‘Another boom coming for Arizona’

Real estate expert and economic forecaster Elliott D. Pollack said on Friday that the worst phase of the downturn is over for the greater Phoenix area, including Pinal County, but that recovery will be slow.

“2012 and 2013 will be a hell of a lot better than 2011,” Pollack told a group of 200 or so government officials, developers, financiers and other business people at the Pinal County Partnership’s annual economic forecast. “And 2011 will be a hell of a lot better than 2008 and 2009. By 2014 and 2015, you all will have big smiles on your faces again.”

In the short term, according to Pollack’s analysis, economic progress will be modest, mainly because of the depth and aftereffects of the collapse in homebuilding and real estate prices including the continuing glut of foreclosures. Tight credit conditions for both homebuyers and businesses and continuing unemployment will also act as dampers, preventing the kind of robust bounce-back typical after most previous recessions.

Pollack said that that Arizona cannot have a robust recovery until the construction industry gets back on its feet and that such a rebound won’t fully occur until 2014, when the current excess housing inventory is finally absorbed and population inflow becomes strong enough again to support a thriving new home building industry with all its attendant benefits in jobs, city revenue and positive psychology.

The good news for 2011 and beyond
The template for gradual recovery and renewed growth in the Phoenix area Pollack outlined included these factors: Credit frees up, consumers become more confident, overall U.S. economy improves, stock market continues upward as business profits increase, excess housing stock is absorbed, people start to move to Arizona again, housing prices rise, construction jobs are created, all job sectors gain, still more people move to Arizona, government revenue improves and the industrial base grows.

As positive indicators of a current modest recovery Pollack noted that jobs are now being created in Greater Phoenix. From October 2009 to October 2010, the area added 24,300 jobs, compared to a net loss of 226,900 jobs over the previous two years.

“All those jobs will eventually come back,” Pollack said. “But it is going to take a while.”

Pollack said business spending on equipment will be up next year as companies invest in upgraded computers and software to increase productivity and that business inventory correction will enhance growth data.

Another positive indicator, perhaps the most basic one of all, is that all prognosticators Pollack cited believe that long-term population growth will resume and continue here with millions more people coming over the next several decades.

More new arrivals mean more houses will have to be built, more stores and restaurants opened, more jobs created, more government revenue generated, leading to a brighter economic picture overall, a version of the rising sun that is Arizona’s state symbol.

Unfortunately, Pollack added that the fundamental housing recovery will lag in Pinal County compared to the rest of the Phoenix area “because so much of the speculative housing was built there.”

Nevertheless, the recovery is on its way in Pinal and throughout Arizona according to this highly regarded forecaster

“Believe it or not,” he told the packed room, “there is another boom coming for Arizona.”