Is Arizona in a Recession?
According to USA Today, yes.
There are roughly one-third of a bazillion definitions of “recession”. (Here are 27.)
6 semester hours of undergrad courses in economics and 3 hours in grad school does not make me an economist by any stretch of the imagination.
But I do sell real estate in Arizona for a living, and the housing market here clearly is not in good shape. Bloated inventories, numerous homes in pre and actual foreclosure and generally declining prices is no pretty picture. And it doesn’t take an economics degree to know that the housing market drives a lot of the state’s economy.
There are bright sides to the Arizona economy. Unemployment is still lower in Arizona and Phoenix than the US average (Dec 2007: Arizona = 4.7%, Phoenix = 3.9% US = 4.9% per U.S. Department of Labor Statistics). But, one should not take lightly the upward monthly trend in Arizona unemployment.
The Arizona State University W.P. Carey School of Business reports from the Arizona Blue Chip Economic Forecast that “one-third of the Arizona Blue Chip panelists believe that Arizona is already in a recession”. In an astonishingly weak piece of journalism, they fail to report what the other two-thirds of the panelists believe. Do they think we are not in a recession? Have no opinion?
A U of A economist says we are “likely in a recession” that will be “short and mild”, and we are “fairly close to the bottom”. He thinks the local Arizona economy will remain weak at least through 2008.
And the Arizona Business Conditions Index fell in February to it’s lowest level since December 2001, “suggesting the state economy is headed for recession”. This index that began in 1962 has predicted every recession four to six months in advance and puts the onset of a recession in Arizona in the next two or three months according to one ASU economist.
On the bright side, and purely anecdotal evidence, our business is definitely rebounding from the last quarter of 2007. Inquiries are up, buyers are getting serious and sellers are coming to the realization that they can sell their homes if they are presented and priced well.
Is Arizona in a recession (or headed that way)? Seems likely. But even economists can’t seem to agree. One thing that has been true since the dawn of mankind is that economies and markets expand and contract. We may not like it, it may be painful for awhile, but it’s not the end of the world as we know it.
Update: The always-brilliant Jonathan Miller was posting some great economics charts at virtually the same time I was writing this post. All point to weakness in the general economy.
[tags]Arizona economy, recession[/tags]