2011 Economic & Workforce Overview from the Maricopa Community Colleges Center for Workforce Development

1. Paradise Valley Community College Economic and Workforce Overview John CatapanoResearch and Communications Coordinator Center for Workforce Development January 14, 2011 1

2. U.S. Economic Overview The Great Recession is over! (but it hasn’t felt much like a recovery) The recovery slowed in the second half of 2010. 2

3. Economic Recovery – A Long Way to Go December 2007 Economy Peaks June 2009 Economy Bottoms 3

4. Economic Recovery – A Long Way to Go December 2007 Economy Peaks Recovery: We are Here X June 2009 Economy Bottoms 4

5. Growth in Real GDP 2007 Q1 to 2010 Q3 (annualized) 5

6. Consumer Spending July 2000 to Present (billions of dollars) 6

7. Consumer Spending July 2000 to Present (billions of dollars) 5.1% Growth Path 3.1% Growth Path 7

8. U.S. Employment Growth January 2007 to Present (month over month, in thousands) 8

9. U.S. Private Sector Employment Growth January 2007 to Present (month over month, in thousands) 9

10. Negative Jobs Feedback Loop Limited Job Growth 10

11. Negative Jobs Feedback Loop Limited Job Growth Little Job Security 11

12. Negative Jobs Feedback Loop Limited Job Growth Little Job Security Depressed Consumer Confidence 12

13. Negative Jobs Feedback Loop Limited Job Growth Little Job Security Depressed Consumer Confidence Modest Consumer Spending 13

14. Negative Jobs Feedback Loop Limited Job Growth Little Job Security Business Uncertainty Depressed Consumer Confidence Modest Consumer Spending 14

15. Negative Jobs Feedback Loop Limited Job Growth Little Job Security Business Uncertainty Depressed Consumer Confidence Modest Consumer Spending 15

16. Percent Job Losses in Post WWII Recessions 16

17. Consumer Confidence1978 to Present 17

18. Consumer Confidence Index1978 to Present 18

19. U.S. Unemployment RateJanuary 2000 to Present 19

20. U.S. Median Duration of Unemployment In Weeks, January 2000 to Present 20

21. U.S. Initial Claims for Unemployment InsuranceJanuary 2007 to Present (in thousands) 21

22. Why Did the Recovery Stall? Uncertainty Stock market down over summer 2010 European debt crisis Consumer confidence waivered due to poor job prospects Housing market continues to be a drag on the economy Banks have been reluctant to lend Impact of healthcare reform November elections Concern about the deficit/debt End of federal stimulus 22

23. Dow Jones Industrial Average 2007 to Present 23

24. Growth in Real GDP 2007 Q1 to 2010 Q3 (annualized) 24

25. Financial Bailouts and Stimulus Saved Us from Another Great Depression Without Federal Intervention: GDP in 2010 would have been about 11.5% lower Employment would be less by 8.5m (on top of 8.4m) Unemployment rate would be around 16% The U.S. would now be experiencing deflation 25

26. The Economy is Expected to Pick Up in 2011 After a Weak Second Half of 2010 Interest rates are low Inflation is nowhere in sight Banks are easing lending standards Corporate profits are up Consumers are showing signs of life Incomes, employee hours, and productivity is up Manufacturing is growing The private sector is adding jobs Unemployment rate is heading down The global economy is back 26

27. What Could Derail the Recovery? Slow job growth Continued weak housing market Financial sector holding back on lending Deficit/debt Rising energy prices State/local government budgets 27

28. Arizona Economic Overview Arizona’s recession is over! (About six months after the U.S.) 28

29. Arizona Was Hit Hard The state lost 363,200 nonfarm jobs (13.4%) from peak (December 2007) to trough (July 2010) The state is unlikely to recover 2007 employment levels before 2014 – a seven-year correction! In 2006 Arizona ranked 2nd in job growth among states, in 2009 we were 49th (thank you, Nevada) Arizona ranked 49th in per-capita personal income growth in 2008 (thank you, Nevada), and 45th in 2009 State GDP decreased 3.9% in 2009, ranking Arizona 47th nationwide In 2009 Greater Phoenix was suffering some of the worst employment losses among large metros, 29

30. AZ Bounces Back from Recession State Rank Based on Monthly Year/Year Growth Rates 30

31. AZ Bounces Back from Recession State Rank Based on Monthly Year/Year Growth Rates 32nd 31

32. AZ Bounces Back from Recession State Rank Based on Monthly Year/Year Growth Rates 2nd 32nd 32

33. AZ Bounces Back from Recession State Rank Based on Monthly Year/Year Growth Rates 2nd 18th 32nd 33

34. AZ Bounces Back from Recession State Rank Based on Monthly Year/Year Growth Rates 2nd 1st 18th 32nd 34

35. AZ Bounces Back from Recession State Rank Based on Monthly Year/Year Growth Rates 2nd 1st 19th 18th 32nd 35

36. AZ Bounces Back from Recession State Rank Based on Monthly Year/Year Growth Rates 2nd 1st 2nd 19th 18th 32nd 36

37. AZ Bounces Back from Recession State Rank Based on Monthly Year/Year Growth Rates 2nd 1st 2nd 19th 12th 18th 32nd 37

38. AZ Bounces Back from Recession State Rank Based on Monthly Year/Year Growth Rates 2nd 1st 2nd 2nd 19th 12th 18th 32nd 38

39. AZ Bounces Back from Recession State Rank Based on Monthly Year/Year Growth Rates 2nd 1st 2nd 2nd 19th 12th 18th 32nd 49th 39

40. AZ Bounces Back from Recession State Rank Based on Monthly Year/Year Growth Rates 2nd 1st 2nd 2nd 11th 19th 12th 18th 32nd 49th 40

41. Employment Growth, AZ v. U.S. January 2006 to Present (percent change, year ago) 41

42. Worst Metro Job Loss 2009Job Loss – November 2009 vs. November 2008 Labor Force > One Million 42

43. Best Metro Job Growth 2010Job Gains – November 2010 vs. November 2009 Labor Force > One Million 43

44. AZ Unemployment RateJanuary 2000 to Present 44

45. AZ Initial Claims for Unemployment InsuranceJanuary 2007 to Present (four-week moving average) 45

46. Arizona’s Early Recovery – Mixed Results Retail sales are up, wages and salaries are improving Employment growth exceeded U.S. in second half of 2009 (2.6% to 0.4%), but slowed in 2010 Jobs will be added in 2011: ADOC - Up 16,500 jobs (or 0.7%) U of A – Up 39,600 (or 1.7%) ASU – 47,900 (or 2.0%) To get back to 2007 employment levels, Arizona will need to add 66,000 jobs a year for four years Negative population growth? Headwinds to recovery: Housing market State budget Consumers 46

47. AZ Industries in RecoveryEmployment Today is Greater Than a Year Ago 47

48. AZ Industries Still StrugglingEmployment Today is Less Than a Year Ago 48

50. K-12 +1%

51. Universities -8%

52. Within H&W:

53. DES/DHS -3%

54. AHCCCS +13%Sales and Income taxes more vulnerable to recession 49

55. Arizona’s Budget WoesArizona General Fund Total and Projections, 2002-2014 (in billions) $2 Billion 50

56. Arizona Won’t Truly Recover Until Housing Improves Excess supply of homes – 50,000 to 75,000 in Greater Phoenix alone Home prices down about 50% 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 Housing and jobs – a negative feedback loop On the positive side - housing is now much more affordable, and interest rates are at historic lows 51

57. Greater Phoenix Home Price ValuesCase-Shiller Index of Repeat Sales, January 2000 to Present 52

58. Implications for MCCCD For MCCCD, the recession is a double-edged sword Enrollment is up But fewer resources are available Look for new program area opportunities, but don’t forget the bread-and-butter (healthcare, IT, business, public safety) Short-term - Negative population growth in Arizona? Long-term - Arizona is projected to add 2.6m nonfarm jobs between 2010 and 2040. Many will be in Maricopa County. MCCCD will play a vital role in training The district’s continued focus should be on high-wage, high-skill jobs to reduce the region’s vulnerability to recessionary cycles 53

59. Questions? john.catapano@domail.maricopa.edu 54