Tag Archives: unemployment

94750491

U.S. adds 236,000 jobs in February

A burst of hiring last month added 236,000 U.S. jobs and reduced the unemployment rate to 7.7 percent from 7.9 percent in January. The robust gains suggested that the economy can strengthen further despite higher taxes and government spending cuts.

The February jobs report issued Friday provided encouraging details: The unemployment rate is at its lowest level in four years. Job growth has averaged more than 200,000 a month since November. Wages rose. And the job gains were broad-based, led by the most construction hiring in six years.

The unemployment rate had been stuck at 7.8 percent or above since September. The rate declined last month because the number of unemployed fell 300,000 to just over 12 million, the fewest since December 2008.

More than half the decline occurred because 170,000 of the unemployed found jobs. An additional 130,000 stopped looking for work. People who aren’t looking for jobs aren’t counted as unemployed.

The unemployment rate is calculated from a survey of households. The job gains are derived from a separate survey of employers.

Stock prices rose as trading began at 9:30 a.m. Eastern time, an hour after the jobs report was released. Another day of stock gains would give the Dow Jones industrial average its fourth straight record close.

Employers did add slightly fewer jobs in January than the government had first estimated. Job gains were lowered to 119,000 from an initially estimated 157,000. Still, December hiring was a little stronger than first thought, with 219,000 jobs added instead of 196,000.

Robust auto sales and a steady housing recovery are spurring more hiring, which could trigger more consumer spending and stronger economic growth. The construction industry added 48,000 in February; it’s added a solid 151,000 since September. Manufacturing gained 14,000 jobs last month and 39,000 since November.

Retailers added 24,000 jobs, a sign that they anticipate healthy consumer spending in the coming months. Education and health services gained 24,000. And the information industry, which includes publishing, telecommunications and film, added 20,000, mostly in the movie industry.

The economy is also benefiting from the Federal Reserve’s drive to keep interest rates at record lows. Lower borrowing rates have made it easier for Americans to buy homes and cars and for companies to expand.

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Ariz. House approves unemployment changes

The Arizona House of Representatives has approved a bill that shifts to workers the burden of proving they’re eligible for unemployment insurance benefits.

Republican state Rep. Warren Petersen of Gilbert argued his bill prevents people from collecting benefits when they’re not eligible while employers fight their claims. Democrats argued it puts federal funding of the state’s program in jeopardy.

The bill requires workers to present documents showing they’re eligible when filing for unemployment insurance benefits.

Democratic state Rep. Debbie McCune Davis of Phoenix says most employment lawyers tell clients not to put anything in writing when letting workers go. That means workers can’t prove they deserve benefits without a long wait.

The bill also lets employers simply say a worker voluntarily resigned or quit.

It now goes to the Senate.

Economy

Arizona jobless rate rises in December

Arizona’s unemployment rate is up, rising from 7.8 percent in November to 7.9 percent in December.

Department of Administration economists say job gains in the private sector were outpaced by job losses in the public sector.

The department says six economic sectors gained jobs while five others lost jobs.

The leisure and hospitality sector had the biggest increase with 1,300 additional jobs, followed by education and health services with 1,100 additional jobs.

The government sector lost 1,700 jobs.

Arizona Unemployment

DES expects delays for some jobless benefits

The Arizona Department of Economic Security says payment of extended unemployment benefits may be delayed by about a week.

The department says it needs to make some computer programming changes as a result of the federal government’s last-minute extension of emergency unemployment benefits.

Congress passed the legislation and President Barack Obama signed it this week.

DES says payments for the week ending Saturday may be delayed by up to seven business days as programming is completed and payments are generated.

The department says people exhausting benefits for the first 26 weeks of coverage should file for emergency extended benefits so those claims can be processed as quickly as possible.

jobs

Arizona unemployment continues to drop

Arizona’s unemployment rate has dropped for the third straight month, falling to 7.8 percent as the economy added jobs in nearly all sectors.

The October unemployment rate was 8.1 percent.

Department of Administration economists report that the state’s economy added 22,700 jobs in November, the largest November gain since 2005.

Nine economic sectors added jobs in November, while one sector — construction— lost jobs. The natural resources and mining sector was flat.

The biggest gain was recorded in the trade, transportation and utilities sector, with 12,800 additional jobs.

Gov. Jan Brewer is hailing the report, saying it provide reasons for optimism.

Brewer notes that the state’s unemployment is now 3.4 percentage points below its peak in January 2010.

Arizona jobless rate dips in September

Arizona’s September unemployment dipped to 8.2 percent, down from 8.3 percent the two previous months.

Department of Administration economists report that the state added 30,000 jobs, mostly in government due to seasonal hiring by schools.

The department says seven of the 11 major economic sectors added jobs in September while four lost jobs.

The biggest job gains in September were recorded in education and health services and in leisure and hospitality. The sectors with the biggest job losses were construction and financial activities.

Barack Obama,

Jobs report gives Obama a boost

President Barack Obama got much-needed good news Friday following his disappointing debate performance as the unemployment rate dropped to its lowest level since he took office. Republican rival Mitt Romney said Obama still hasn’t done enough to create jobs.

The figures announced by the Labor Department — 114,000 new jobs last month to bring unemployment to 7.8 percent — gave Obama fresh evidence to support his argument that his economic policies are working. Romney countered that the country can’t afford four more years of the president’s leadership and said he would lead a recovery with pro-growth policies for job creation and rising income.

“This is not what a real recovery looks like,” the former Massachusetts governor said in a statement less than an hour after the jobless figures were released. He pointed to millions of people still struggling to find work, living in poverty and using food stamps to feed their families. He also argued that the rate is low in part because some people have quit looking for work.

The unemployment rate fell from 8.1 percent in August, matching its level in January 2009 when Obama became president. There is one more monthly unemployment report before Election Day, so Friday’s numbers could leave a lasting impact on Americans who are already casting ballots in states that allow early voting.

The candidates were headed Friday to opposite ends of one of those early voting states, Virginia. Romney was campaigning for support in the state’s far western coal country while Obama was rallying students at George Mason University in the Washington suburbs.

Obama, seeking to rebound after Romney dominated their first debate Wednesday night, is accusing his rival of being dishonest about how his policies would affect the tax bills of middle-class families and the Medicare benefits of retirees — a squabble that has even injected Big Bird into the race.

“I just want to make sure I’ve got this straight: He’ll get rid of regulations on Wall Street, but he’s going to crack down on ‘Sesame Street’?” Obama said Thursday in Madison, Wis., referring to Romney’s statement in the debate that he would cut a federal subsidy for PBS, which airs “Sesame Street.” ”Thank goodness somebody’s finally cracking down on Big Bird.”

97690520

Unemployment falls in nearly 90% of U.S. cities

Unemployment rates fell in August in nearly 90 percent of large U.S. metro areas, mainly because more people gave up looking for work.

The Labor Department said Wednesday that unemployment rates dropped in 329 large cities, the most in four months. Rates rose in 24 cities and were unchanged in 19.

In the Metro Phoenix area, the unemployment rate was 7.4 percent in August 2012, down from 8.8 percent in August 2011.

The decline in rates across America’s cities was largely for a bad reason: The government only counts people as unemployed if they are actively looking for work.

The trend closely matched the national figures. The U.S. unemployment rate fell in August to 8.1 percent from 8.3 percent, also because more people stopped searching for jobs and weren’t counted.

The metro data are more volatile than the national figures because they aren’t adjusted for seasonal factors, such as summer hiring.

The four cities with the biggest drops in unemployment were all in Mississippi, where the work force shrunk by 1.8 percent to 1.3 million. In Hattiesburg, the unemployment rate dropped to 7.3 percent from 9 percent. In Jackson, it fell to 6.7 percent from 8.2 percent. Pascagoula and Gulfport-Biloxi reported the next biggest declines. Yet the state barely added jobs in August.

The two cities with the biggest increases were in Washington state: Yakima’s rate jumped to 10 percent from 8.2 percent, and Wenatchee’s rose to 7.2 percent from 5.7 percent. Both are centers of apple production and their rates can be volatile during the harvest season.

In Denver, where President Barack Obama and GOP challenger Mitt Romney were set to debate Wednesday night, the unemployment rate fell half a percentage point to 7.7 percent. Unemployment also dropped in Las Vegas, where Obama has been preparing for the debate, although it was still painfully high at 12.3 percent. Nevada has the nation’s highest unemployment rate of 12.1 percent.

There were some signs of progress in the report. The unemployment rate is below 7 percent in 123 metro areas, up from 73 a year ago. And the rate tops 10 percent in only 54 areas, about half the number compared with a year ago.

The lowest unemployment rate was in Bismarck, N.D., where it was 2.6 percent. North Dakota has benefited from a boom in oil and gas drilling.

The highest rate was in El Centro, Calif. and Yuma, which both reported rates of 29.9 percent. Both cities have large numbers of migrant farm workers.

construction industry

Construction Industry Loses 7,000 Jobs In March

The construction industry lost 7,000 jobs in March, inching the unemployment rate up to 17.2 percent from 17.1 percent in February, according to the April 6 Department of Labor employment report. Year over year, construction industry unemployment is down compared to the March 2011 rate of 20 percent. The construction industry added 55,000 jobs over the past 12 months.

The nonresidential construction sector lost 6,000 jobs for the month, but year over year has added 7,000 jobs, or 1.1 percent, bringing the total number of jobs to 659,400. Residential construction lost 5,000 jobs for the month and has added 3,000 jobs during the past 12 months, or 0.4 percent, to reach 569,000 jobs.

Nonresidential specialty trade contractors shed 5,000 jobs in March, while residential specialty trade contractors added 5,000 jobs and heavy and civil engineering construction employment saw a gain of 4,000 jobs. Year over year, nonresidential specialty trade contractors have lost 4,000 jobs, or 0.2 percent; residential specialty trade contractor employment grew by 29,000 jobs, or 2 percent; and heavy and civil engineering construction employment increased by 20,000 jobs, or 2.4 percent.

Across all industries, the nation added 120,000 jobs in March. The private sector expanded by 121,000 jobs and the public sector shrank by 1,000 jobs. On a yearly basis, the nation has added 1,899,000 jobs, or 1.5 percent. The national unemployment rate stood at 8.2 percent in March, down from 8.3 percent in February, with the labor force shrinking by 164,000 people.

“Today’s employment report was disappointing, particularly for the construction industry,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “The first quarter of 2012 will be judged as a step backward for the industry as construction spending levels stagnated and employment momentum disappeared.

“A certain level of weakness was anticipated due to the economic slowdown during the spring and summer of last year that caused many projects to be put on hold and resulted in diminished construction momentum,” Basu said. “In addition, ABC’s Construction Backlog Indicator, a predictor of construction activity, dipped during last year’s fourth quarter, setting the stage for the declines in construction employment now being observed.

“This employment report differed from the prior three months because employment growth was disappointing for the broader economy as well,” Basu said. “The consensus coming into today’s release was the nation would have added approximately 200,000 jobs in March, which did not happen.

“Some attribute the disappointing March report to abnormally warm weather across the nation, which caused February’s employment to be artificially high. However, one month does not make a trend and other data remain upbeat, including consumer activity and overall economic momentum. Economists and others will be looking for signs of improvement in labor market dynamics in April,” Basu said.

Economic Forecast

Economic Forecast: Arizona, U.S. to Show Improvement in 2012

Improvement in both the Arizona and U.S. economies can be expected next year, but full recovery is still a few years away. That’s according to experts who spoke Wednesday at the 48th Annual Economic Forecast Luncheon, co-sponsored by ASU’s W.P. Carey School of Business and JPMorgan Chase.

 More than 1,000 people packed into the Phoenix Convention Center to hear the outlook for 2012. The experts say that though U.S. economic growth was actually slower this year than last year, conditions for 2012 are looking up for the nation and state.

“Although the Arizona recovery is tepid at best, every key indicator is expected to improve in 2012 as compared to 2011, including jobs, incomes, sales and even housing,” said Research Professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business. “Still, no indicator will be sharply better until the national economy moves onto a faster growth path.”

McPheters says Arizona hasn’t been rebounding with the same vigor seen in previous recovery periods. The state lost 324,000 jobs from 2007 to 2010. By the end of this year, only about 20 percent of those will be restored. However, Arizona did move from No. 49 among the states for job creation in 2010 all the way up to a Top 10 growth state this year.

“After three consecutive years of lost employment, about 23,800 jobs were added in 2011,” said McPheters, editor of the prestigious Arizona and Western Blue Chip Forecast publications. “Arizona employment is expected to increase by 45,000 jobs in 2012. However, we’re now at about 9 percent unemployment in the state and expect unemployment to continue to be a problem next year, dropping to around 8.5 percent. Healthcare and manufacturing are among the sectors doing relatively well.”

McPheters also expects Arizona’s population to grow by 1.5 percent in 2012, faster than the national average of about 1 percent, but slower than Texas and Colorado. Personal income is expected to go up 6 percent in Arizona. Retail sales are projected to rise by 8 percent. Cautious consumers have largely been putting off non-essential spending, but may relieve some pent-up demand next year.

In the hard-hit housing market, McPheters predicts 20-percent growth in single-family housing permits. However, Elliott D. Pollack, president of highly regarded economic and real estate consulting firm Elliott D. Pollack and Company, explained that even a large percentage growth in this area doesn’t mean much.

“Permits have bottomed out, but they are still down 89 percent from the peak,” Pollack said. “About 50,000 to 55,000 excess housing units remain in the Greater Phoenix area.”

Foreclosures and short sales have been dragging down existing-home prices. Pollack says, in the third quarter of this year, 25 percent of the existing-home transactions were foreclosures, and another 29 percent were short sales. Also, more than 40 percent of the homes being sold are going to investors and other owners who won’t actually live there.

“On the positive side, the number of units going into foreclosure is declining, and housing prices appear to have stabilized,” said Pollack. “Depending on population growth, job growth and other factors, we could see full housing recovery in three to four years.”

Pollack says the apartment market is already looking good, as many people switch to renting. Vacancy rates in industrial space have started to decline, and an increasing number of companies are looking at the Phoenix area as an alternative to California. Still, about one out of every four square feet of office space in the metro area is vacant.

At the national level, experts expect 2012 to bring an increase in gross domestic product (GDP) of somewhere between just under 2 percent to 3 percent. Professor John B. Taylor, the George P. Schultz Senior Fellow in Economics at Stanford University’s Hoover Institution, talked about what needs to be done in this area.

“The economy wasn’t nearly this weak in the 1980s, following an equally deep recession when unemployment rose to even higher levels,” said Taylor, who served as Undersecretary of the Treasury during President George W. Bush’s first term and on the President’s Council of Economic Advisers for President George H. W. Bush. “Recently, we have seen a return toward more government intervention for fiscal, monetary, regulatory and tax policy. These swings have had enormous consequences for the American economy.”

Taylor says the country needs a predictable government policy framework based on law with strong incentives derived from the market system and a clearly limited role for government.

Anthony Chan, chief economist for private wealth management at JPMorgan Chase & Co., specifically addressed the future of the financial markets. He said many stocks are a bargain now.

“We currently face oversized volatility and uncertainty; for this reason, we believe stocks are attractively priced from a historic perspective,” said Chan, who served as an economist at the Federal Reserve Bank of New York, appears monthly on CNBC, and is a member of the Reuters, Bloomberg and Dow Jones weekly economic indicator panels. “Prices should gravitate toward fairer values when the outsized degree of uncertainty lifts.”

Chan added corporations are sitting on “huge amounts of cash,” while paying out low dividends. When business sentiment improves and uncertainty is reduced, he expects faster employment and economic growth. He also believes high-yield and municipal bonds will remain a good investment as long as the country doesn’t fall into recession. Still, he is concerned the United States may be losing some control over its long-term destiny, noting that China and Japan hold a combined 46 percent of U.S. Treasuries.

“It is hard to believe the U.S. influence will remain as dominant as it once was, if this trend persists,” said Chan. “Meantime, emerging markets are becoming more attractive. Consider a diversified portfolio.”

For more details and analysis on the 2012 economic forecast, including the presentation slides, go to knowwpcarey.com.

 

Image Provided by Flickr

ASU Cancels Study Abroad Program In Egypt

On January 25th, Egyptian citizens erupted in violent revolution against corruption, extensive poverty, enormous national unemployment and numerous governance problems of autocratic leader Hosni Mubarak — and two Arizona State students were caught in its crossfire.

The students were studying abroad in Cairo at the time political unrest hit its threshold in late January; and with ASU’s Study Abroad Office’s help, they were pulled out of the area.

Image Provided by FlickrASU has had a long-standing relationship with the American University of Cairo (AUC) where the previously mentioned students had been studying, but as CNN reported attacks on American journalists in the area, concerns arose from families of the students involved.

“We feel confident that both students will be back in the U.S. by this weekend, weather permitting”, said Amy Shenberger, director of the Study Abroad Office at ASU.

Their decision in the cancellation was met with widespread agreement by both the U.S. government agencies involved and university partners in Cairo.

In result from years of political turmoil, Egypt reached its tipping point of strong government rhetoric from Mubarak.  Headlines of bloodied civilians and anti-riot police have scattered newspapers nationwide, giving American news affiliates reason for concern.

According to the Washington Post, the White House is aiding in the extraction of news reporters in the area, as many have been savagely beaten or detained by the Egyptian government.Image Provided by Flickr

iJet, a travel intelligence that monitors international activity for ASU’s study abroad office, has maintained communication with Shenberger to give live updates on the situation.

Shenberger also strongly advocates the continuation of its program in Egypt in future years but believes the current political atmosphere presents a clear and present danger to the students.

“We have had a partnership with AUC since 2004, and it’s our intention to maintain that going forward,” said Shenberger.

The program plans to resume once the dust settles in Egypt, according to Shenberger, and ASU will continue to monitor the situation with the students’ best interests.

“The safety and security of all of our students is our primary concern, [and] any time the danger in a location outweighs the benefits of the academic program, we take the steps necessary to ensure our students’ safety,” said Shenberger.

Consumer Confidence

Consumer Confidence In The New Year Will Influence Buying Decisions

Employment and real estate prices have regularly influenced our economy over the last century. Recently, they have negatively compounded the economic crisis and will most likely continue to be an issue as we fight through to recovery.

What will it take to change the direction of unemployment and low real estate prices? It begins with corporate confidence and consumer spending. Due to the challenges we currently face, many corporations have held on to large amounts of cash. Until corporations feel the worst is behind us and start deploying their large cash reserves, we will see a delay in our recovery. These large cash reserves will be used for research and development, marketing, and most importantly, hiring. Over time, people’s confidence will increase due to hiring, and as this happens people will begin to tap into their savings to start buying goods and services such as clothes, small home appliances, automobiles and vacations.

As more time goes on and we experience improvement with unemployment, people will begin to feel more confident and see the opportunity to invest in the markets. Doors will open for new opportunity for individuals to consider buying homes again. People who thought that owning a home was once out of their reach can now afford to buy. Home buying will certainly increase as we see unemployment decrease, which will benefit most of us — as long as we don’t get greedy again. Slowly, both will recover. Unemployment will most likely come down before real estate goes back up.

Everything is cyclical. Eventually, low unemployment and higher real estate prices will help the economy again. How long will it take? We don’t know. Recovery from a crisis such as the recent recession will take longer than we think. Be patient and use the knowledge we have learned from this recession to plan appropriately for the next crisis.

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Arizona’s Unemployment Rate Climbs In August

Despite some gains in the governmental sector, the state’s unemployment rate for August rose one-tenth of a percent to 9.7 percent as private sector hiring was flat, according to the Arizona Department of Commerce. Usually, Arizona’s economy generates jobs in August, but last month only 28,000 jobs were created. That was still better than August of 2009.

Most of the seasonal job gains were the result of local schools bringing on 26,000 positions for the start of the academic year. State education added 7,000 jobs, with losses in other government agencies offsetting some of the gains.

The private sector posted gains in five sectors and losses in five sectors for a net decline of 800 jobs. Of the state’s 11 industry sectors, government posted the largest job gains at 29,000. Educational and health services followed government, adding 3,000 jobs. Construction continued to add jobs in August, generating 1,900 and giving the industry a net gain through the first eight months of the year.

The Commerce Department reports that, “Construction employment trends in 2010 indicate stabilization in the industry after 28 months of continuous losses.”

Other sectors creating jobs in August were: professional and business services (1,800); trade, transportation and utilities (1,100); and natural resources and mining (100). The sectors that lost jobs last month were: information (500); financial activities (800); manufacturing (1,400); and other services (2,000).

Leisure and hospitality lost 4,000 jobs last month, which the Commerce Department called “unusual.” With the winter tourism season generally starting after Labor Day, hotels and resorts in the state traditionally tend to ramp up hiring in August.

Year-over-year, the jobless situation in Arizona continues to show improvement. Total nonfarm employment last month was down 0.1 percent. In August 2009, it was down 8.3 percent. Compared to August of last year, four sectors registered year-over-year job gains last month. The professional and business services sector was up 8,200 jobs; trade, transportation and utilities was up 7,700 jobs; educational and health services had a gain of 7,100 jobs: and natural resources and mining posted gains of 1,000.

Around the state, only the Phoenix and Tucson metro areas held steady with their unemployment rates. Other major metro areas in the state posted increases in joblessness. Here’s a look at unemployment around the state:

Phoenix Metro: 8.8%
Tucson Metro: 8.7%
Yuma Metro:    23.7%
Flagstaff Metro:   8.0%
Prescott Metro:   10.2%
LHC-Kingman Metro: 10.9%

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Greater Phoenix Economic Forecast 2011: “Painfully Slow”

The economy may be better in 2011 than it was in 2010, but the road to full recovery will remain long and full of potholes. But hey, it could be worse. It could be 2009.

That’s according to economist Elliott D. Pollack, CEO of Elliot D. Pollack & Company. Pollack was speaking at the Greater Phoenix Chamber of Commerce’s Economic Outlook 2011 breakfast today at the Arizona Biltmore Resort & Spa.

Pollack said population growth in the Valley should settle at 1 percent this year and rise to 2 percent in 2011. Net job growth will contract by 1 percent in 2010 and climb by 2 percent in 2011. Retail sales will increase 1 percent this year and rise by 8 percent next year. Building permits will increase by 20 percent in 2010 before jumping 50 percent in 2011.

In summarizing his 2011 forecast for the Valley, Pollack read a laundry list of good news and bad news:

  • The housing market is at or past bottom, but there are many negatives still trumping a full recovery, most notably slower migration flows.
  • The commercial real estate market is at or past bottom, but recovery will be slow and “take a long time.”
  • Sales tax revenues are no longer falling, but they aren’t growing quickly enough to fix the state’s battered budget.
  • Retail sales have past bottom and there is pent-up demand among consumers, however, those same consumers are still so worried about personal debt that they will continue to curb spending, thus thwarting a big recovery.

While Pollack said the Valley’s economic recovery will be “painfully slow,” he points out that a recovery is indeed underway. For example, the state’s standing in employment growth compared to the rest of the nation is gradually improving — but only after a precipitous decline. In 2006, Arizona ranked second in the nation in job growth; that dropped to 22nd in 2007; 47th in 2008; and 49th in 2009. Up to July of this year, the state had moved up to 42nd in job growth.

Another indication that the Valley’s economy is showing improvement is in the number of economic sectors that have shown net job gains. Of the state’s 12 major economic sectors, five have shown net job gains so far this year (education and health services; trade; leisure and hospitality; professional and business services; other services). That compares to the same time last year, when no economic sectors reported net job gains.

But, Pollack pointed out again, the Valley and state can’t expect the robust and recoveries that have accompanied past recessions.

He says the Valley’s housing market continues to be weighed down by:

  • Weak job growth
  • Tough underwriting standards
  • Negative home equity
  • Loan modification failures
  • High foreclosures
  • Option ARMs (adjustable rate mortgages) peaking in 2011

In terms of equity, 51 percent of houses in the state have negative equity. The national average is 23 percent. Such negative equity severely curtails people’s ability to buy and sell homes. In addition, supply still outstrips demand in the single-family home market, with an excess inventory of houses somewhere between 40,000 to 50,000 units, Pollack said. A balance between supply and demand will not be fully achieved until about 2014, he added.

The picture is bleaker for the commercial real estate market, with delinquencies on loans still very high. In the office market, Pollack cited forecasts from CB Richard Ellis that said vacancy rates would peak at 25.6 percent in 2010 before dropping to 23.9 percent in 2011. As Pollack pointed out, there currently is no multi-tenant office space under construction in the Valley. In fact, he expects “no significant office building in Greater Phoenix for the next five years.”

Industrial space vacancy rates are faring only slightly better, with CB Richard Ellis predicting year-end vacancy rates of 16.4 percent for 2010 before falling to 15.2 percent in 2011. As for the retail market, the vacancy rate will rise to 12.3 percent in 2010 and hit 12.9 percent in 2011.

For office, industrial and retail commercial real estate, Pollack said he did not expect vacancy rates to reach normal levels until 2014-2015.

Still, Pollack maintained that the economic outlook for the Valley “remains favorable,” thanks to the recovering national economy, increased affordable housing in the Valley, a rise in single-family home building permits, unemployment bottoming out, consumer spending improving and continued problems in California.

Green Trash Can

Effective Ways To Go Green, High-Tech Trash Bins And More

Here’s some green bits from around the web. This week we’ve gathered stories about tattletale trashcans costing their owners big bucks, effective ways to go green that may surprise you, a possible “feed-in tariff” to encourage solar power growth in Arizona, test driving electric cars and others.

Feed-in Tariff to Aid Solar Weighed
Arizona officials are considering a “feed-in tariff” to encourage more solar power usage and to guarantee profits for solar developers. The tariff would require power companies to buy electricity from solar developers at prearranged prices, since they are required to get 15 percent of their power from renewable sources by 2015. Similar tariffs are in place in Germany, the world’s leader in solar power, and in many states and cities across the United States.

Most Americans Unsure of Most Effective Ways to Save Energy
Researchers have discovered through surprising survey results that most Americans have vast misconceptions regarding the best ways to save energy. In general, the public thinks that curtailing energy use, by turning off the lights, for example, is the most effective way to save energy. In reality, using more energy-efficient equipment, such as compact fluorescent light bulbs, can be just as, if not more, effective. There are a lot of surprising facts like that in this article and in the survey, found the results of which can be found here.

High-Tech Trash Bins Rat Out Residents Who Refuse to Recycle
Don’t recycle? Better start before your trashcan starts tattling and slaps you with a fee. In Cleveland, trash bins are being embedded with microchips that will prompt the collector to go through the bin if the recycling can isn’t brought to the curb regularly. If the bin is more than 10 percent recyclables, you get stuck with a $100 fee – all because your trashcan ratted you out. How embarrassing.

Study Finds 40% of U.S. Consumers Likely to Test Drive EVs
Despite the fact that most consumers have concerns preventing them from buying electric cars, a new study finds that at least 42 percent would be willing to consider and test drive an EV (electric vehicle). Concerns consumers face include the possibility of running out of battery power on the road and limited mileage, but the benefits, such as the positive environmental impact and potential cost savings, may soon outweigh the negatives.

Employees Losing Confidence in Companies’ Green Commitments
Americans’ confidence in their employers’ commitment to environmental responsibility has reached an all-time low, likely as a result of high unemployment and increased workflows. Meanwhile, local governments have inspired their highest level of confidence yet. These are based on the Green Confidence Index, a monthly online survey.

housemarkethardtoread

High Foreclosure Rate And Unemployment Make Housing Recovery Hard To Read

The Phoenix resale market slowed a bit in May when compared to April, possibly because activity spiked last month as the federal first-time home buyer program came to a close, according to Jay Butler, associate professor of real estate and author of the monthly Realty Studies Report from the W. P. Carey School of Business. And though foreclosures as a percentage of the market are continuing to decline, the actual number of foreclosures is still quite high, he said. Even hopeful signs, like the recent increases in median price, are connected to foreclosures — in this case because foreclosures on high price homes pulled the median up. So where will Phoenix be in the fall? Hard to say, according to Butler, because we’ve never been here before. (9:37)

Students/employees succeed post-recession

New Program At Thunderbird Aims To Help Students And Employees Succeed Post-Recession

Lately, the national and international media have been reporting that the economy is recovering. The chatter is that many of the key indicators (other than unemployment) are starting to predict that we may be just a quarter or two from the “light” at the end of the tunnel.

That light, however, could be snuffed by yet another crisis — a crisis in sustainable leadership. The loss in human potential caused by the high demands and increased stress related to reductions in human resources and development of remaining talent could be catastrophic for businesses.

Sure, many of the cost reductions in companies and organizations have had a positive impact on margins and liquidity, but will this be sustainable? Many executives have shared their doubts about whether the changes and strategies they put in place during this recession will make their organization more capable of reaching their future targets. Even worse, they question their own energy and capacity to continue to try to keep up, let alone get ahead.

This is the crisis at the end of the tunnel. There will be many opportunities that emerge from the post-recession economy. Unfortunately, too many leaders and organizations still will be in survival mode because they are numb, tired, foggy and lack the passion to really capitalize. In short, they won’t have the gas in their tank to use the knowledge they have to bring their business back to the level it should be.

The last year has been a time of less. Less people, less investment in the people remaining, less optimism, less outward focus (on the customers and the opportunities) and less training. Unfortunately, it also has led to a lack of high-performance behaviors. In order to see the light at the end of the tunnel businesses and organizations must change the paradigm to one of MORE. More energy, more passion, more productivity, more preparation, more focus and more design.

The Thunderbird School of Global Management recognizes this missing link in the executive world. This is why it is collaborating with Tignum to incorporate sustainable high performance training into the school’s own work force and educational experiences. The aim is to ensure its employees, graduates and executive education clients not only garner the business and cultural skills needed to run sustainable organizations, but also the personal capacity to maintain their own long-term performance and competitive edge.

Sustainable high performance training was first introduced to Thunderbird’s faculty and staff during a kickoff event on Aug. 18. Later that month, similar presentations were made to new full-time students. Thunderbird now is integrating the program into campus life through follow-up workshops and an on-campus communication campaign. School officials say the goal is to help participants overcome habits that lead to burnout by building a solid foundation that can sustain high performance throughout their careers.

Thunderbird and Tignum also are working to develop a sustainable high performance program for corporate clients who come to the school for executive education.

“Incorporating sustainable personal leadership training with Thunderbird’s No. 1-ranked global business education furthers the school’s mission to produce global leaders who make a lasting impact in the world by creating sustainable value for their companies and communities,” Thunderbird President Ángel Cabrera said in a statement. “In order for individuals to create lasting value, it is imperative they be equipped with strong global business skills combined with a socially responsible and global mindset and the capacity for their own sustainable high performance.”

The fact is, the knowledge, skills and strategies that have gotten businesses to this point will no longer be sufficient to achieve long-term goals in the future if companies do not invest in the sustainability of their people.

Recently there was a special issue of the Harvard Business Review called Leadership in the New World. The name of this issue alone explicitly implies that what we knew in the “old” world won’t work in the future. The habits that you’ve used to be successful in the past won’t be enough to ensure your success in the future.

The New World will require energized, responsive, agile, creative and attentive leaders. It will require that they energize and inspire others so they can meet their customers’ desires and stay two steps ahead of the growing and gainingcompetition. This will require new personal habits to increase their energy, resilience, brain performance and capacity. In the past, too many executives saw these things as a “nice to have,” but now these things are a “strategic must.” Your own personal energy and resilience are your foundation upon which all of your performance is built.

Sustainable high performance is a condition where you are highly motivated, your self-esteem is strong, your excitement to handle challenges is evident and your physical energy is abundant. People perceive you as present,grounded, responsive and focused. You implement sound judgment and innovative solutions, maximizing your impact on your team, company, brand and the world. Sustainable high performance is showing up consistently with your best game on.


An End in Sight

Hit Harder Than The Rest Of The Nation, The Valley’s Economy Is Starting To Show Faint Signs Of Recovery

Don’t dust off that party hat just yet, but there are early signs that the worst recession in the Valley’s history is easing its stranglehold on the economy. To be sure, as fall approaches and the recession’s two-year mark looms in December, Phoenix residents and businesses still struggle with plenty of economic problems. But economists and business leaders see hopeful signs.

Conventional wisdom says the housing market will pull the Valley out of the recession, after having led it down that path in the first place. Lee McPheters, economics professor at the W.P. Carey School of Business at Arizona State University, sees that milestone unfolding right now. The Greater Phoenix Blue Chip Real Estate Consensus Panel estimates 8,260 single-family housing permits will be issued this year, McPheters says. That’s down dramatically from the 57,360 issued in 2004, but McPheters says the forecast also calls for 12,600 permits in 2010, establishing 2009 as the bottom for that economic indicator.

New-home sales may have hit their low point the first half of this year and sales of existing homes, or re-sales, are bouncing back, according to McPheters.

“We are on track here to have easily over 75,000 re-sales for 2009, and it could be closer to 100,000 because there’s lots of inventory out there,” McPheters says. “At least half of that is bank-owned foreclosures but, nonetheless, re-sales are quite robust.”

There were 110,000 re-sales in 2005 during the Valley’s housing boom.

“New permits and sales of new homes seem to have bottomed out and re-sales have been going up,” McPheters says. “Those seem to be pretty strong trends, but still at a low level.”

What McPheters is saying is that good news in the housing sector alone does not constitute an overall recovery.
“There is nothing in the makeup of the Phoenix economy at all that would provide the stimulus for any independent recovery,” McPheters says.

Metropolitan Phoenix is still plagued by continuing job losses, declining personal income, decimated retail sales, declining home prices, home foreclosures, weak commercial real estate construction and more. The shrinking labor force likely won’t bottom out until the second half of next year after recording a historic three-year stretch of job losses — 2008, 2009 and 2010.

“By the time all the job losses have been recorded, Phoenix will have several hundred thousand fewer workers, and it probably will be 2011 before there is any kind of vigorous recovery in retail sales,” McPheters says.

In the meantime, 96 percent of the economists in the national Blue Chip Economic Indicators newsletter expect the national recession will end in the fourth quarter of this year. McPheters sees the national downturn drawing to a close with a modest turnaround and he thinks Phoenix will follow suit.

“Nationally, at the end of 2009, we will stop talking contraction and start talking about indicators that are more positive,” McPheters says. “Then there will be a period of slow growth. Phoenix probably will follow that, but remember that we have been harder hit than the rest of the country.”

Still, there is more to the Valley’s economy than statistics. Local business leaders are encouraged by what they see.

“From my perspective, we have seen a dramatic increase in headquarters activity,” says Barry Broome, president and CEO of the Greater Phoenix Economic Council.

Businesses primarily from the Northwest and California and, to some extent, Boston and New York, are either researching the Valley or making definitive plans to move their headquarters here, he says. Broome expects 10 to 15 headquarters to relocate to Arizona over the next 18 months and Phoenix will land some of them.

Broome also sees “new, sophisticated capital” moving into the Phoenix market. Investors are deploying the money now and plans are being written up for commercial real estate and science and technology projects, he says. Existing companies poised for growth are attracting capital infusions, Broome adds.

“This is not the cheap Las Vegas capital coming into the Valley where they buy it, zone it and flip it,” Broome says. “Now we’re seeing private equity firms that have 50 to 100 years of reputation in the U.S. and the world that didn’t get burned in this downturn. They are coming out of the Northeast markets, which we have not seen before.”

Bruce Coomer, executive director of the Arizona Association for Economic Development, is amazed at how busy city and county economic development departments are in the Valley and around the state.

“I don’t think there are any in Metro Phoenix cities that are not extremely busy,” Coomer says. “They are telling me that they are having trouble keeping up with the work.”

Although cities are likely conducting outreach programs, Coomer believes staffers are scrambling mainly because companies are approaching them.

Economic developers, Coomer says, “have got some big deals in the wings. That tells me companies, site selectors and developers know that sooner or later the recovery is going to come and they all want to position themselves. They want all their ducks in a row and all their due diligence done so they can pull the trigger and be on the front lines in a short period of time.”

Richard Hubbard, president and CEO of Valley Partnership, sees two encouraging signs within the business community.

“Commercial development companies have come face to face with the difficult decisions they have to make, be that layoffs, stopping projects or filing for bankruptcy,” Hubbard says. “A lot of those decisions are being made.”

Hubbard also is pleased with decisions made by sources of capital.

“Lending companies — whether that’s banks, private institutions or individuals — who have taken back property through foreclosure are starting to bring that property to market at reasonable prices,” Hubbard says. “They’re cutting their losses and deciding they can’t hold onto the property anymore. That will allow these companies to move forward.”

Hubbard says he also is encouraged that the housing market is well into the process of working its way out of the recession.

“The home-building industry has been suffering for a long time and they made their tough decisions a year ago,” Hubbard says. “Now it’s time for the commercial industry to follow suit.”

The Arizona economy and Tucson, Southern Arizona’s economic engine, continue to suffer from the same maladies as Greater Phoenix, says Marshall Vest, an economist at the University of Arizona’s Eller College of Management. Vest sees no hopeful signs of a statewide recovery for the time being. The only positive for Tucson is that its housing boom was not as strong as Phoenix, and its economy was not dragged down as far as the Valley’s, he says.

Vest sees the national recession receding in the third quarter.

“Arizona and Tucson will lag behind the nation by at least a quarter or two,” Vest says. “So Arizona should bottom out by the end of the year or the first quarter of next year and start its recovery at that time.”

The first sign of a statewide recovery will be a peak in the number of initial unemployment insurance claims, followed by stabilization of the labor market and then an uptick in retail sales, Vest says.

Flagstaff dominates the Northern Arizona economy. Marc Chopin, dean of the W.A.

Franke College of Business at Northern Arizona University, says the city has been logging double-digit declines for sales tax revenues and bed, board and beverage tax receipts. Building permits for single-family homes and additions and alterations to existing homes also have been declining, he says.

“I don’t expect things will turn around for some time,” Chopin says. “Construction, I expect, won’t recover for some time. About a quarter of the homes in Flagstaff are second homes. Until there’s a recovery under way in Phoenix, from which many of our second-home owners come, the second-home market in Flagstaff is unlikely to recover.”

www.aaed.com
www.cba.nau.edu
www.ebr.eller.arizona.edu
www.gpec.org
www.valleypartnership.org
wpcarey.asu.edu

money stack

Credit Unions Were Well Capitalized Leading Into The Recession

Arizona credit unions are weathering the rocky economy fairly well, but not without some bumps and bruises along the way. More than 20 of the 55 credit unions in the state have seen their bottom lines slip into the red. Even so, conservative and prudent lending policies that steered them away from the risky subprime market, and the fact they are well capitalized, have put credit unions on solid financial ground.

Insiders say the No. 1 measure of solvency is capital, and credit union capital ratios are considered quite healthy.

Credit unions, which are not-for-profit institutions and do not have stockholders to satisfy, nevertheless are feeling the pain of their members who have lost jobs or might even be in danger of mortgage foreclosure or bankruptcy.

Michael Hollar, vice president of business financial services for the 68,000-member Arizona Central Credit Union, describes the percentage of its loans that are in delinquency as “fairly high.” As of late last year, 1.67 percent of Arizona Central’s loans were in jeopardy, compared to 0.5 percent 12 to 18 months earlier.

If a payment is 11 days late, the credit union contacts the member to find out what the problem is. If the payment is 60 days late, steps are taken to ease the member’s financial pain by extending the amortization and lowering the interest rate.

“From a bottom line perspective, we were well into the red in 2008, roughly $6.5 million,” Hollar says.

“The reason is that we put a significant amount of money into reserve for loan losses. Every time we write something off, we put that much into reserve.”

Through 11 months of 2008, Arizona Central had put $10.6 million into its reserve fund, compared to $1.6 million for the corresponding period in 2007, reflecting the result of troubled loans.

“People walk in with the car keys and say they can’t make the payment anymore,” Hollar says. “It’s amazing. We’re lucky to get 50 cents on the dollar on that vehicle when it is sent to auction. Values are down. We’ve had a fair number of home equity loans that we wrote off. There’s no equity in the home anymore. The first mortgage is probably more than the house is worth.”

The goal was to pack as much bad news into 2008, so Arizona Central could hit the ground running in 2009, Hollar says.

Most credit unions have a very strong capital base. Any capital ratio to total assets in excess of 7 percent is considered by the National Credit Union Association to be well capitalized. In the past year, Arizona Central slipped to more than 10 percent from 11 percent, still well above the 7 percent plateau.

“We’re still north of 10 percent,” Hollar says. “As far as long-term stability, there are no issues. We’re not panicking by any means.”

The sinking economy, however, led to some changes in Arizona Central’s already conservative lending policies. Home equity loans that were offered for 100 percent of a home’s value, now are limited to 80 percent.

Steve Dunham, CEO of Canyon State Credit Union and board chairman of the Arizona Credit Union League and Affiliates, assesses the industry’s status: “I think we’re doing pretty well.”

He cites such factors as credit unions being not-for-profit organizations chasing quarterly profits, and avoiding higher-risk activities, including subprime and no-documentation lending.

“That helped protect us,” Dunham says. “Capital at credit unions was at an all-time high going into the recession. Credit unions started out with very good capital, and we still have very good capital at this point. By and large, I think credit unions will weather the recession very well.”

At Canyon State Credit Union, the 20th largest in the state with $140 million in assets, the number of members who are encountering financial difficulties is accelerating somewhat, Dunham says.

“As they have difficulty, so do we,” he adds. “As unemployment rises, more members are losing their jobs or having their hours cut. Real estate loans that everybody thought were well collateralized, with the drop in real estate values, now we’re discovering they are not so well collateralized. We’re very conservative as far as identifying what that real estate value is.”

Like other credit unions, Canyon State works with its members to help them through tough times on a case by case basis.

Even though some credit unions are operating in the red, Scott Earl, CEO of the Arizona Credit Union League and Affiliates, doesn’t expect consumer members to see much difference when it comes to borrowing. However, credit unions might require more documentation before awarding a loan than they did a year or two ago, he says.

At First Credit Union, where defaulted loans have increased mostly for autos, Carolyn Cameron, vice president of business development, says membership actually rose slightly in 2008 to nearly 60,000.
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“We stepped up our relationship building, our marketing efforts, working hard to attract new members and retain our current members,” Cameron says.

On the financial side, Cameron says, “Our very strong capital position prepared us to weather fluctuations in economic conditions. We also added provisions for dealing with increased loan losses. We eliminated construction loans, and we came out with an assistance program for members having trouble.”

Assistance may involve deferring or reducing payments, and reducing interest rates to help borrowers get back on their feet, she says.

What is it going to take to turn the economy around? Dunham, chairman of the Credit Union League, says the answer is simple.
“In Arizona, we need to absorb the excess real estate that’s available and get home building started again.”

executive education

During Hard Economic Times, Executive Education Helps Workers Keep Marketable Edge

It may be hard to believe, but in tumultuous economic times, executive education is somewhat recession proof — at least as far as employees are concerned. People who have lost their jobs have more time to go back to school, while those who are still employed may feel the need to enhance their skills.

University administrators and instructors see no less interest in educational opportunities as the economy spins downward. Even businesses that have downsized continue to pay a portion of tuition costs for those employees who remain. But at companies where training and development programs are among the first to be eliminated, experts suggest such moves are shortsighted.

Andy Atzert, assistant dean of the Arizona State University W. P. Carey School of Business and director of the school’s Business Center for Executive and Professional Development, does see a diminished demand from companies for customized executive education programs.

“The reason is that they are very visible expenses, a big line item that a company can slash when desperate,” Atzert says. “They’re shifting back to open enrollment. They’re not necessarily cutting back on education funding for individuals. The money is distributed through departments and it’s a less visible expenditure.”

Employers benefit from executive education programs in today’s economy because the skills of employees who remain expand. For example, an engineer who is promoted to fill a vacancy might need to acquire knowledge about marketing.

Strange as it may seem after layoffs, another benefit is employee retention.

“When a company lays off people, it worries about the effect on people who remain,” Atzert says.“You’ve pared down, and you don’t want to lose more employees. That’s one of the reasons for not cutting the education budget.”

Atzert describes education, and that includes executive education programs, as being “a counter-cyclical business.”

“What commonly happens in an economic downturn is that when there is not full employment and not a lot of jobs out there, people seek opportunities to retrain,” he says. “People who are employed polish up their resume a bit, just in case. Insecurity causes a person to make oneself more competitive.”

Mike Seiden, outgoing president of Western International University, agrees that historically, education is recession proof.

“We don’t see any abatement coming to us for degree programs,” Seiden says. “When people are losing their jobs, they recognize that a degree is important, and when times are good, companies support their employees by providing educational opportunities. I don’t see any change in that, but I say that with a little bit of caution. This economic climate is a lot different from anything we have experienced in the last 40 to 60 years.”

While Arizona’s three state universities are facing budget cuts, and some smaller niche colleges are encountering economy-related problems, Western International, a forprofi t private institution that is part of the Apollo Group Inc., is not feeling a negative impact, Seiden says. Employer subsidies seem to be holding steady.

“But if unemployment increases substantially,” Seiden says, “and companies become more hard-pressed, who knows what will happen?”

Both ASU and Western International University have executive education partnerships with the Salt River Project. At ASU, the Small Business Leadership Academy provides CEOs of small and diverse businesses with a 10-week program designed to help take their businesses to the next level.

The first class, which consisted of 11 SRP suppliers and five SRP business customers, completed the program last November. A second group will start taking classes next August. Offered one evening a week at the ASU School of Business Tempe campus, the classes focused on such topics as business strategy, negotiations regarding terms of contracts, employee retention and corporate procurement.

“They learn what we look for as a procurement organization, so when they get my requests for proposals they know what to be prepared for,” says Art Oros, SRP manager of procurement services. “They have already shown tangible savings. The improvements helped them to maintain the edge they need in these times.”

The companies that participated are small businesses, many of which are minority owned.

“We had good diversity — all ethnicities and cultures,” Oros says.

At Western International, SRP helps to subsidize its own employees’ education as they pursue degrees.

“A company’s ability to help provide an education for its employees is paramount in today’s world,” Seiden says. “It not only helps ensure that the company will retain its employees, but it will improve productivity.”

Paul Palley, who teaches economics and statistics at the University of Phoenix, says his classes naturally turn to discussions of current events.

“The subject of bailouts is something that is brought up a lot,” says Palley, a city of Phoenix economist. “Students don’t really understand what’s going on. Bailout is not the best word. In many cases, it represents an investment — government purchasing equity. Sometimes students feel not enough is being done, and sometimes they feel too much is being done. It changes from student to student and from day to day.”

Kevin Gazzara, who recently retired from Intel, where he was program manager of management and leadership, is senior partner of Magna Leadership Solutions and University Research Chair for Organizational Behavior at the University of Phoenix. He has developed a statistical tool that enables employers to link training and development programs with business results.

“One of the first things to go in difficult economic times is training and development,” Gazzara says. “From our perspective, it should be one of the last things to go. Many organizations utilize training, but don’t know if they are getting a return on their investment. In tough economic times, I tell organizations to restrain from the urge to cut training to save some relatively small dollars.

“As managers are being asked to do more with fewer resources,” Gazzara adds, “raising their levels of skills so organizations can compete becomes essential, and the only way to do that is having the right training.”