School on July 16, 1941, allowed more than 26,500 men and women to earn their wings. It was active as a training base for both the U.S. Army Air Forces, as well as the U.S. Air Force from 1941 until its closure in 1993.

It also opened the door for other military training bases in Arizona, including Luke Air Force Base; which employs more than 8,000 personnel and covers 4,200 acres and is home to the largest fighter wing in the world, the 56th Fighter Wing; Davis-Monthan Air Force Base in Tucson, home to the A-10 Thunderbolt II, which was used in combat for the first time during the Gulf War in 1991, destroying more than 900 Iraqi tanks, 2,000 military vehicles, and 1,200 artillery pieces; and Yuma Marine Corps Air Station, which specializes in air-to-ground aviation training for U.S. and NATO forces. In 1990, almost every Marine that participated in Operations Desert Shield and Desert Storm trained at Yuma.

Solar power

Solar power has the potential to make Arizona “the Persian Gulf of solar energy,” former Gov. Janet Napolitano once said. But despite the overabundance of sunshine, the industry didn’t take root in the state until the end of the last century.

The first commercial solar power plant in the state came in 1997 when Arizona Public Service (APS) built a 95-kilowatt, single-axis tracking photovoltaic plant in Flagstaff. In 1999, the City of Scottsdale covered an 8,500-square-feet parking lot with photovoltaic panels, to both provide shaded parking and generate 93 kilowatts of solar power.

Arizona installed more than 55 megawatts of solar power in 2010, doubling its 2009 total of 21 megawatts, ranking it behind California (259 megawatts), New Jersey (137 megawatts), Florida (110 megawatts), and Nevada (61 megawatts).

Water

Construction of the Central Arizona Project — which delivers water to areas where 80 percent of Arizonans reside — began in 1973 at Lake Havasu. Twenty years and $4 billion later, it was completed south of Tucson. The CAP delivers an average 1.5 million acre-feet of water annually to municipal, agricultural and Native American users in Maricopa, Pima and Pinal counties.

“Without the CAP, we wouldn’t have the population we have today,” says Pam Pickard, president of the CAP board of directors. “We wouldn’t have our economic base. We wouldn’t have the industry we have.”

But the CAP wouldn’t have been possible without another milestone that occurred nearly 60 years earlier — Hoover Dam and its reservoir, Lake Mead, 30 miles southeast of Las Vegas. Hoover Dam, constructed between 1933 and 1936, tamed the Colorado, which Marshall Trimble, Arizona’s official state historian, says was even more erratic than the Salt River. The dam created reliable water supplies for Arizona’s Colorado River Valley and, eventually, Central and Southern Arizona via the CAP.

Sports

On April 24, 2000 Arizona Gov. Jane Dee Hull signed a bill that created the Arizona Tourism and Sports Authority (initially known as the TSA). Later, it was renamed to the Arizona Sports and Tourism Authority.

The Arizona Sports and Tourism Authority was instrumental in the constructions of University of Phoenix Stadium, home of the Arizona Cardinals and an anchor of Glendale’s sports complex. The development of the stadium, also home to the Fiesta Bowl, marked a shift in the economic landscape of the West Valley and Arizona sports. The Stadium has already hosted one Super Bowl and will host a second in 2015.

The Arizona Sports and Tourism Authority has also been instrumental in Cactus League projects — including Surprise Stadium, Phoenix Municipal Stadium, Tempe Diablo Stadium, Scottsdale Stadium, Goodyear (Cleveland Indians and Cincinnati Reds) and in Glendale (Los Angeles Dodgers and Chicago White Sox.) The economic impact of Cactus League baseball is estimated at $350 million a year.

“There’s no doubt about it, sports is an integral part of any destination tourism package,” says Lorraine Pino, tourism manager at the Glendale Convention and Visitors Bureau. “Our tourism literally exploded over the past few years.”

Isabelle Novak, Noelle Coyle and Tom Ellis contributed to this story.

Arizona Business Magazine January/February 2012


arizona flag 2011

Legislation to help re-establish Arizona as an economic leader

Gov. Jan Brewer today called the Legislature into Special Session for the consideration of a comprehensive plan to put Arizona back to work. Known as the Arizona Competitiveness Package, the proposal includes a mix of targeted business incentives and broad tax reforms designed to rev the Arizona economy.

“The Competitiveness Package will make Arizona a magnet for business expansion, relocation, capital formation and investment,” Brewer said. “This is our roadmap for future economic growth.” Improving Arizona’s competitiveness in the global marketplace is the first of the governor’s Four Cornerstones of Reform that she unveiled earlier this year. The centerpiece of the plan is her creation of an Arizona Commerce Authority.

Replacing the Arizona Commerce Department and its hodge-podge of more than 50 mandates and responsibilities, the Commerce Authority will have a single focus: the retention and recruitment of quality jobs for Arizona. The Commerce Authority will be overseen by a public-private board comprised of Arizona leaders in business and policy.

Designed to be nimble and flexible in responding to economic opportunities, the board will be armed with a $25 million deal-closing fund to help land some of the nation’s most highly-sought corporations and business ventures for Arizona. No dollars will be awarded prior to performance, and “claw-back provisions” and an independent, 3rd-party economic analysis will ensure that companies awarded public funds meet their promised obligations.

“This package of tax reforms and targeted investments will give Arizona the tools it needs to compete for economic development on the global stage,” said Don Cardon, president and CEO of the Arizona Commerce Authority. “Arizona can’t afford to wait for economic growth. We’re going to aggressively pursue quality jobs and stable industries that will become the bedrock of this state’s economic future.”

The Arizona Competitiveness Package is focused on both urban and rural job creation, and is intended to make this state a destination for business growth and development. Specific aspects of the plan include:

• The creation of a Quality Jobs Program, with corporate tax credits of up to $9,000 for each qualifying new job. ($3,000 per job, per year, with a 400-job cap).

• An increase in the electable state corporate income-tax sales factor to 100 percent, up from the current 80 percent. This will encourage firms to establish headquarters and manufacturing centers in Arizona.

• Re-authorization of the Arizona Job Training Program, providing job-specific, reimbursable grants to train employees for new careers.

• A four-year, phased-in reduction of the state’s corporate income tax to 4.9 percent, beginning in January 2014. This will give Arizona the nation’s fifth most competitive corporate income-tax rate.

• A 10 percent increase in the state’s Research & Development tax credit, encouraging further collaboration between Arizona’s research universities and the private sector.

• A 5 percent acceleration of the depreciation schedule for business personal property, spurring purchases of new equipment and other capital investments.

The Arizona Competitiveness Package is consistent with Brewer’s long-held call for corporate tax relief that would be phased-in after Proposition 100 expires and the state’s budget is on firmer footing.

“The development of a stable and growing economy is the key to Arizona’s future,” she said. “It will provide good jobs for our citizens and revenue for the state programs and services everyone enjoys. I urge legislators to act quickly in enacting these reforms and furthering Arizona’s economic recovery.”

3rd Quarter Figures Upbeat for Retail and Market Sector

3Q Figures Upbeat For Office, Industrial & Retail Market Sectors

The Arizona economy has marked some improvement and is much better than the public perceives, according to the Third Quarter 2010 Economic Outlook released by the Forecasting Project at the University of Arizona.

However, the report also states that will it will take some time for many Arizonans to recognize the improvement in the state’s economy and to repair the damage done by the recession. Estimates are that it will be 2013 or early 2014 before all the damage that occurred during the recession is repaired. The long-term forecast is for nation-leading growth to return to Arizona.

There was also some positive news in the CB Richard Ellis Third Quarter 2010 Analysis of Metro Phoenix Office, Industrial and Retail Markets. Highlights included:

Office: After 12 consecutive quarterly increases, the office market vacancy rate remained unchanged from the second quarter, at 25.9 percent. While the full service average asking lease rate for office space has leveled off in 2010, it has fallen 12.5 percent in the past two years, from $25.44 per square foot in third quarter 2008 to $22.25 per square foot today.

Absorption for the year is 147,610 square feet, with gross activity of 4.3 million square feet. This compares with negative absorption of 897,916 square feet and gross activity of 2.9 million square feet at the same time last year. An increasing supply of office sublease space continues to impact the absorption of direct space. There was 2.2 million square feet of available sublease space at the end of the third quarter compared to 2 million square feet one year ago.

Industrial: Through the first three quarters of 2010, the Metro Phoenix industrial market had positive absorption of 2.6 million square feet. Leading the way was the Southwest submarket, with more than 3.4 million square feet of positive absorption year-to-date. The industrial market vacancy rate decreased for the second consecutive quarter, dropping from 16.4 percent at the end of the first quarter to 15.3 percent today. One year ago the vacancy rate was 15.8 percent.

The net direct average asking lease rate for existing industrial product remained relatively unchanged during the past three months, ending the third quarter at $0.54 per square foot. However, in the last year the rate has dropped 5.3 percent. While there is 619,800 square feet of industrial product under construction, it consists entirely of build-to-suit projects. No speculative developments broke ground in the third quarter. This trend is expected to continue due to the challenging financial market and the glut of space.

Retail: The retail market experienced positive absorption in the third quarter, posting 83,491 square feet. This was the first time in seven consecutive quarters that the metro area reported more retail space was gained than lost. Vacancy increased slightly in the third quarter, from 12.2 percent to 12.3 percent. In comparison, the retail vacancy rate one year ago was 10.9 percent.

The average net asking lease rate for existing retail centers has declined 9.4 percent since the end of 2009, dropping from $17.33 per square foot to $15.71 per square foot at the end of the third quarter. The large supply of available big box space continues to weigh heavily on the Phoenix area retail market. Currently there are 303 spaces greater than 10,000 square feet, totaling 8.2 million square feet. The majority, 34 percent, can be found in the Mesa/Chandler/Gilbert submarket, with 2.8 million square feet of space.

Projections

Fewer Jobs Will Be Lost This Year, But Growth Will Remain Slow In 2011

In an updated forecast released today, the Arizona Department of Commerce Forecast reports that the state’s nonfarm job losses for 2010 have been revised downwardly. The department now forecasts that the state’s economy will lose 25,700 jobs this year, as opposed to the 50,400 originally forecast. However, the department also revised its forecast on how many nonfarm jobs Arizona’s economy will create in 2011, from 23,100 to 16,500. The fact that Arizona will be losing fewer jobs this year is being attributed to:

  • Federal government economic stimulus program spending that began in 2009.
  • Continued employment growth in the education and health services sector.
  • Improved job growth in the professional and business services; trade, transportation, and utilities; leisure and hospitality; and natural resources and mining sectors.
  • Stronger than anticipated global economic growth.


The downward revision in 2011’s job growth rate is being attributed to:

  • Tepid growth in the private sector due to sluggish business and consumer spending.
  • Large state and local government budget deficits.
  • A slowdown in population growth.
  • Limited consumer and small business lending by banks.


Gains in five sectors and losses in six sectors are expected over the two-year period (2009 to 2011). The major sectors in the Arizona economy where job gains are forecast include: educational and health services; professional and business services; trade, transportation and utilities; leisure and hospitality; and natural resources and mining. Sectors with projected job losses during the same time period include: government; construction; financial activities; information; manufacturing; and other services.

Arizona Sector Employment
Average Annual Over-the-Year Change


2009

2010

2011

Total Nonfarm

-7.3%

-1.1%

0.7%

Manufacturing

-11.6

-3.0%

1.3%

Natural Resources/Mining

-17.8%

1.8%

12.3%

Construction

-30.8%

-11.8%

1.8%

Trade, Trans. & Utilities

-7.1%

0.6%

0.6%

Information

-6.4%

-6.4%

-2.9%

Financial Activities

-5.0%

-3.2%

-1.6%

Professional & Business Svcs

-10.4%

-0.3%

2.8%

Educational & Health Svcs

2.7%

2.6%

1.8%

Leisure & Hospitality

-5.2%

0.4%

0.8%

Other Services

-6.6%

-2.1%

2.0%

Government

-2.2%

-1.8%

-1.9%


Total Nonfarm Employment
Annual Average Growth Rate

2009

2010

2011

Arizona

-7.3%

-1.1%

0.7%

Phoenix MSA

-7.9%

-1.0%

0.8%

Tucson MSA

-5.1%

-1.1%

0.4%

Rest of State

-6.4%

-1.1%

0.6%

Luke’s Future In The West Valley Is Assured - AZ Business Magazine Jul/Aug 2010

Ready For Take Off: Luke’s Future In The West Valley Is Assured

Luke Air Force Base has landed the coveted mission of training pilots for the next generation F-35 fighter jets.

Luke was on the Defense Department’s short list, competing with Holloman Air Force Base in New Mexico, and Eglin Air Force Base in Florida, for the F-35. Actually, Luke was shooting for becoming a secondary site for the F-35s that exceed the number of jets already allotted to Eglin.

Luke, which annually pumps $2.17 billion into the Arizona economy, is considered recession-proof and a lifeline for the West Valley. It has been training U.S. fighter pilots since March 1941.

Yet, Luke’s unparalleled record of success — in preserving the nation’s security and enhancing Arizona’s economy — has faced challenges. Most recently, it weathered an encroachment issue that threatened its viability and its very existence.

Luke’s 8,000 active-duty personnel and their 6,700 family members are an important part of the West Valley, plus some 120,000 military retirees in the area who rely on various services provided at Luke. Their value to the area is not lost on Glendale Mayor Elaine Scruggs.

“We know many of them as residents, neighbors, volunteers and active members in our community, schools and churches,” she says. “Luke personnel and their families buy homes, cars and other big-tickets items, as well as shop in our stores and eat in our restaurants.”

F-35 JetIn stressing Luke’s importance to the West Valley, Scruggs adds, “The new F-35 mission will bring with it decades of sustainable economic benefits and an immediate infusion of $150 million in construction-related projects. In addition, the F-35 will generate additional employment, wages, consumer spending and investments that our region and state desperately need.”

Likewise, Peoria Mayor Bob Barrett recognizes the importance of Luke to the West Valley and the importance of the F-35 to Luke. Barrett and Scruggs were among several local elected officials who made trips to Washington, D.C. to plead Luke’s case with military officials.

Before the announcement that the F-35 training center had been awarded to Luke, Barrett was blunt about the base’s future without it.

“The Air Force doesn’t like me saying this,” Barrett says, “but I believe if we don’t acquire the F-35 for Luke Air Force Base, I believe they will close Luke. In five to eight years, the F-16 is gone. So, if we don’t have the F-35, Luke will follow. There is no reason to keep a base as large as Luke and maintain it if it doesn’t continue to be the world’s largest fighter training base — not just in the U.S., the world’s largest.”

Jack Lunsford, president and CEO of WESTMARC, says his organization strongly supports Luke and for several years has worked to preserve its mission. Lunsford sees Arizona Sen. John McCain, the ranking Republican on the Senate Armed Services Committee, as a key advocate for Luke and other military bases throughout the state.

On the issue of residential encroachment, Lunsford says, “We’ve been an advocate of protecting the base from encroachment for many years.”

James “Rusty” Mitchell, director of the Luke Community Initiatives Team, shies away from the term “encroachment.” Mitchell, who retired from the Air Force in 1998 as a lieutenant colonel, prefers “managed growth.” A representative of the Community Initiatives Team attends various city council meetings seeking win-win solutions.

“It’s more a process of managing development in the area so we can continue our flying mission and the cities can continue to be economically viable,” Mitchell says.

Under the terms of a 2004 Arizona law, and accepted earlier this year by the Maricopa County Board of Supervisors, local governmental entities are required to ensure adequate buffer zones around the state’s military bases.

Steve Yamamori, executive director/CEO of Fighter Country Partnership, a support group for programs and services at Luke, says the F-35 means “sustainability for Luke Air Force Base for the next 50 years — and that’s worth trillions of dollars.”

Arizona Business Magazine Jul/Aug 2010

USA Energy Guide

Green News Roundup – Alternative Energy, USAEnergyGuide & More

I’m always on the lookout for developments in the local sustainability industry. USAEnergyGuide was started by three Arizona entrepreneurs passionate about the environment. Realizing that rebate and tax incentives are hard for consumers to navigate, they jumped at the opportunity to create a site that would be simple and user-friendly.

Originally only for Arizona residents, the site has recently expanded to include California and Texas with plans to add more states in the future. USAEnergyGuide is your free online source used to calculate rebates and savings that you can receive by switching to more sustainable forms of energy.

I had the pleasure of meeting with two of the company’s founders — Michael Barber, director of operations and Ken Bonham, director of business development — who took the time to answer a few questions I had about their company.

What led to the creation of USA Energy Guide?
One of our Founders was going through the process of researching how much it would cost to install solar panels on their home, how much they would save on a monthly and yearly basis and what the tax incentives and rebates were, but couldn’t find a site that answered all these questions. So, we sat down and mapped out how we could make this process easier for consumers.

What challenges did you encouter and how were these overcome?
Similar to many startups we had the classic chicken and egg scenario. In order for the company to be successful, we needed installers who matched our qualification criteria and qualified leads (consumers) who were interested in being contacted by these installers. We worked to introduce ourselves to every installer in the markets we served so they could understand how we could help them be successful and also focused on connecting to consumers via social media. Along the way, various local media outlets stumbled across our site and did stories on us. The press stories and word of mouth helped us overcome both these initial challenges.

What are the company’s full line of  services?
For consumers, we provide simple ways to understand how much money alternative energy would save them, what rebates and incentives are available in their geographic area and all associated rebates for the products they are interested in. For installers, we provide leads to consumers and business owners who are qualified and ready to purchase these products.

What is your favorite aspect of the industry/company?
Our favorite aspect of the sustainability and alternative energy industry is that it is rapidly expanding and changing every day. There are new advances in solar technology and energy efficiency regularly, and more and more consumers are trying to understand how they can minimize their impact on the environment. This makes every day different and pushes our team to understand how we can help both our customers — installers and consumers — reach their goals.

What kind of a role do you think sustainability plays in today’s Arizona economy?
Right now, the sustainability industry in Arizona is only in its infancy. As costs for alternative energy technology decrease and consumers’ interest in living a greener lifestyle increase, the industry has nowhere to go, but up. However (and this is big however), the industry’s Achilles heel is support from local, state and federal governments. Without broad based government support to spur continued growth, the industry could die a quick death.

What has been the company’s greatest achievement to date?
From the beginning our greatest achievement has been providing information to consumers they couldn’t easily find before. Along with this, it’s the stories we hear from people who have used our site, found qualified installers and are now enjoying solar panels or solar water heaters in their home.

What are your future plans for the company?
While we have been primarily focused on the solar and energy efficiency industries, the sustainability industry goes well beyond those two verticals. We have big plans to not only expand the site beyond those verticals, but become a community where visitors can find a wealth of information across a wide variety of sustainability topics, both on a national and local level.

www.usaenergyguide.com

As The Valley And State’s Hospitality Industry Has Grown So Has Its Contribution To The Economy

As The Valley And State’s Hospitality Industry Has Grown So Has Its Contribution To The Economy

Tourism is a vibrant and diverse industry, and I have been fortunate to be part of it for the past 25 years. This exciting industry encompasses culture, history, natural wonders, state parks, sports, resorts, spas, restaurants and shopping. And it’s supported by a variety of other industries such as laundry services, food services and transportation — all of which help to keep Arizona’s economy moving forward. As one of the state’s major economic generators, contributions by the travel and tourism industry have been immense. In 2007, more than 35 million visitors traveled to the Grand Canyon State and contributed $19.3 billion to the state’s economy. Additionally, tourism has generated millions in tax revenue and has employed directly and indirectly thousands of residents. 

Twenty-five years ago, tourism wasn’t nearly as lucrative. There were fewer than 20,000 hotel rooms throughout the Valley, and no spas. Visitors came to Arizona because of its scenic beauty and outdoor adventures. But the Valley, more often than not, served as a gateway to other Arizona communities and attractions. Phoenix was rarely seen as the “main” attraction for a family vacation. In 1984, Phoenix Sky Harbor International Airport had only two terminals available for travelers. The freeway infrastructure consisted mainly of the I-10 and I-17 freeways. And the Phoenix Suns were the only major professional sports team playing in the Valley.

However, because of the dynamic growth and development of the Valley, we have been able to greatly expand our tourism marketing efforts. In addition to the state’s signature beauty, outdoor adventures and Wild West history, we now market arts and culture, culinary opportunities, resorts with spas, and plenty of great shopping.

What the Valley now offers has helped define the Phoenix area and Arizona as premier travel destinations. To accommodate the growing number of domestic and international travelers, the airport has added Terminal 4, increasing passenger traffic to 40,000 travelers annually. The addition of the loops 101 and 202 has eased traffic, and the Valley now boasts 55,000 hotel rooms. The new Phoenix Convention Center has more than tripled in size, expanding from 300,000 square feet to an incredible 1 million square feet, allowing for more conventions to take place. 

The Phoenix Suns now have plenty of company — the Arizona Cardinals, the Arizona Diamondbacks and the Phoenix Coyotes — that bring visitors to the state. We have also become a featured destination on the national sports scene by hosting two Super Bowls, Cactus League spring training, the FBR Open and the Fiesta Bowl, including the Bowl Championship Series.

While we can be proud of the way tourism has evolved, like many other industries we have been hit with challenges. As a result of the struggling economy, people are traveling less. The unfortunate misconception about corporate meetings and events has had a negative impact on the industry, as well. However, it’s important to understand that although people are traveling less they are traveling closer to home, giving us opportunities to promote the wonders of Arizona to our own residents and neighbors. 

The tourism industry is resilient and will continue to be so. It is the only export industry that drives revenue to all 15 Arizona counties, and is second only to microelectronics in generating earnings that benefit Arizona’s residents. The earnings generated from tourism are spread throughout the state and have shown consistent growth, helping to create a stabilizing effect on the Arizona economy. It’s vital to our economy to continue promoting Arizona as a vacation destination.

We are fortunate to live in such an incredibly diverse state with breathtaking scenery, culture and heritage, sports, fine dining and shopping. It’s what people from thousands of miles away want to experience.

Dark Days: Recession in Arizona

The Recession In Arizona And The Nation Could Drag On For Another Year

Winters in Arizona may be sunnier than other places, but the economy in the Grand Canyon State has cooled faster than almost every state. Analysts expect 2009 to bring even more bad economic news, and it is likely that the monthly reports on job growth and unemployment will be downright chilling for some time to come.

As in all downturns in the past 50 years, Arizona’s economy will track the national business cycle. There are no forces inherent in the makeup of the state’s economy that would propel Arizona into an independent turnaround. Arizona will recover at approximately the same time as the country as a whole.

And, entering 2009, a rebound for the national economy is nowhere in sight. The National Bureau of Economic Research recently decreed that we have been in recession since the end of 2007. Now that a start date has been identified, it is only natural to wonder how long recessions typically last. The answer is that the average post-World War II recession has been 10 months from peak to trough. This information is perhaps useful for trivia buffs, but in the current environment, the 10-month average is not much of a guideline. This recession has already persisted past 10 months, and may be well on its way to setting a post-war record for length. The recession will certainly be 18 months at a minimum, and could persist for as long as 24 months. Or more.

The list of economic problems facing the country and Arizona continues to grow. Until recently, exports and non-residential building were actually expanding at a double-digit pace, keeping the Gross Domestic Product growth figures in the positive region. As the global economy slows, exports will decrease, probably early in 2009. Arizona has important manufacturing exports, especially in high technology, that will be affected.

Non-residential building (commercial, office, and warehousing) will grind to a halt in 2009 as current projects are completed. When the economy is losing jobs and sales are falling, there is no need for additional offices, retail space or warehouses.

During the first half of 2008, consumers in Arizona and the nation continued to spend, and that bolstered growth. New unemployment claims were mounting during this period, but conditions would have been worse if consumers were not contributing to the economy. The credit crunch hit in the second half of 2008. Combined with a chaotic stock market and continually falling home values, consumer willingness — and ability — to spend hit the breaking point. Arizona retail sales were down sharply in 2008, with auto sales and restaurant and bar sales both off by 25 percent. Consumer spending is expected to fall more during the early months of 2009.

Compared to other states, Arizona’s labor markets are in the deep freeze. Employment in the state is down by more than 75,000 jobs compared to last year at this time. Arizona is just one of 37 states now losing jobs, but conditions are worse here. Arizona ranks 49th among all states in job growth. Only Rhode Island is losing jobs more rapidly. Unemployment rates nationally and in Arizona are destined to increase into the 7 percent or possibly 8 percent range before recovery begins.

And recovery will come, as it always does in business cycles, although this one will be deeper and longer than has been seen since the 1930s. Housing inventory will eventually be worked off, and foreclosures will begin to slow. Home prices will stabilize. The nation adds three million new residents per year, and the pent-up demand created by family formation and population growth will start to translate into new sales.

Arizona benefits from high levels of domestic migration. Even if migration slows temporarily in the down period, the basic attractions of Arizona remain powerful in the longer term.

One of these attractions for many decades has been affordable housing. During the housing boom, home prices in Phoenix increased faster than in many peer metropolitan areas, and Phoenix became less competitive to relocators. Although falling values have caused dismay to Arizona home owners, the resulting new lower prices actually create an environment for ultimate growth.

The table shows housing affordability as measured by the National Association of Homebuilders. Higher numbers indicate housing is more affordable. At the end of the previous recession (third quarter of 2001) Phoenix had an affordability value of 70, which means 70 percent of homes were affordable to families at the median Phoenix income. Phoenix housing was more affordable than the nation and the peer metro areas shown. Two years later, at the peak of the boom, Phoenix was less affordable than Denver, Riverside, Calif., and the nation as a whole. But the most recent values, for third quarter 2008, show Phoenix affordability up by 75 percent over the 2005 figure, and more affordable than the other metro areasandthe nation. The Phoenix housing advantage has been restored.

There is one final optimistic observation to be made, one which is familiar to Arizona economy-watchers. When recovery does begin, Arizona invariably rebounds much stronger than the nation, and more vigorously than most other states. What analysts are still debating is whether this rebound will come in 2009 or is delayed until early in 2010.