Most of the job gains during the period are expected in service-providing sectors, particularly trade, transportation, and utilities professional and business services education and health services and leisure and hospitality. The forecast calls for job growth to accelerate from 1.7% in 2014 to 2.1% in 2015 and eventually to 2.8% by 2017. Since gasoline purchases make up a significant share of household budgets, this may free up resources for households to spend on other priorities. On an inflation-adjusted basis, Phoenix gas prices have been gradually trending down since 2012 and are now at levels last seen in 2010, as shown in Exhibit 3. Indeed, Phoenix gas prices dropped from $3.41/gallon in June 2014 to $2.16/gallon in January 2015. One hopeful sign for retail sales growth in 2015 is the massive decline in gasoline prices since last summer. Taxable sales at restaurants and bars were up 8.2% year to date through November. The annual growth rate for 2014 is likely to lower because of a large one-time transfer into the category in December 2013. Taxable retail sales less food was up 4.7% year to date through November. Unspectacular income gains lately have resulted in similarly uninspiring gains in retail sales. That was far below the state’s average rate during the 30 years before the Great Recession, of 4.8% per year. For instance, real personal income growth in the state during the past four quarters was 2.2% (U.S. While Arizona personal income rose at a faster rate than the nation last year, growth was not very rapid by historical standards. Both natural increase (births minus deaths) and net migration contributed to growth during the past year.Ĭontinued job and population growth have contributed to personal income gains in Arizona. Population in the Phoenix MSA rose by 1.5% in 2014 and 1.1% in the Tucson MSA. That translated into a rate of growth of 1.3%, which exceeded U.S. According to the Arizona Department of Administration, the state added 86,200 residents between July 2013 and July 2014. Housing activity has been sluggish in part because of weak population and household growth. The strength in multi-family permits reflects rising single-family house prices, still tight mortgage lending conditions, and demographic factors. Multi-family permits were up by 47.3% for the year, while single-family permits declined by 3.9%. The preliminary data suggest that Arizona housing permits rose by 9.9% in 2014, or roughly 2,500. Keep in mind that the exhibit reflects Arizona job growth measured by EBRC’s benchmark, which incorporates data from the Quarterly Census of Employment and Wages through June 2014.Įxhibit 2: Arizona Single and Multi-Family Permits As Exhibit 1 shows, the state’s over-the-year job gains were close to, or even below, the national average for much of 2014. Arizona Recent DevelopmentsĪrizona added jobs during the final three months of 2014, but at a moderate pace. The outlook calls for the state to gradually gain momentum in coming years, with help from lower gasoline prices, faster national growth, and a bit less federal fiscal drag. Second, federal fiscal drag continues to weigh on the state economy. What is holding the state back? First, population growth is positive but slow and this is contributing to an unusually weak housing/construction recovery. Overall, the state is growing at rates that are in the neighborhood of the nation, but that are well below our own past history. Sluggish gains in Arizona employment, income, and retail sales continued in the fourth quarter of 2014.
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