cochise college center for economic research cochise college center for economic research economic...

Cochise College Center for Economic Research

Cochise CollegeCochise CollegeCENTER FOR ECONOMIC CENTER FOR ECONOMIC

RESEARCHRESEARCH

Economic OutlookEconomic Outlook

Sierra Vista, AZSierra Vista, AZ


What HappenedWhat Happened

Fed lowers interest ratesFed lowers interest rates

Lower rates give rise to subprime mortgage marketLower rates give rise to subprime mortgage market

High default rates shake investor confidenceHigh default rates shake investor confidence

Losses in derivatives further shake confidenceLosses in derivatives further shake confidence

Slowdown in housing & real estate spills over to other sectorsSlowdown in housing & real estate spills over to other sectors

TARP is introduced & modifiedTARP is introduced & modified

People begin losing jobs or worrying about itPeople begin losing jobs or worrying about it

Consumer and investment spending slowsConsumer and investment spending slows

Economy ends up in recessiEconomy ends up in recessionon


U.S. Recessions Since 1945U.S. Recessions Since 1945Peak Trough Duration (Months)

February 1945 October 1945 8

November 1948 October 1949 11

July 1953 May 1954 10

August 1957 April 1958 8

April 1960 February 1961 10

December 1969 November 1970 11

November 1973 March 1975 16

January 1980 July 1980 6

July 1981 November 1982 16

July 1990 March 1991 8

March 2001 November 2001 8

December 2007 ? 16+ and counting


Gross Domestic ProductGross Domestic Product

-7%

-5%

-3%

-1%

1%

3%

5%

I2004

II III IV I2005

II III IV I2006

II III IV I2007

II III IV I2008

II III IV

Seasonally Adjusted Annual Rate


GDP = Consumption Spending + Domestic Investment +

Government Spending + Net Exports


Inflation (CPI)Inflation (CPI)

0%

1%

2%

3%

4%

5%

6%

Jan2007

Mar May Jul Sep Nov Jan2008

Mar May Jul Sep Nov Jan2009

Compared to same month previous year


National OutlookNational Outlook

Recovery possible in late 2009, early 2010Recovery possible in late 2009, early 2010

Some positive signs in early AprilSome positive signs in early April

Financial markets must improveFinancial markets must improve

Investor & consumer confidence must Investor & consumer confidence must improveimprove

Fiscal stimulus will have impactFiscal stimulus will have impact


The Local EconomyThe Local Economy

How Cochise County andHow Cochise County and

Sierra Vista are impactedSierra Vista are impacted


Retail Trade & Retail Trade & CommerceCommerce


Retail Sales GrowthRetail Sales Growth

-25%-20%-15%-10%-5%0%5%

10%15%20%25%

Jan

07 Feb Mar Apr

May Ju

nJu

lAug Sep Oct

NovDec

Jan

08 Feb Mar Apr

May Ju

nJu

lAug Sep Oct

NovDec

Jan

09

Cochise County Sierra Vista

Inflation adjusted; compared to same month previous year


Retail Sales Recent ActivityRetail Sales Recent Activity

Cochise County retail market in recession since Cochise County retail market in recession since November 2007November 2007 2007: -1.3%2007: -1.3% 2008: -6.5%2008: -6.5% 2009 (Jan): -6.6%2009 (Jan): -6.6%

Sierra Vista retail market in recession since Sierra Vista retail market in recession since November 2007November 2007 2007: 2.6%2007: 2.6% 2008: -6.6%2008: -6.6% 2009 (Jan): -6.9%2009 (Jan): -6.9%


Restaurant & Bar Sales GrowthRestaurant & Bar Sales Growth

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%




Restaurant & Bar Sales Recent ActivityRestaurant & Bar Sales Recent Activity

Cochise County restaurant & bar sales in recession Cochise County restaurant & bar sales in recession since October 2007since October 2007

2007: 0.1%2007: 0.1% 2008: 0.2%2008: 0.2% 2009 (Jan): -19.5% 2009 (Jan): -19.5%

Sierra Vista restaurant & bar sales in recession since Sierra Vista restaurant & bar sales in recession since October 2007October 2007

2007: 2.9%2007: 2.9% 2008: -2.0%2008: -2.0% 2009 (Jan): -0.3% 2009 (Jan): -0.3%


Accommodation Sales GrowthAccommodation Sales Growth

-40%-20%

0%20%40%60%80%

100%120%140%160%180%




Accommodation Sales Recent ActivityAccommodation Sales Recent Activity

Cochise County accommodation sales in recession since Cochise County accommodation sales in recession since April 2008April 2008

2007: 19.7%2007: 19.7% 2008: -1.0%2008: -1.0% 2009 (Jan): -8.2%2009 (Jan): -8.2%

Sierra Vista accommodation sales NOT in recessionSierra Vista accommodation sales NOT in recession 2007: 21.1%2007: 21.1% 2008: 19.4%2008: 19.4% 2009 (Jan): 8.6%2009 (Jan): 8.6%


Sales OutlookSales Outlook

County & city retail sales at or near bottom—County & city retail sales at or near bottom—recovery likely in late 2009recovery likely in late 2009

Restaurant & bar sales at or near bottom—Restaurant & bar sales at or near bottom—recovery likely in mid-2009recovery likely in mid-2009

Sierra Vista accommodation should continue Sierra Vista accommodation should continue above trendabove trend

County accommodation at or near bottom—County accommodation at or near bottom—recovery likely in 2009 or early 2010recovery likely in 2009 or early 2010


EmploymentEmployment


Unemployment RatesUnemployment Rates

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009*

United States

Arizona

Cochise County

Sierra Vista

* Jan-Feb only; seasonally adjusted


Monthly Unemployment RatesMonthly Unemployment Rates

2.5%

3.5%

4.5%

5.5%

6.5%

7.5%

8.5%

Feb2008

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan09

Feb

United States

Arizona

Cochise County

Sierra Vista

Seasonally Adjusted


Cochise County Monthly Nonfarm Job GrowthCochise County Monthly Nonfarm Job Growth

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

Mar2008

Apr May Jun Jul Aug Sep Oct Nov Dec Jan2009

Feb

Compared to same month previous year


Cochise County Nonfarm Job Gains/Losses By IndustryCochise County Nonfarm Job Gains/Losses By Industry

325

25

-150

-175

-275

-400

-425

-575

450

-100

-100

-800 -600 -400 -200 0 200 400

Professional and Business Services

Federal Government

State and Local Government

Manufacturing

Other Services

Educational and Health Services

Information

Leisure and Hospitality

Construction

Financial Activities

Trade, Transportation, and Utilities

12 months ending Feb 2009


Cochise County Nonfarm Job Growth By IndustryCochise County Nonfarm Job Growth By Industry

6.8%

0.3%

-3.6%

-6.6%

-8.5%

-13.3%

-38.6%

-19.0%

8.3%

-10.5%

-28.0%

-50% -40% -30% -20% -10% 0% 10%

Professional and Business Services

Federal Government

State and Local Government

Educational and Health Services

Leisure and Hospitality

Trade, Transportation, and Utilities

Other Services

Manufacturing

Construction

Information

Financial Activities

12 months ending Feb 2009


Employment OutlookEmployment Outlook

Expect continued job losses & rising Expect continued job losses & rising unemployment through 2009unemployment through 2009

County and city will fare better than state County and city will fare better than state and nationand nation

County and city will begin to recover County and city will begin to recover before state and nationbefore state and nation


Housing, Real Estate, Housing, Real Estate, & Commercial & Commercial ConstructionConstruction


New Home ConstructionNew Home Construction

0

200

400

600

800

1000

1200

2003 2004 2005 2006 2007 2008

Co

ch

ise

Co

un

ty

0

100

200

300

400

500

600

700

800

Sie

rra

Vis

ta


Single Family Residential Building Permits


New Home Construction—Sierra VistaNew Home Construction—Sierra Vista

0

100

200

300

400

500

600

700

800

72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

Single Family Residential Building Permits


Recent SFR Permit ActivityRecent SFR Permit Activity

Cochise CountyCochise County 2008: 404 (-14.4%)2008: 404 (-14.4%) 2007: 4722007: 472

Sierra VistaSierra Vista 2009 (12009 (1stst Qtr): 24 (-53.8%) Qtr): 24 (-53.8%) 2008: 199 (11.8%)2008: 199 (11.8%) 2007: 1782007: 178


Existing Home Sales—Sierra Vista AreaExisting Home Sales—Sierra Vista Area

112

82

99

69

105

91

100

8387

96

112

7476

78 83

6473

61

80

63

4548

76

45

0

20

40

60

80

100

120

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Previous Current


Median Home Price (Site Built)Median Home Price (Site Built)

$145,000

$155,000

$165,000

$175,000

$185,000

$195,000

$205,000

$215,000

$225,000

2004 2005 2006 2007 2008

Sierra Vista Area Cochise County


Median Home Price (Site Built)Median Home Price (Site Built)

Cochise CountyCochise County

2004: $150,0002004: $150,000

2005: $186,000 (24.0%)2005: $186,000 (24.0%)

2006: $205,250 (10.3%)2006: $205,250 (10.3%)

2007: $206,579 (0.6%)2007: $206,579 (0.6%)

2008: $195,000 (-5.6%)2008: $195,000 (-5.6%)

Sierra Vista AreaSierra Vista Area

2004: $162,5002004: $162,500

2005: $199,900 (23.0%)2005: $199,900 (23.0%)

2006: $216,713 (8.4%)2006: $216,713 (8.4%)

2007: $217,479 (0.4%)2007: $217,479 (0.4%)

2008: $209,500 (-3.7%)2008: $209,500 (-3.7%)


New Commercial Construction—Sierra VistaNew Commercial Construction—Sierra Vista

0

5

10

15

20

25

30

35

40

45

2000 2001 2002 2003 2004 2005 2006 2007 2008

No

. of

Pro

jec

ts

$0

$10

$20

$30

$40

$50

$60

$70

Mill

ion

s

Va

lua

tio

n

No. of Projects Valuation


OutlookOutlook

New residential construction likely at or New residential construction likely at or near bottom (county & city)near bottom (county & city)

Existing home sales approaching bottomExisting home sales approaching bottom

Home prices should continue to hold or Home prices should continue to hold or decline modestlydecline modestly

Commercial construction remains Commercial construction remains relatively strongrelatively strong


ConclusionConclusion

Based on historical trends, most of the recession is Based on historical trends, most of the recession is probably behind usprobably behind us

The economic stimulus package will have an impact on The economic stimulus package will have an impact on the economythe economy

There have been some signs that we’re at the bottomThere have been some signs that we’re at the bottom

Employment probably won’t improve until late 2009 or Employment probably won’t improve until late 2009 or early 2010early 2010

cochise college center for economic research cochise college center for economic research economic...

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