2011 economicworkforceoverview

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Economic and Workforce Overview

January 14, 2011

Paradise Valley Community College

John CatapanoResearch and Communications Coordinator

Center for Workforce Development

U.S. Economic Overview

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The Great Recession is over!(but it hasn’t felt much like a recovery)

The recovery slowed in the second half of 2010.

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Economic Recovery – A Long Way to Go

December 2007Economy Peaks

June 2009Economy Bottoms

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Economic Recovery – A Long Way to Go

Recovery: We are Here

December 2007Economy Peaks

X

June 2009Economy Bottoms

Growth in Real GDP2007 Q1 to 2010 Q3 (annualized)

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Consumer SpendingJuly 2000 to Present (billions of dollars)

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Consumer SpendingJuly 2000 to Present (billions of dollars)

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5.1% Growth Path

3.1% Growth Path

U.S. Employment GrowthJanuary 2007 to Present (month over month, in thousands)

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U.S. Private Sector Employment GrowthJanuary 2007 to Present (month over month, in thousands)

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Negative Jobs Feedback Loop

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Limited Job Growth


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Limited Job Growth

Little Job Security


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Limited Job Growth

Little Job Security

Depressed Consumer Confidence


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Limited Job Growth

Little Job Security


Modest Consumer Spending


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Limited Job Growth

Little Job Security



Business Uncertainty


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Limited Job Growth

Little Job Security



Business Uncertainty

Percent Job Losses in Post WWII Recessions

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Consumer Confidence1978 to Present

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Consumer Confidence Index1978 to Present

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U.S. Unemployment RateJanuary 2000 to Present

U.S. Median Duration of UnemploymentIn Weeks, January 2000 to Present

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U.S. Initial Claims for Unemployment InsuranceJanuary 2007 to Present (in thousands)

Why Did the Recovery Stall?

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• Stock market down over summer 2010• European debt crisis• Consumer confidence waivered due to poor job prospects• Housing market continues to be a drag on the economy• Banks have been reluctant to lend• Impact of healthcare reform• November elections• Concern about the deficit/debt• End of federal stimulus

Uncertainty

Dow Jones Industrial Average2007 to Present

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Growth in Real GDP2007 Q1 to 2010 Q3 (annualized)

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Financial Bailouts and Stimulus Saved Us from Another Great Depression

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Without Federal Intervention:• GDP in 2010 would have been about 11.5% lower• Employment would be less by 8.5m (on top of 8.4m)• Unemployment rate would be around 16%• The U.S. would now be experiencing deflation

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• Interest rates are low• Inflation is nowhere in sight• Banks are easing lending standards• Corporate profits are up• Consumers are showing signs of life• Incomes, employee hours, and productivity is up• Manufacturing is growing• The private sector is adding jobs• Unemployment rate is heading down• The global economy is back

The Economy is Expected to Pick Up in 2011 After a Weak Second Half of 2010

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• Slow job growth• Continued weak housing market• Financial sector holding back on lending• Deficit/debt• Rising energy prices• State/local government budgets

What Could Derail the Recovery?

Arizona Economic Overview

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Arizona’s recession is over!(About six months after the U.S.)

Arizona Was Hit Hard

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• The state lost 363,200 nonfarm jobs (13.4%) from peak (December 2007) to trough (July 2010)

• The state is unlikely to recover 2007 employment levels before 2014 – a seven-year correction!

• In 2006 Arizona ranked 2nd in job growth among states, in 2009 we were 49th (thank you, Nevada)

• Arizona ranked 49th in per-capita personal income growth in 2008 (thank you, Nevada), and 45th in 2009

• State GDP decreased 3.9% in 2009, ranking Arizona 47th nationwide

• In 2009 Greater Phoenix was suffering some of the worst employment losses among large metros,

AZ Bounces Back from RecessionState Rank Based on Monthly Year/Year Growth Rates

30


31

32nd


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32nd

2nd


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32nd

2nd

18th


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32nd

2nd

18th

1st


35

32nd

2nd

18th

1st

19th


36

32nd

2nd

18th

1st

19th

2nd


37

32nd

2nd

18th

1st

19th

2nd

12th


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32nd

2nd

18th

1st

19th

2nd

12th

2nd


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32nd

2nd

18th

1st

19th

2nd

12th

2nd

49th


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32nd

2nd

18th

1st

19th

2nd

12th

2nd

49th

11th

Employment Growth, AZ v. U.S.January 2006 to Present (percent change, year ago)

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Worst Metro Job Loss 2009Job Loss – November 2009 vs. November 2008

Labor Force > One Million

Metro Area Percent Job Loss

1. Los Angeles -3.5% 194,900

2. Chicago -4.1% 186,600

3. New York -2.2% 186,100

4. Detroit -6.8% 128,600

5. Atlanta -4.9% 117,100

6. Phoenix -6.0% 110,200

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Best Metro Job Growth 2010Job Gains – November 2010 vs. November 2009

Labor Force > One Million

Metro Area Percent Job Gains

1. Washington DC 1.7% 49,200

2. Dallas 1.4% 40,600

3. Boston 1.1% 26,500

4. Phoenix 1.5% 25,500

5. Minneapolis 1.4% 22,900

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AZ Unemployment RateJanuary 2000 to Present

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AZ Initial Claims for Unemployment InsuranceJanuary 2007 to Present (four-week moving average)

• Retail sales are up, wages and salaries are improving• Employment growth exceeded U.S. in second half of 2009 (2.6% to

0.4%), but slowed in 2010• Jobs will be added in 2011:

– ADOC - Up 16,500 jobs (or 0.7%)– U of A – Up 39,600 (or 1.7%)– ASU – 47,900 (or 2.0%)

• To get back to 2007 employment levels, Arizona will need to add 66,000 jobs a year for four years

• Negative population growth?• Headwinds to recovery:

– Housing market– State budget– Consumers

Arizona’s Early Recovery – Mixed Results

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AZ Industries in RecoveryEmployment Today is Greater Than a Year Ago

Peak-to-Trough Employment Loss

Construction -55.3%

Mining -26.4%

Professional /Business Services -17.4%

Retail Trade -15.2%

Transportation and Warehousing -13.9%

Wholesale Trade -11.1%

Healthcare Never Lost Jobs

Education Never Lost Jobs

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AZ Industries Still StrugglingEmployment Today is Less Than a Year Ago

Peak-to-Trough Employment

Loss

State Government -23.5%

Manufacturing -22.4%

Information -21.7%

Federal Government -20.6%

Local Government -19.1%

Financial Activities -13.8%

Leisure and Hospitality -10.9%

Utilities -4.7%

• Sales and Income taxes more vulnerable to recession

Arizona’s Budget Woes

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General Fund Operating Spending

1980 2010 Change

Education 63% 55% -8%

Healthcare & Welfare 16% 26% +10%

Corrections 5% 10% +5%

General Government/Other 17% 9% -8%

General Fund Tax Revenues

1980 2010 Change

Sales 47% 56% +9%

Income 34% 37% +3%

Property 6% 0% -6%

Other 13% 7% -6%

• Within Education, 1980-2010:– K-12 +1%– Universities -8%

• Within H&W:– DES/DHS -3%– AHCCCS +13%

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Arizona’s Budget WoesArizona General Fund Total and Projections, 2002-2014 (in billions)

$2 Billion

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• Excess supply of homes – 50,000 to 75,000 in Greater Phoenix alone

• Home prices down about 50%• Arizona is one of the worst performing states for mortgage

delinquencies and foreclosures• New home construction has all but ceased• Commercial real estate market is hurting• Housing and jobs – a negative feedback loop• On the positive side - housing is now much more affordable, and

interest rates are at historic lows

Arizona Won’t Truly Recover Until Housing Improves

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Greater Phoenix Home Price ValuesCase-Shiller Index of Repeat Sales, January 2000 to Present

Implications for MCCCD

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• For MCCCD, the recession is a double-edged sword– Enrollment is up– But fewer resources are available

• Look for new program area opportunities, but don’t forget the bread-and-butter (healthcare, IT, business, public safety)

• Short-term - Negative population growth in Arizona?• Long-term - Arizona is projected to add 2.6m nonfarm jobs

between 2010 and 2040. Many will be in Maricopa County. MCCCD will play a vital role in training

• The district’s continued focus should be on high-wage, high-skill jobs to reduce the region’s vulnerability to recessionary cycles

Questions?

[email protected]

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2011 economicworkforceoverview

Career

az bounces

recessionstate rank

growth path3

growth path7

percent job losses

consumer spendingjuly

consumer confidence1978

worst metro job loss