Steve Goldstein: A report released today predicts a two percent plus job growth rate over the remainder of the year and into next. The report predicts a full jobs recovery to prerecession levels, is three to five years away. Here to talk about that is Arizona Board of Regents Economist Dan Anderson. Welcome.
Dan Anderson: Steve.
Steve Goldstein: What is with this recovery the idea that we are going to have to wait another year or two?
Dan Anderson: I think the jobs are not coming back faster because the national economy is slower in recovering, and the national economy is slower because we don't have the kind of international growth, the kind of fiscal strength stamina going on to drive it forward. In previous recoveries we have had situations where we recovered the jobs lost in a recession, and maybe in a year, 18 months, two years at the most, and we were back to the level we were at before, and we continued to grow along. And I can remember times, back in the 90's or so, when we were creating 100 to 150 thousand jobs a year. Our forecast now, looked to be, you know, 50 thousand, maybe or so, maybe a bit less than that this year. And next year, coming up around 60 thousand jobs, and given the tremendous decline that we had, you know, from 2008 to the present, Arizona's recovered less than half of the jobs that were lost. So, it's going to take a while, even when we are creating jobs at 50 to 60 thousand a year, to dig ourselves out of that hole, just to get us back to where we were before the recession began.
Steve Goldstein: And in recent recoveries, Arizona has always been faster to recover even if the recession had hit the state harder. What are we doing about job diversity, we talk about there is too much reliance on construction, real estate, and are we getting beyond that?
Dan Anderson: I think we are getting beyond it, it is difficult, we've been there before so many times, and it's hard to get out of that mode. And we're being almost forced into doing that because, of course, people haven't been able to leave where they were. They cannot leave Illinois or leave California because they are under water in their homes, and they cannot sell it. And so, they are, basically, stuck where they are, and we are not creating very many jobs, so there is very little pushing people out of where they are, and there is very little pulling people in here. The fortunate piece is that when you take a look at job creation, it's not just one sector. It’s not just construction that's growing or manufacturing. We're seeing job creation in most sectors. Some areas are going to grow more rapidly than others, most definitely. But, it's not -- it's not just one sector that's driving our economy, so, we're getting some of that diversification, and I know in economic development circles, they are really trying to bring in a lot more businesses, and I think that there are plenty of opportunities.
Steve Goldstein: How big of a deal going with economic development do you think that the Apple expansion to Mesa is?
Dan Anderson: I think that it's indicative of a bigger thing, and that is that we're getting more diversification, that really domestic producers are beginning to say, there are opportunities within the United States to bring manufacturing in, to make the components here, instead of it's everything has to be exported to the middle east, or to the far east or other places, so we're beginning to do some of that development here, and when you take a look at the balance sheets of businesses, they are virtually a wash in cash. They have plenty of resources to make the investment. And one of the concerns is how confident are they in the economic health and the decisions being made in this country to allow them to make wise decisions here, to invest their money, to create those jobs. And probably the biggest problem that I think a business faces is uncertainty when they don't know what the future is going to bring. It's very -- it's very risky for them to make those long-term investment decisions.
Steve Goldstein: We have heard so much about uncertainty, tied to the Affordable Care Act, people worried about that, and uncertainty always seems to be part the business environment. So why does uncertainty seem to be so much more dramatic now?
Dan Anderson: I think that there is more uncertainty. I think that there are questions at the national level, about what the fiscal authorities are going to be doing, and I think that there is less uncertainty on the monetary side, you know, the Federal reserve has signaled clearly that they are going to keep an easy monetary policy, and when we saw them kind of indicate that they might be starting to tighten up, boy, did the market react to that quickly. And so I think there are some places where there has been, you know, improvement, but I think particular at the national level where you don't really know what the federal government will be doing, and what the directions are going to be, and all of that conflict creates uncertainty in businesses, basically, want to stand on the sidelines, and until they are confident that things are, are clearer and they know what's going to happen.
Steve Goldstein: As economist for the Board of Regents, you know about the importance of higher education driving Arizona's economy. We talk about this often. So, how much does education in the state, K-12 and higher education, have to improve for it to affect the economy in a positive way?
Dan Anderson: Well, I think that it's a big deal, and I think that really, we do have to have, if we are going to really move our state forward, we need to have something that is valuable to employers, and I think the greatest value that we can have is an educated workforce who can be productive, and really help businesses be more efficient. And it's not just a matter of people filling, you know, low level, low skilled positions, I think that businesses are looking for people who are really, can be very productive who can learn because the jobs are changing all the time. And we're getting more and more businesses that more high tech oriented. They need people with those educational skills.
Steve Goldstein: What industries are you watching closely that may help Arizona's recovery and when the next recession comes for us to get out of the recession faster?
Dan Anderson: Well, there are a number of sectors. Clearly, business services is one of the big areas, and I think that health services is another significant growth area, and manufacturing, particularly, a high tech manufacturing, we have got a lot going on, in a number of sectors, and high tech business services. Financial services, and I think again, there is a wide array of, of areas in which we're seeing growth, much of it is here, and we're seeing lots of opportunities in Tucson, and in Prescott, and in Yuma and other places, as well.
Steve Goldstein: Dan, finally, I'm a big admirer of economists, I interview them all the time and respect them. When we look at this idea of the job recovery, we heard about 2015. Now we’re hearing 2016, 2017. How much can we trust what's coming, not to cap on economists, but how should we know, how should we measure what we really know? What are the factors that those of us who are laypeople should be looking at to see if the economy is really in recovery mode?
Dan Anderson: I think that people, obviously, they look at their own individual situations first, and how well am I doing and how well are my neighbors and how well are my friends doing, and then on broader scale we start to take a look at, at the state's budget picture, how healthy is the state's budget? What kinds investments is the state putting back into the system, and how is that improving? And finally, what do we see in the way of business expansion? We need to, to have not only the existing businesses here, and growing, but we need to be attracting other businesses. We're clearly a growth area, and Arizona still has the advantages it has had for decades and decades. But I don't think that we're going to see the kind of rapid growth that maybe we saw in previous decades. A slower, more predictable growth I think is advantageous for us.