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December 5, 2012

Host: Ted Simons

Economic Forecast

  |   Video
  • ASU Economist Lee McPheters provides an overview of today’s Arizona Economic Forecast Luncheon co-sponsored by the Department of Economics at Arizona State University’s W. P. Carey School of Business and JPMorgan Chase.
  • Lee McPheters - Economist, Arizona State University
Category: Business/Economy   |   Keywords: economy, forecast, ASU,

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Ted Simons: Over 1,000 people gathered today at the Phoenix Convention center for the 49th annual economic forecast luncheon. Co-Sponsored by ASU's W.P. Carey School of Business and J.P. Morgan Chase. Here to tell us what he sees For Arizona's future is ASU economist Lee McPheters, one Of the annual presenters at The event.
Lee McPheters: Good to be here.
Ted Simons: Overriding opinion. What was the move, the theme?
Lee McPheters: Basically better than last year. Going to be better next year. We're on the path to recovery. We're not recovered. And as you say, two to three years before we get to, I think, the normal activity levels that people associate with a robust Arizona economy.
Ted Simons: What kind of indicators give you those ideas?
Lee McPheters: Well, probably most economists would look at the labor market and look at the jobs that we have lost, over 300,000 jobs since the economy peaked out. That would have been October of 2007. We bottomed out in September of 2010. And over that period lost 300,000 jobs. We have added back about 90,000. So, just roughly we have added back about 30%. So, what does that mean? We have 70% left to recover. The pace of growth probably around 60, 70,000 jobs per year. It looks like it is going to take about three years to get those 200,000 jobs back that we still need to recover.
Ted Simons: Some might say that seems like a modest pace. Do you see it as a modest pace and if so why?
Lee McPheters: It is a modest pace. We are projecting 2.5% growth in employment next year and for a frame of reference, our long-term average over the last three, four decades is probably closer to 4%. Basically running about half speed with the Arizona economy. Every year is a little better. Last year we only added about 48,000 jobs. The numbers are not in yet. Next year, 60,000. Year after that probably 75,000.
Ted Simons: As far as predicted unemployment number for next year, what are you seeing?
Lee McPheters: Where -- we're down one percent from where we were a year ago. It would be reasonable to expect another one percent. I think normal might be five or six percent. We will be two, three years getting down 6% unemployment.
Ted Simons: Maybe 7.5, something along those lines.
Lee McPheters: I would think. Yeah, a year from now, you know, what we have, of course, is seasonal factors, Christmas season, employment ticks up a bit. But this time next year, we will probably be down around 7.5%. I think that is a good bet.
Ted Simons: As far as personal income, again, increases but modest.
Lee McPheters: Yeah, personal income, somewhat in 2012, this was consistent of what we saw nationally. Certainly we did not go back into recession, but it was slow growth. Again, another percentage number, about 4%. Next year we expect to see about 5%. Modest growth in personal income.
Ted Simons: Same thing for retail sales, improvement but not great guns?
Lee McPheters: Retail sales, of course, are, you know, connected with employment. They're connected with the level of personal income, wages. Wages have been somewhat stagnant and have not grown as rapidly. We're thinking in terms of five, six percent for this year at best. And next year five or six percent again. We don't expect to see a big surge in retail. On the other hand, it certainly is not going to be a contraction.
Ted Simons: Are we expecting to see an increase in the number of people moving here to Arizona? Because that -- growth has been our biggest growth industry for a long time.
Lee McPheters: That is true.
Ted Simons: Are we going to see something reverting back to a little closer to normal?
Lee McPheters: Well, nationally, the economy adds population about 1%. That is the national number year after year. Arizona in a good year, will do three times as well as the national economist, population growth, about 3%. Again, we're at about 1.5% right now. So, that is, again, half speed. What we really need to see is two to three percent population growth and, you know, that is not really going to happen until we see home prices stabilize, people can sell their house. Move to Arizona. I think it is very reasonable to expect that once that starts, it ought to be pretty robust. There is probably a lot of pent up demand to move to Arizona. There is probably demand in terms of small business owners to relocate to Arizona, but there are all sorts of head winds slowing that process down right now.
Ted Simons: A lot of folks speaking regarding real estate at the luncheon. Give us a general consensus of the opinion as far as where we are now and where we're going to be in a year or two.
Lee McPheters: Surprisingly, there is maybe two to three months of housing supply available. We are looking at a surge in single family permits compared to a year ago. Up maybe one half. Still at a very low level. Certainly we're not looking at the 80,000 permits for the state of Arizona that we saw at the peak of the housing boom. It is the same story. Every year is a bit better than the year before. Again, about 2015 I think, before we really get back to a solid housing market.
Ted Simons: Last question. A lot of thought here, a lot of predictions, prognostications and the like, are all bets off if we fall off of that fiscal cliff?
Lee McPheters: Absolutely. We developed a fairly complex set of forecast for 2013. The overriding assumption, which I think is a consensus among most economists, our assumption was this would be resolved, this whole fiscal cliff issue, in perhaps six weeks, maybe two months at the most. After that, the economy will get back on a much more steady pace. Some of the uncertainty will fade and we will be able to move forward.
Ted Simons: All right. Very good. Good to have you here. Great information. Thank you for joining us.
Lee McPheters: Good to be with you.

Arizona Town Hall: Civic Leadership

  |   Video
  • Recommendations from the 101st Arizona Town Hall on improving civic leadership.
Category: Community   |   Keywords: arizona, town, hall, leadership, ,

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Ted Simons:Civic leadership for Arizona's future. That was the topic at the 101st Arizona town hall Recently held. Participants looked at ways to improve the quality of Arizona's civic leadership. Here to discuss the town Hall's recommendations are Two of the participants. Nancy Welch, vice president Of the Arizona center for Civic leadership at the Flinn foundation. And Lisa Atkins, vice president of public policy for greater Phoenix leadership and a board member of the central Arizona project. Good to have you both here.
Lisa Atkins: Thank you.
Ted Simons: Thank you for joining us. This is not the first town hall that has dealt with leadership, civic leadership, how to improve what we got. How come?
Nancy Welch: It really makes sense to look at civic leadership now and again. The town hall has looked at civic leadership three times since 1990. It makes sense because public policy changes, our environment changes, our communities change. And so it is really an opportunity to reflect on do we have the kind of civic leadership we need to position us well for the future.
Ted Simons: What is civic leadership?
Nancy Welch: Civic leadership is really the capacity of communities to solve their problems. And the people at the Arizona town hall really saw it as an adaptive process, the ability to adapt, the ability to collaborate, the ways that people can work together to solve common problems.
Ted Simons: Is there a disconnect between civic leaders and constituents?
Lisa Atkins: I think we focus more on the positives, on the opportunities that once we get out of our own little portion of the community, we realize that there are several aspects to civic leadership and opportunities that some of us may get so buried in what we're doing that we don't realize. We looked at the education community. We looked at the business community. We looked at our nonprofit community and faith-based communities to see what other people were doing to add to every component of what makes a successful community.
Ted Simons: I think some would say though that there is a disconnect.
Lisa Atkins: There might be.
Ted Simons: They look at civic leadership in general in Arizona, as we mentioned earlier, some are lampooning us and making fun of us. Arizona --
Lisa Atkins: I think it depends where you are on an issue and where you set in the community. We have a lot of success stories around Arizona. The folks that participated in town hall, diverse group from all over the state, had their own stories of success to bring to the table. They recognized that there are problems but chose to focus on the opportunities.
Ted Simons: Should they choose more on the problems?
Nancy Welch: You know, really there is an opportunity to see civic leadership as deciding on a common vision and moving towards that. Empowering people and motivating people to move towards that. And this is called civic leadership for Arizona's future, especially because we are starting our second hundred years of statehood. When you look at the town hall over the past couple of years, they looked at government for Arizona's next 100 years, civic engagement, and then the logical follow on was civic leadership for our future. People really concentrated as much on the future as they did on what is going on right now.
Ted Simons: You mentioned education and community and faith-based organization. The role that those particular entities have on civic leadership.
Lisa Atkins: We also talked about the role of technology, which is a now aspect of civic leadership and how we communicate. We talked about the leadership organizations that are available. Where are the crossover points between the business community and the nonprofit community and the faith-based community. What are the opportunities that we have to not only improve our leadership today, but more importantly to develop a leadership for tomorrow. Think one of the most outstanding parts of the town hall were the number of students we had this time. And their interest in what it means to be a civic leader. And how they see the development as being necessary for successful communities.
Ted Simons: Again, though, the role of business, education, community, faith-based organizations, what are those roles in civic leadership?
Nancy Welch: The roles are really, I think, both complimentary and different. Education was seen as a preparation ground for civic leadership, whether it was in the curriculum for all ages of students, or in the ways in which institutions grow. Business was seen as both a player in civic leadership and a place where civic leaders grown through the opportunities that they have in business. As Lisa mentioned, it was really very much bringing Arizona's resources together from all of these sectors. We talked often about the ability to collaborate and work across sectors to address the challenges that Arizona has and to build quality communities.
Lisa Atkins: From a business community standpoint, fostering civic leadership also fosters economic development and economic success in our communities. When you look at the leadership programs that we have across the state and what FLINN brown is doing not only to develop civic leaders to the future but to coordinate the leadership programs, that is an eye opener when you realize there is a cross-section of effort all over the state of Arizona.
Ted Simons: Among the recommendations, reconsider term limits and reconsider clean elections. Why?
Lisa Atkins: To broaden the pool of people that may be interested in participating in some of our elected offices. But those elected offices range from a fire district, a school board, an HOA, in my case a central Arizona project is an elected board. But I think that we also should not lose sight of the education recommendations about making sure that there is a level of civic education. That businesses have a role. It wasn't solely focused on the current elected officials or perspective. What are all of those things that make a successful civic leader?
Ted Simons: Last question, I thought it was interesting that one of the recommendations was formal training for elected leaders on ethical behavior, respect, collaboration. That says something that you would even have to recommend that.
Nancy Welch: I think it says how much people are concerned about their communities and concerned about Arizona. And they want the very best for Arizona. And they see that as a way of preparing leaders for the future who are prepared to face the problems we have.
Ted Simons: Did you leave the town hall optimistic?
Nancy Welch: Of course.
Ted Simons: And you?
Lisa Atkins: Absolutely.
Ted Simons: Very good. Good to have you both here. Thank you for joining us.
Lisa Atkins: You're welcome.
Nancy Welch: Thank you very much.

AZ Technology & Innovation: Chandler as a High Tech Hub

  |   Video
  • Chandler Mayor Jay Tibshraeny discusses the City’s emergence as a leader in high technology.
  • Jay Tibshraeny - Mayor, Chandler
Category: Technology   |   Keywords: mayor, chandler, technology, ,

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Ted Simons: In our continuing coverage of Arizona technology and innovation, we look at Chandler's growing reputation as a hub for high tech. I recently spoke with the Chandler mayor. Thank you very much. Thank you for being here. Good to see you again.
Jay Tibshraeny: Thank you for having me out. Appreciate being here.
Ted Simons: How did Chandler become a high-tech hub?
Jay Tibshraeny: It doesn't happen overnight. It is a long-term vision. I have been involved politically in the city about 30 years. It is visions of what you want to be and what you don't want to be. I think a long time -- when I first got involved politically, I didn't want Chandler to be a bedroom community, I wanted it to be a business community. So did many of our other forefathers. We put in place things to encourage and attract industry. It was a lot of hard work and a lot of vision and holding to your principles. Intel located in the community, Intel facilities in the state in Chandler. First one in west Chandler. Then when I was mayor, they located their second facility in the mid 90s into south Chandler. But those large facilities kind of anchored our high-tech businesses and then where Intel located for example on the corridor, southern end of it, Motorola located a huge facility. It is not there anymore. But those two huge locates and then a lot of other businesses kind of started going and getting attracted to it. And we put in a good
Ted Simons: The importance of Intel's presence can't be overstated. It is major out there. High-tech start-ups, Chandler ranked fourth in the country. It is pretty impressive what is going on out there. What is government doing to encourage start-ups?
Jay Tibshraeny: What we have done, because people don't realize, companies that are in Chandler, for example, today like Intel or microchip or other ones started as small companies. We have a facility in Chandler, a former high-tech facility. We called our innovations incubator. Smaller companies into smaller spaces, but we have access for them of nitrogen lines, for example, clean rooms, lab space, and where they can come in and kind of invent and work on their things. They pay rent. I mean, it is -- it is not a loss for the city. But we encourage that. We have about 60,000 square foot of the incubator space in Chandler seeing some pretty good results. U of A in there with 7,000 square foot doing a lot of their stuff. And they're also there to help the other companies that are there. So, the incubator has been successful, and what we hope will happen they will be the next Intel or next micro chip when they spin off --
Ted Simons: I know ASU is involved -- higher education in general. We hear that there is a lack of engineering folks, a lack of high-skilled workers that could be a concern for a place like Chandler. Talk about that.
Jay Tibshraeny: You know, when we located, this last expansion of Intel, which is a $5 billion expansion. It has like 5,000 construction workers and 1,000 permanent workers. That wasn't their main concern. They could hire those. And working with Dr. Crow from ASU, and Dr. Heart from U of A, that hasn't come to the forefront as a problem. I think they are addressing that. I know it was mentioned a few years ago. We are not running up against companies. Recruiting all of the time. Meeting with fortune 500 companies in the last month. Not coming up and saying hey we're not interested in your city or state because of the engineer graduates. I think the universities have picked it up and are addressing that concern right now.
Ted Simons: Is there a concern, talking about manufacturing jobs, the competition, threat of offshore to these particular jobs, this particular line of work, is there some concern there?
Jay Tibshraeny: Yeah, our competition, Chandler and the state, we're in a global competition. Intel, for example, has manufacturing plants all over the world. So, when we compete for a project, we're competing all over the world. We have competed fairly well. I think when you look at it overall, though, we need to continue to look how we can be more competitive, and how we can address. We're stronger in some areas and in some areas we're not. The president was out last January, as was the treasury secretary. I sent a letter after he won the election to congratulate him. If he is -- America getting these manufacturing plants, I offered my service to sit on a panel or be involved with that. We need to encourage more of it. We are doing okay. We are not getting our fair share of manufacturing. We are lucky in Chandler, we have Intel. I would like to see 10 of those in Arizona.
Ted Simons: Speaking of Intel. We mentioned that a lot. It is obviously a major player there. Is it too much of a player in Chandler? Is Chandler too dependent -- what happens if something goes wrong with Intel?
Jay Tibshraeny: We don't want that to happen. We are working hard on diversifying. They are such a large business and such a large facility. The facility to give people an idea, the facility in south Chandler, 700 acres there. They have room for a lot of expansion. West Chandler, 160 acres. West Chandler, research and development of brand new $300 million facility. South Chandler,high-volume manufacturing of their product. We have a couple of data centers, large data centers that have located. eBay, PayPal is there. Wells Fargo is there. And I could go on and on. We are trying to diversify. But that is also something that you have to be very careful about how dependent you get on one industry. We're cognizant of that and watching it. We are supplementing what is going on there.
Ted Simons: You mentioned the price row corridor a number of times. Where does it begin and end?
Jay Tibshraeny: Ends kind of like where Intel is in South Chandler, OKATIA Road and Price Road.
Ted Simons: North boundary --
Jay Tibshraeny: Probably Chandler Boulevard -- six, seven mile run and fairly, probably the most dynamic high-tech corridor in the state, one of the most dynamic in the western United States.
Ted Simons: Sounds like things are happening there. Good for the update and good to hear from you. Thank you for joining us.
Jay Tibshraeny: Thank you.