Tag Archives: Economist

economy

Arizona Could Hit Full Economic Recovery in 3 Years

We’re finally on the path to full economic recovery, and Arizona may get there in about three years. That’s the main message from experts who spoke today at the 49th Annual Economic Forecast Luncheon co-sponsored by Arizona State University’s W. P. Carey School of Business and JPMorgan Chase.

About 1,000 people attended the event at the Phoenix Convention Center, where economists painted a generally brighter picture for 2013.

“As of September, Arizona ranked fifth among states for job growth, and the Phoenix area was fourth among large metropolitan areas,” said Research Professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business. “Arizona is expected to add 60,000 jobs in 2013, led by professional and business services, retail, hospitality and health care. We should finally dip below 8-percent unemployment in 2013 — down to 7.6 percent.”

McPheters added, as long as the national economy doesn’t drag us down, Arizona may see 2.5-percent growth in its employment rate next year. The state had 2-percent growth this year. Despite the jump, Arizona has gained back less than a third of the jobs it lost during the recession. McPheters believes it will take another three years to return to pre-recession employment levels.

In 2013, McPheters expects improved 5-percent growth in personal income, up from just 4 percent this year. He projects retail sales will go up 6 percent, from 5 percent this year. He expects Arizona’s population to rise 1.5 percent, and he believes single-family housing permits will shoot up a whopping 50 percent, with the local housing market now on the mend.

Both McPheters and Beth Ann Bovino, deputy chief economist at Standard & Poor’s, hinged their forecasts on whether the national economy can really pull forward; otherwise, Arizona will go down, too. The biggest question out there is whether Congress can avoid the “fiscal cliff” – where automatic spending cuts would kick in, just as various tax cuts expire. Bovino says that could plunge the United States back into recession and push national unemployment back above 9 percent by the end of the year.

“If we can avoid the fiscal cliff, then it looks like the economy could finally be in a self-sustaining recovery,” said Bovino. “We expect this year’s gross domestic product (GDP) to hit 2.1 percent, stronger than previously projected. For 2013, we’re looking at about 2.3 percent. Reports also show a stronger jobs market and signs that households are willing to buy big items, such as cars and homes.”

Bovino adds the U.S. unemployment rate was at 7.9 percent in October, and she sees signs more people are joining the workforce and getting jobs. However, she says the labor participation rate is still near a 30-year low, meaning more people will still be coming back to the workforce to look for jobs, keeping the unemployment rate low for a quite a while. Despite this, Bovino expects the national unemployment rate to drop to 7.6 percent next year.

She also has a good outlook for the national housing market, with housing starts already up 45 percent this September over last September. Bovino referenced a report that 1.3 million homes rose above water – with the value going higher than what was owed – in the first half of this year alone. She expects residential construction to go up almost 19 percent in 2013.

In the financial sector, Anthony Chan, chief economist for private wealth management at JPMorgan Chase & Co., says corporations remain flush with cash. They’re waiting for some clarity on where the market will go as a result of the fiscal-cliff situation and other factors.

“U.S. corporations are reluctant to go through global mergers and acquisitions or make big investments until they have a clearer picture,” said Chan. “Corporations are keeping high cash balances, in order to deal with the uncertainty. They’re making near-record profits in some cases, and many values on the stock market look good. However, everyone’s waiting to see what will happen.”

He said high-yield investments, such as bonds, and gold remain relatively attractive. The U.S. dollar keeps falling against currencies from emerging markets, as monetary agencies work through different strategies of dealing with the rough economy.

In the local housing market, Elliott D. Pollack, chief executive officer of Scottsdale-based economic and real estate consulting firm Elliott D. Pollack and Company, also drew some conclusions.

“Even though about 40 percent of Arizona homeowners are underwater on their mortgages, we’re starting to see a recovery,” said Pollack. “The single-family-home and apartment markets look great. Industrial real estate has improved quite a bit. Only office and retail have quite a way to go.”

Pollack adds new residential foreclosure notices are down almost 70 percent from the peak in 2008. Phoenix-area home prices are up more than 35 percent over last year. New-home sales are also doing well, with 67 percent of the local subdivisions active today projected to be sold out in less than a year. Builders are going to have to work to meet the demand, with less land and labor available.

Pollack sees a strong rental presence, with about 22 percent of local single-family homes being used as rentals right now. That’s up from less than 12 percent just a decade ago. Landlords appear to be buying up many single-family homes, and more people are moving to the area.

“In the absence of a fiscal cliff, things should continue to improve over the next several years,” said Pollack. “By 2015, things should be normalized. As I like to say, we’re only one decent population-flow year away from the issue being resolved.”

More details and analysis from the event, including the presentation slides, are available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com.

economy

Arizona Economy Expands in September

Comerica Bank’s Arizona Economic Activity Index increased by 0.9 percentage points in September, rising to a level of 87.7. The September index reading is 17 points, or 24 percent, above the index cyclical low of 71.0. Year-to-date the index has averaged 85 points, seven points above the average for all of 2011. August’s index reading was unrevised at a level of 86.8.

“The Arizona economy expanded for the fourth straight month in September, as shown by our Arizona Economic Activity Index. Job gains are strengthening the foundation of our index, as Arizona job growth continues to outpace that of the nation. Phoenix home prices have increased every month for the 12 months through September,” said Robert Dye, Chief Economist at Comerica Bank. “The recovery in home prices and in residential construction is providing broad support to nearly all aspects of the state economy. We expect to see further improvement to the Arizona economy in the months ahead.”

The Arizona Economic Activity Index consists of seven variables, as follows: nonfarm payrolls, exports, sales tax revenues, hotel occupancy rates, continuing claims for unemployment insurance, building permits, and the Case-Shiller home price index. All data are seasonally adjusted, as necessary, and indexed to a base year of 2008. Nominal values have been converted to constant dollar values. Index levels are expressed in terms of three-month moving averages.

Comerica operates 18 full-service banking centers throughout the Phoenix/Scottsdale area. In addition to Arizona, Comerica locations can be found in its headquarters state of Texas, as well as in California, Florida and Michigan, with select businesses operating in several other states,

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New Global Rankings Laud W. P. Carey School

New rankings and ratings are out from three prestigious groups that examine the best business schools in the world. The Financial Times, The Economist and The Princeton Review all give the W. P. Carey School of Business at Arizona State University extremely high marks for excellence.

“The new rankings from The Economist and Financial Times show the W. P. Carey School is consistently recognized among the best business schools in the world,” says Robert Mittelstaedt, dean of the W. P. Carey School of Business. “The new book from The Princeton Review delivers high praise in the form of reviews from our own students. Recognition from highly regarded media outlets is gratifying, but acclaim from students who actually attend our school and learn from our stellar faculty also really validates our mission and accomplishments.”

In the new rankings out today from the Financial Times, the W. P. Carey School’s executive MBA program in China ranks as one of the Top 25 executive MBA programs in the world. The Financial Times is considered to be Britain’s equivalent of The Wall Street Journal. It specifically ranks the W. P. Carey School program in Shanghai as No. 21 globally and the No. 2 executive MBA program affiliated with any U.S. public university.

“Our students in the Shanghai program are senior-level executives at businesses and government agencies responsible for decisions influencing literally millions of people,” says Professor Buck K. W. Pei, associate dean of Asia Programs at the W. P. Carey School of Business. “The new Financial Times ranking speaks to the commitment of our faculty members and partners in China, who provide world-class management education for key members of the global business community.”

Students in the Shanghai program have included three vice mayors of China’s major provinces, six vice mayors of Shanghai, the chief executive officer of the Shanghai Stock Exchange (the fifth-largest stock exchange in the world), several bank chairmen, the chairman of Shanghai Airlines, the chief executive officer of Baosteel, the deputy commissioner of the China Securities Regulatory Commission, and many other top leaders. The program includes high-level visits to some of the world’s biggest companies and classes taught by faculty members from both Arizona State University and other prominent universities.

The new rankings from The Economist, also released this month, review the W. P. Carey School’s full-time MBA program in Arizona. This marks the first time the school has been invited to participate in the global rankings survey, and it debuted high on the Top 100, at No. 59. It is the only Arizona school on the entire list and Top 10 in the western United States. The full-time W. P. Carey MBA program is known for its small, personal classes and a high return-on-investment for tuition. The Economist, based in London, is renowned for its intellectual appeal and boasts a readership of 2.5 million.

The Princeton Review releases its new edition of “The Best 296 Business Schools” this month. The new book is based largely on student surveys and praises the W. P. Carey School for its peer network, cutting-edge classes, satisfied students, career services, and solid preparation in management and teamwork. The book gives the school a 96 rating for academic experience and a 93 rating for career (graduate employment/salaries), on a scale with a maximum of 99.

“All of these new reviews point to our consistence in striving for and achieving excellence,” says the school’s executive dean, Amy Hillman. “We’ll continue to educate many of the best students in the world, and we’re now unveiling a new scholarship program to help with that.”

The school is unveiling a new scholarship program called The Wm. Polk Carey Memorial Scholarship Fund this month. It will provide financial support for some of the highest-achieving individuals who apply to the W. P. Carey School of Business. The exclusive scholarship is named after the school’s benefactor, real estate investor and acclaimed philanthropist Wm. Polk Carey, who donated $50 million to the school in 2002/2003. No additional application is required for the new scholarship program; all successful full-time MBA applicants will be considered for the scholarships.

For more information about the W. P. Carey School, which also has highly ranked undergraduate business, evening MBA and online MBA programs, visit www.wpcarey.asu.edu.