1 economic and workforce overview december 7 th, 2011 occupational administrators council john...
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Economic and Workforce Overview
December 7th, 2011
Occupational Administrators Council
John CatapanoResearch and Communications Coordinator
Center for Workforce Development
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U.S. Economic Overview
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The Recovery is Proceeding at a Snail’s Pace(And it wasn’t much of a recovery to begin with)
Is a “Double Dip” on the Horizon?
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Growth in Real GDP2007 Q1 to 2011 Q3 (annualized)
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Why Did the Recovery Stall?
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• Stock market volatility
• European debt crisis
• Depressed housing market
• Banks have been reluctant to lend
• Impact of healthcare reform
• 2012 elections
• Debt ceiling debate
• Concern about the deficit/debt
• End of federal stimulus
• Less government spending
• High oil and commodity prices
• Turmoil in the Middle East
• Japanese earthquake and tsunami
• Extension of Bush tax cuts
• Concerns over future taxes and regulations
• Political polarization
• Downgrade of U.S. debt
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U.S. Private Sector Employment GrowthJanuary 2007 to Present (month over month, in thousands)
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Percent Job Losses in Post WWII Recessions
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Percent Job Losses in Post WWII Recessions
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U.S. Unemployment RateJanuary 2000 to Present
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U.S. Initial Claims for Unemployment InsuranceJanuary 2007 to Present (in thousands)
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Consumer Confidence1978 to Present
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Negative Jobs Feedback Loop
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Limited Job Growth
Little Job Security
Depressed Consumer Confidence
Modest Consumer Spending
Business Uncertainty
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Corporate Profits After Taxes1960 to Present (in billions)
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Excess Reserves of Depository Institutions1960 to Present (in billions)
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Job Losses and Gains Since Dec-07 Peak(in thousands)
Trade, Trans, Util, Other Serv
Manufacturing Prof & Bus Serv, Information
Construction & Mining
Financial Activities
Leisure & Hospitality
Government
Education & Health Serv
RecessionRecovery
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Labor Force Participation RateSelected Groups, 1960 to Present
Men
Women
16-24 Year-Olds
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Recovery faces significant headwinds:
• Housing market is still a mess
• Less government spending/stimulus
• Structural unemployment
• Income inequality
Bright Spots:
• Strong corporate profits
• Banks are loosening purse strings
• Consumers are paying off debt
• Manufacturing is doing well, exports are up
Outlook and Summary
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Arizona Economic Overview
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Employment Growth, AZ v. U.S.January 2006 to Present (percent change, year ago)
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ArizonaU.S.
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AZ Unemployment RateJanuary 2000 to Present
ArizonaU.S.
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Arizona IndustriesEmployment Today Compared to a Year Ago
Job Added in the Last Year
Peak-to-Trough Employment Loss
Healthcare +14,100 Never Lost Jobs
Leisure and Hospitality +10,400 -11.5%
Construction +4,600 -57.5%
Manufacturing +4,700 -21.7%
Transportation and Warehousing +4,100 -12.6%
Education +2,900 Never Lost Jobs
Local Government +2,600 -18.7%
Professional/Business Services -800 -19.3%
Finance/Insurance -300 -12.6%
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Arizona’s Budget Improving
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• The budget is balanced! (but down 21% from FY2008)
• FY2010 was the bottom of the recession when revenues fell below FY2004 level
• Arizona now has six straight quarters of general fund revenue growth
• While revenue recovery has begun, it is difficult to forecast its speed due to the uncertain economy
• Short-term surpluses:– 2012 - $416m– 2013 - $143m– 2014 - $610m to $1.2b shortfall (1% temporary sales tax expires)
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Taxable Sales - Arizona January 2005 to Present (percent change, year ago)
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Arizona’s PopulationCensus 2010
• Arizona was the second fastest growing state between 2000 and 2010 (24.6%). Nevada was first (35.1%)
• Total population of 6,392,017 – but less than 2009 projection
• Hispanic population grew 46.3% from 2000-2010
• Greater Phoenix has the 6th most Hispanics of all cities in U.S. with 589,877
• Arizona accounted for 16.6% of the growth in children 10 years-old or less nationwide between 2000 and 2010
• “Cultural generation gap” of 40%
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• Excess supply of homes – 70,000 in Greater Phoenix alone
• Home prices down over 50% - to late ‘90s levels
• 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
• Market will not recover until household formation and jobs return
• 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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Downside• Weak job market• Incomes and wages are lagging• Housing fundamentals are poor• Public sector employment and population
growth will be a drag on the Economy• Population Mobility must Improve to Absorb
Excess Housing Stock and Build New Homes
Upside• Hiring is Up• Retail Sales are Up• State Budget is Balanced – For Now
Outlook and Summary
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Implications for MCCCD
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• For MCCCD, the recession is a double-edged sword– Enrollment is up
– But fewer resources are available
• District needs to look at new revenue streams– Alternative delivery– Contract training– Alleviate structural unemployment (jobs mismatch)– Underserved and emerging populations
• Short-term – Slow population and economic growth, little help from state
• Long-term - Arizona is projected to add 1.8m new jobs in the next 30 years. Many will be in Maricopa County. MCCCD will play a vital role in training