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To: GFOAZ By: Jim Rounds, Senior Vice President Elliott D. Pollack & Company January 10 th , 2013

The Land of Uncommon Sense. To: GFOAZ By: Jim Rounds, Senior Vice President Elliott D. Pollack & Company January 10 th , 2013. Context. The economy we wanted…. What we got…. US New Job Data Change from Prior Month (S/A) June 2010 – December 2012 Source: Bureau Labor of Statistics.

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To: GFOAZ By: Jim Rounds, Senior Vice President Elliott D. Pollack & Company January 10 th , 2013

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  1. The Land of Uncommon Sense To: GFOAZ By: Jim Rounds, Senior Vice President Elliott D. Pollack & Company January 10th, 2013

  2. Context

  3. The economy we wanted…

  4. What we got…

  5. US New Job Data Change from Prior Month (S/A)June 2010 – December 2012Source: Bureau Labor of Statistics (000’s)

  6. U.S. Unemployment Rate1976 – 2012* Source: Bureau of Labor Statistics Recession Periods *Data through November 2012

  7. U.S. Underemployment Rate1994 – 2012* Source: Bureau of Labor Statistics Recession Periods Beaten down by life. Unemployment Rate *Data through August 2012

  8. Financial Obligation Ratio**1980 – 2012* Source: Federal Reserve Recession Periods Paying less for past purchases! *Data through second quarter 2012 **Ratio of mortgage and consumer debt (including auto, rent and tax payments) to disposable income.

  9. Consumer Confidence1978 – 2012* Source: The Dismal Scientist Recession Periods Normal Normal Normal New Normal? Approval of medical marijuana... *Data through December 2012

  10. Real Retail Sales U.S. Percent Change Year Ago1973 – 2012* Source: Federal Reserve Recession Periods *Data through November 2012 **Three-month moving average

  11. Real Disposable Personal IncomePercent Change Year Ago1971 – 2012* Source: Bureau of Economic Analysis Recession Periods * Data through second quarter 2012

  12. Hours WorkedPercent Change from Year Ago1976 – 2012* Source: Bureau of Labor Statistics Recession Periods *Data through third quarter 2012

  13. Capacity Utilization Rate1970 – 2012* Source: The Federal Reserve Bank of St. Louis Recession Periods *Data through November 2012

  14. Recession Periods U.S. Leading Indicators1971 – 2012* Source: The Conference Board *Data through November 2012

  15. FISCAL CLIFF 2013

  16. Recession? No. Slow growth?Yes.Kicking the can…Yes.

  17. Arizona

  18. Alaska Hawaii Jobs growing Top 10 Jobs declining Job Growth 2006 Source: US BLS 10 7 9 5 1 4 3 15 22 8 2 11 6 13

  19. Hawaii Jobs growing Top 10 Jobs declining Job Growth 2009 Alaska 2 Source: US BLS 34 20 1 46 44 7 3 24 5 10 50 9 36 6 30 45 49 25 8 4

  20. Hawaii Jobs growing Top 10 Jobs declining Job Growth 2012 YTD November 2012 vs YTD November 2011 Source: US BLS Alaska 43 11 26 1 33 12 31 50 34 7 4 10 9 14 5 2 6 47 3 8

  21. SRP Residential Utility Hookup Percentage Growth Greater Phoenix 2003 – 2012* Source: SRP POP *Data through July 2012.

  22. APS: Slowest Growth in over 50 years1954 – 2012* POP *Data through third quarter 2012 Source: APS

  23. Arizona Retail Sales Percent Change Year Ago*1999 – 2012**Source: Arizona Department of Revenue Recession Periods 9.2% October? *Data through October 2012 **3-month moving average

  24. FISCAL CLIFF IN ARIZONA? Projected Net Job Growth: 2013 = 73,600 2014 = 88,500 = 162,100

  25. FISCAL CLIFF IN ARIZONA? If the mandated spending cuts take place, total loss to Arizona is projected at: 45,000 to 50,000 jobs. (This does not take into account any slowdown caused by tax increases SO DOUBLE THIS NUMBER????) We will still grow, but very slowly. Remember, the “worst case” is not the most likely scenario.

  26. Addl. Detail:Greater Phoenix

  27. Arizona Employment*Source: Bureau of Labor Statistics *November 2012/ November 2011

  28. Employment Levels: Greater Phoenix back to Peak in 2015?Source: ADOA Recession Periods Peak

  29. Maricopa County Retail Sales Percent Change Year Ago*1999 – 2012**Source: Arizona Department of Revenue Recession Periods *Data through October 2012 **3-month moving average

  30. U.S. Single-Family Starts1978–20121/Source: Census Bureau Recession Periods (Millions) Over- supply LTA: 1.2 Under- supply 1/ Through November 2012

  31. Single Family Permits Greater Phoenix 1975–2016*Source: RL Brown & Elliott D. Pollack & company # Permits (000) But population growth also slid… *2012 – 2016 forecast is from Elliott D. Pollack & Company

  32. Greater Phoenix Percentage of Homes Purchased with$$$ Cash $$$2003 – 2012*Source: Cromford Report *Data through November 2012

  33. Greater Phoenix PermitsSource: R.L. Brown *Data through YTD November 2012 vs. YTD November 2011

  34. Home Prices IndicesGreater Phoenix1989 – 2012* Source: Macro Markets, LLC; AMLS Recession Periods ? *Data through October 2012.

  35. Total Single Family Units Occupied by Renters2000-2011 Greater PhoenixSource: American Community Survey ?

  36. Greater Tucson

  37. Same basic story, just different scale and timing…

  38. Greater Tucson MSA Employment* Annual Percent Change 1975–2012**Source: Department of Commerce, Research Administration Recession Periods *Non-agricultural wage & salary employment. Changed from SIC to NAICS reporting in 1990. **Data through November 2012

  39. Greater Tucson Employment*Source: Arizona Department of Commerce, Research Administration ? *Nov 2012/Nov 2011

  40. Pima County Retail Sales Percent Change Year Ago2000 – 2012* Source: Arizona Department of Revenue Recession Periods *Data through September 2012

  41. Greater Tucson Single Family Permits2000–2012*Source: Southern Arizona Housing Market Letter Recession Periods *Data through September 2012

  42. Single Family Resale Median PriceGreater Tucson2000 – 2012* Source: Southern Arizona Housing Market Letter Recession Periods *Data through November 2012

  43. Balance of State

  44. Balance of State Employment* Annual Percent Change 1975–2012**Source: Department of Commerce, Research Administration Recession Periods *Non-agricultural wage & salary employment. Changed from SIC to NAICS reporting in 1990. **Data through September 2012

  45. Balance of State Employment*Source: Arizona Department of Commerce, Research Administration *November 2012/November 2011

  46. Balance of State Retail Sales Percent Change Year Ago2000 – 2012* Source: Arizona Department of Revenue Recession Periods *Data through September 2012

  47. Balance of State Single Family Permits1976–2013*Source: University of Arizona Recession Periods *2012 & 2013 are forecasts from the University of Arizona

  48. Why be Optimistic?

  49. Housing?

  50. Many renting will buy.Many doubled-up will buy. Some population growth is back. Employment growth is occurring. Retirees less bound to crappy states. Investors will not suddenly dump and run. Still producing less than “normal.” Fundamentals remain in place. “Normal” returns in 2015-ish. Growth rates will be strong now though.

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