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Experts: Slow, steady economic recovery for Arizona

Our economy continues to slowly improve, with the healthcare and biosciences industry having the most potential for local employment growth. That was just one of the positive signs that came out of last week’s Economic Outlook 2015, presented by the Greater Phoenix Chamber of Commerce (GPCC) and Cox Communications. Nearly 800 business leaders attended the 32nd annual event at the Arizona Biltmore on Friday, September 5, 2014, to hear an analysis of the state’s economic challenges and what opportunities lie ahead for Arizona’s economy.

Attendees gained insight from local, national and global economic experts, including presentations by Dr. Quincy Krosby, Chief Market Strategist at Prudential Annuities, local Valley economist Elliott Pollack of Elliott D. Pollack & Company, and financial markets expert Jim Huntzinger of BOK Financial.

In an exclusive GPCCTV video, Pollack points out the positive developments he sees and why continued economic growth will be slow for Arizona.

Stated Pollack, “I’m more optimistic than I was a year ago. The housing market is going to improve and continue to grow, but very slowly. While it’s a little disappointing in the housing market, overall it’s not a bad picture. There is no recession on the horizon. Consumer confidence surveys are really starting to improve in a meaningful way. But essentially, things are moving forward.”

Huntzinger, executive vice president and chief investment officer of BOK Financial, provided a national perspective of the economy and his impression of improving economic indicators, the impact of events overseas and the outlook for the markets.

“I feel pretty confident about the way the economy is setting up right now,” said Huntzinger. “The U.S. economy is stable and improving. The auto industry is doing quite well. The retail industry is doing OK. Manufacturers are improving. We have a slow-growing, but deliberate economy that’s gaining some steam.”

Prudential Annuities Chief Market Strategist Dr. Quincy Krosby, a former diplomat with an impressive career in international finance, provided a global perspective and discussed the current status of industries abroad, future economic drivers and the role Phoenix plays in the global economy. In this exclusive GPCCTV video of Dr. Krosby, she shares how events on the other side of the globe can impact the entire world and American economies.

“A healthy global economy is good for all countries…we’re always optimistic,” stated Krosby. “Terrorism is the biggest worry in a volatile climate, but the U.S. economy is resilient.”

Cox Communications once again showcased its mobile technologies with the Cox Media Mobile Survey, which asked attendees at Economic Outlook 2015 to share their sentiments via text message on local industry growth, national policy and local industry growth.

Thirty-three percent of attendees who responded said that the healthcare and biosciences industry has the most potential for local employment growth.
Twenty-seven percent of respondents indicated that their number-one concern next year from an economic perspective was election results, while 25 percent of survey respondents indicated that international unrest was their top concern.
Global risks were also on everyone’s mind, with 26 percent of survey respondents citing political and social instability as the top global risk, while 18 percent of respondents indicated that fiscal crises in key economies were high on their radar.

Full results of the Cox Media Mobile Survey are available, along with the presentations and interviews from Economic Outlook 2015, at http://www.phoenixchamber.com/eo2015.

The GPCC has been hosting this event since 1982, and uses it as an opportunity to bring the community together to learn about both the global and local economic indicators. The Chamber’s Economic Development Annual Report was also presented during Friday’s event. The report communicates the Chamber’s commitment to support community businesses in their efforts to grow, retain and expand and can be found online at www.phoenixchamber.com/yearinreview.

“The Greater Phoenix Chamber of Commerce is proud to work with a strong community partner like Cox Communications to present the state of the economy from a local, national and international perspective to business leaders across the Valley,” stated Todd Sanders, president and CEO of the Greater Phoenix Chamber of Commerce. “Although Arizona’s economic recovery remains on a slow, but steady path as the presenters stated at this year’s event, I am confident that Arizona will see continued improvements in job growth, consumer spending and economic development in 2015.”

Added Sanders, “In collaboration with the City of Phoenix and the Arizona Commerce Authority, the Greater Phoenix Chamber of Commerce’s PHOENIX FORWARD>> initiative will deliver a strategic and sustainable, economic development plan. This initiative focuses on strengthening and growing existing business in three key industry sectors: Health Care & Biosciences, Transportation & Logistics and Advanced Business Services. Together, we will remove barriers to success for the region’s businesses and grow Arizona’s economy from within.”

bioscience - economic outlook - AZ Business Magazine May/June 2012

Strength Of Bioscience Helps Brighten Arizona’s Employment Outlook

Bioscience brings strength to Arizona’s employment opportunities.

Arizona’s economic doldrums are finally starting to appear in the rearview mirror.

“Here in Arizona, the state ranked No. 12 in job creation (in 2011),” says Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at ASU’s W. P. Carey School of Business. “That’s a vast improvement from last year at this time, when it ranked No. 40.”

Twenty percent of the Phoenix-area companies interviewed for a Manpower Employment Outlook Survey plan to hire more employees during the second quarter of 2012, while just three percent expect to reduce staff.

Leading the charge in Arizona job growth is technology, healthcare and bioscience, Ernst says. “We’ve also seen manufacturing pick-up substantially in the last month with roles in accounting and finance,” he added.

According to Manpower spokesperson Frank Amendariz, other job prospects for the next quarter appear best in construction, transportation, utilities, wholesale and retail trade, information, financial activities, professional and business services, and leisure and hospitality.

“Employers expect stronger employment prospects compared with one year ago,” Amendariz says optimistically.

“There’s a lot more optimism among hiring managers than in years past,” says Andy Ernst, regional vice president of Robert Half International, a specialized staffing services company. “Businesses are looking to hire. As the economy continues to regain its foothold, we anticipate an uptick in hiring as more companies look at ways to market themselves to attract new candidates and retain key members of their team. We anticipate the next 3-4 years being very good on the job front here in Phoenix.”

But no sector has shown the strength or potential that bioscience has shown. During the post-recessionary period of 2009-10, bioscience jobs in Arizona increased by 7.4 percent, compared with a 1.8 percent decline for the state’s overall private sector, according to a new performance analysis of Arizona’s bioscience sector, commissioned by the Flinn Foundation.

The annual study by the Battelle Technology Partnership Practice found that since 2002 Arizona has outpaced the nation in generating bioscience jobs and firms, and in winning National Institutes of Health grants, the gold standard for biomedical research funding. Even venture-capital funding, long a challenge for Arizona’s bioscience sector, was on an upswing in the past year.

“Through the most trying economic circumstances of our lifetimes, bio in Arizona more than held its own,” says Walter Plosila, senior advisor to the Battelle Technology Partnership Practice. “The bioscience sector is past the ‘promising’ stage. It is now becoming integral to Arizona’s future.”

Since Arizona’s Bioscience Roadmap was launched in 2002, bioscience jobs in the state have grown 41 percent to a total of 96,223, versus 11 percent growth for the nation as a whole. Those jobs pay an average annual wages of $55,353, 29 percent higher than the overall average for private-sector wages in Arizona.

With those jobs comes the demand for a better educated workforce.

“In the Phoenix market, there is high demand for experienced professionals with four-year degrees or more who have 2-3 years experience working in their field,” Ernst says. “The unemployment rate for college-degreed workers 25 and older is 4.2 percent and even lower from some specialties such as IT, accounting and finance.”

While the investment in education is paying off for Arizona’s workers, the investment of time and energy in developing a cohesive plan to further the state’s bioscience industry is paying dividends for the state’s workforce and its economy.

Martin Shultz, chair of the statewide steering committee that oversees the Bioscience Roadmap, applauded the commitment of Arizona leaders. “Over the past decade, officials ranging from school principals to mayors to three governors have made long-term investments in our state’s future by supporting the biosciences,” Shultz says. “The excellent return on those investments is undeniable.”

For more information on the Bioscience Roadmap, visit the Flinn Foundation’s website at flinn.org.

Arizona Business Magazine May/June 2012

recovery sign

ASU Experts: Economy Rebounds, But Is Still Years From Full Recovery

Despite positive growth, full economic recovery is still two years away for the nation and at least three years away for Arizona. That message was delivered today by top economists from the W. P. Carey School of Business at Arizona State University. The experts spoke at the annual Economic Outlook Luncheon sponsored by the Economic Club of Phoenix.

“Arizona lost 314,000 jobs during the recession, and we’ve only added back around 25 percent of those,” explained Research Professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business. “We’ll probably pick up about 48,000 jobs this year in the state, but it will be three to four years until we can expect to see full recovery.”

McPheters says Phoenix is on its way to a significant rebound, having ranked No. 4 among the nation’s large cities for total job growth from March 2011 to March 2012. Arizona is already back to its position as a Top 10 job-growth state, ranking No. 8 for the same time period. Health care and hospitality are two of the fields doing relatively well in the recovery here.

“Arizona’s recovery will be slow, but it appears sustainable as long as the U.S. economy stays on track,” said McPheters. “Businesses should plan now for long-term improvement.”

Nationally, McPheters says the country has already gained back 40 percent of the 8.9 million jobs it lost during the recession.

However, Robert Mittelstaedt, dean and professor of management at the W. P. Carey School of Business, said, “Many experts are still looking at the national-debt situation as an issue. April was the first time since September 2008 that we’ve had a monthly surplus, and that is not likely to be repeated anytime soon.”

Mittelstaedt points out that the recent peak for the U.S. deficit was 10.1 percent, which happened in 2009. The last time the national debt was at that level or worse was all the way back in 1945.

Professor Dennis Hoffman, director of the L. William Seidman Research Institute at the W. P. Carey School, gave an analysis of the state’s budget situation. He says taxes on individuals are relatively low in Arizona, and the public pensions are generally solvent. Also, the recent upswing in the economy has helped provide some stabilization for incoming state revenue, even though tax collections as a share of income have continued to fall for years. However, the current clarity in the fiscal picture will start to get cloudy again.

“Next year, the temporary sales tax will expire, and within five years, the Arizona corporate income-tax rate will be about 30 percent lower than it is today,” explained Hoffman. “This presents some fiscal challenges that will have to be managed.”

As for the housing market, Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School, delivered some good news for hard-hit homeowners.

He said, “Home prices are on the rise in the Phoenix area, and we expect that trend to continue.”

The median single-family home price already went up more than 20 percent from March 2011 to March 2012. The bounce was from $112,000 last March to $134,900 this March.

“Most homes under $250,000 are attracting multiple offers within a couple of days, and there are far more buyers than sellers,” said Orr. “We’ve also seen a big shift in the types of transactions in the market from a focus on lender-owned home sales to a rise in normal resales, new-home sales, investor flips and short sales.”

The number of foreclosures completed this March was down a whopping 60 percent from last March. Also, the number of delinquencies on loans – those who are behind on payments, but not in foreclosure – is down 51 percent. All of this means the supply of lower-priced homes in the area is down to less than a month’s worth of inventory, and new-home construction is cranking up to try to help meet the demand.

Today’s Economic Outlook Luncheon was held at the Westin Kierland Resort & Spa in Scottsdale. The Economic Club of Phoenix hosts the Economic Outlook Luncheon every spring, as one of its opportunities for Valley business leaders and others to network and engage. The club was founded by a group of prominent business executives called the Dean’s Council of 100, in conjunction with the W. P. Carey School of Business. More information about the club can be found at wpcarey.asu.edu/ecp.