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Economic Outlook Government Finance Officers of Arizona August 10, 2012 Alan E. Maguire

Economic Outlook Government Finance Officers of Arizona August 10, 2012 Alan E. Maguire. Economic Outlook. “Where are we going?” US Economy in the Global Economy Arizona Economy in the US Economy Drivers of Economic Growth. Economic Outlook. “Where are we going?”

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Economic Outlook Government Finance Officers of Arizona August 10, 2012 Alan E. Maguire

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  1. Economic Outlook Government Finance Officersof ArizonaAugust 10, 2012Alan E. Maguire

  2. Economic Outlook “Where are we going?” US Economy in the Global Economy Arizona Economy in the US Economy Drivers of Economic Growth

  3. Economic Outlook “Where are we going?” US Economy in the Global Economy Arizona Economy in the US Economy Drivers of Economic Growth

  4. US Economic Outlook US Economy in the Global Economy How We Got Here The Current Context The Outlook Long-Term Trends Lessons from the Past

  5. How We Got Here “Those who don't know history are destined to repeat it.” -- Edmund Burke End of the “Great Moderation” Federally Induced Housing Bubble Easy Money Postponed Recession US Economic Outlook

  6. What Happened? The “House of Cards” Collapsed Housing as Investment Vehicle End of the Housing Run Destabilization of Massive Mortgage Debt Financial Market Contagion Worldwide Consequences PLUS Cyclical Recession – On Top! US Economic Outlook

  7. What Happened? Expanded, Unsophisticated Investors Counterparty Risk and Inter-dependence Credit Enhancement Unquestioned Faith in Contracts Failure of Mutual Confidence Liquidity Crisis US Economic Outlook

  8. What Happened? Arizona Among Hardest Hit – Why? Existing Strong Housing Industry Historical Growth Pattern Projected Housing Demand Quadruple Counting the Same Buyers Others Affected – Nevada, Florida,… US Economic Outlook

  9. US Economic Outlook The Current Context Current Conditions Gross Domestic Product Trends Employment Trends Current Challenges

  10. US Economic Outlook The Current Context Cyclical Recession Over Since Mid 2009 Relatively Short Recession in GDP Terms, but Deep US Financial Crisis Has Been Contained Some Major Issues to Clean-up – Fannie, Freddie, Privates So, ………….

  11. US Economic Outlook The Current Context Stagnant Growth for “Recovery” period Historical Recovery Drivers Missing Remnants of Double Whammy Remain International Issues Consumer Mortgage Debt / Other Debt Overhanging Housing Supply Battered Consumer Confidence

  12. * US Economic OutlookUS GDP Quarterly Change 1970 - 2012 GDP Recessions

  13. * US Economic OutlookUS GDP Quarterly Change 1970 - 2012 GDP Recoveries

  14. * US Economic OutlookUS GDP Quarterly Change 1970 - 2012 GDP Recoveries

  15. * US Economic OutlookUS GDP Quarterly Change 1970 - 2012 GDP

  16. * US Economic OutlookUS GDP Quarterly Change 2009 - 2012 GDP

  17. US Economic OutlookUS GDP Quarterly Change 2009 - 2012 GDP ??

  18. * US Economic OutlookUS Employment % Change from Prior Year 1970 - 2011 Employment Recoveries

  19. * US Economic OutlookUS Employment % Change from Prior Year 1970 - 2011 Employment Recoveries

  20. US Economic OutlookUS Employment % Change from Prior Year 1970 - 2011 Employment Recoveries

  21. * US Economic OutlookUS Employment % Change from Prior Year 1990 - 2010 Employment Growth Total Employment

  22. * US Economic OutlookUS Employment % Change from Prior Year 1990 - 2010 Employment Growth Total Employment

  23. US Economic OutlookUS Employment % Change from Prior Year 1990 - 2010 Employment Growth Total Employment

  24. US Economic Outlook The Outlook – Near Term Substantial Deterrents to Growth & Investment International Issues – Especially Europe Collapsing EU Fiscal / Banking Systems Weak Demand – Scared Consumers & CEOs Continuing Uncertainty! Expectations of Rising US Taxes- “Fiscal Cliff” Structural Workforce Issues

  25. US Economic Outlook The Outlook – Near Term European Situation Unsustainable Deficits AND Debt Levels Use of Debt for “Operating Expenses” Shrinking Productive Class Expectations of Resolution Based on Hope not Analysis Public vs. Private Sector Ratio

  26. US Economic Outlook The Outlook – Near Term European Debt and Deficits Bond Write-downs = Controlled Default Broad-based Bank & Investor Losses Government Fiscal Crises European Financial Stability Facility European Financial Stability Mechanism European Stability Mechanism @ 7/13 Risk of Contagion

  27. US Economic Outlook The Outlook – Near Term Europe’s Impact on Global Economy One-Quarter of Global Economy Linked to China and the to US European Recession Now Likely From Low Growth to Negative Growth Lack of Economic Catalysts Uncertainty

  28. US Economic Outlook Long Term Trends Worldwide Demand Issues Europe’s Issues Japan’s Issues High Debt and Pending Liquidation Asia’s Cultural / Governmental Challenges America Alone? -- Again?

  29. US Economic Outlook Long Term Trends America’s Challenges and Prospects Massive and Growing Federal Fiscal Crisis Demographic Trends Labor Force Skills Gap Loss of Mid-skill Employment

  30. US Economic Outlook Long Term Trends America’s Challenges and Prospects Strong, Agile Markets Tradition of Productivity Fully Developed Infrastructure Finest Higher Education System Highest Caliber “Rule of Law”

  31. US Economic Outlook Long Term Trends Decades in the Making – Not Days in the Fixing Improve Labor Force Skills Reinvigorate Personal Responsibility Reduce Barriers to Production The power to tax is the power to destroy. -- John Marshall, First Chief Justice The power to regulate is the power to eliminate .

  32. Economic Outlook “Where are we going?” US Economy in the Global Economy Arizona Economy in the US Economy Drivers of Economic Growth

  33. AZ Economic Outlook AZ Economy in the US Economy The Current Context The Outlook Long-Term Trends Lessons from the Past

  34. AZ Economic Outlook The Current Context Recent AZ Employment Trends Current Challenges

  35. AZ Economic OutlookAZ Employment 2001 – 2012(000’s) * All Industries

  36. AZ Economic OutlookAZ Employment 2001 – 2012(000’s) * Construction Manufacturing All Industries

  37. AZ Economic OutlookAZ Employment 2001 – 2012(000’s) * Construction Manufacturing All Industries

  38. AZ Economic OutlookAZ Employment 2001 – 2012(000’s) * All Industries 300,000 jobs

  39. AZ Economic OutlookAZ Employment 2001 – 2012(000’s) * All Industries 65,000 jobs 75,000 PRIVATE jobs

  40. AZ Economic Outlook The Current AZ Context Still Challenging US Conditions Continuing Uncertainty – Nationally / Globally Positive AZ Trends

  41. AZ Economic Outlook The Current AZ Context Returning to Government Fiscal Balance Above National Average Job Growth Rates Benefit of A “Low Base” to Build From Beware of the “Illusion of Recovery”

  42. AZ Economic Outlook The AZ Outlook Substantial Drags and Risks Still Exist Historic Drivers Are Weak Not Like Historical Patterns

  43. AZ Economic Outlook The AZ Outlook Expect Very Slow, but Positive Growth Existing Capacity Available for Growth -- Without Capital Spending -- With Little New Hiring Still Strong Fundamentals in Arizona Positive Business and Social Climates We’re Not California!

  44. AZ Economic Outlook The Good AZ News 5th in Job Growth – From 49th! 70,000 + jobs added since June 2010 Retail Spending Rising (Autos, Durables) Az Retail Sales up about 6% Outlook Hopeful, but Concerned Arizona Recovery Underway (Overhanging Risk)

  45. Economic Outlook The Good AZ News Economic Estimates Commission Forecast PERSONAL INCOME FY10 FY11 FY12 FY13 -1.7%5.0%5.2%5.6% POPULATION FY10 FY11 FY12 FY13 0.4%0.4%1.0% 1.1%

  46. Economic Outlook The Good AZ News Blue Chip Economic Forecast Calendar 2012 over 2011 % Growth PI Retail Employ Pop Housing 5.06.11.81.1 27 Calendar 2013 over 2012 % Growth PI Retail Employ Pop Housing 5.76.62.41.3 38

  47. AZ Economic Outlook AZ Long Term Trends More Integrated Economically Not just the “Five C’s” anymore More Dependent on US / Global Economies Same Core Challenges as US Labor Force Issues Global Demand Constraints

  48. Economic Outlook “Where are we going?” US Economy in the Global Economy Arizona Economy in the US Economy Drivers of Economic Growth

  49. Economic Outlook Drivers of Economic Growth Business Investment and Human Productivity Disposable Incomes and Consumer Spending Population Growth

  50. Economic Outlook Business Investment and Productivity Continuing Transition of “Mechanization” Water Wheel to Pump Hand Built to Assembly Line Typewriter to E-mail Massive Increases in Returns to Factors of Production – Especially Labor Positive Impacts on Human Productivity

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