New report gives false picture of Arizona's economy - East Valley Tribune: Arizona

New report gives false picture of Arizona's economy

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Posted: Thursday, March 24, 2011 11:58 am

A new report Wednesday suggests that the income of Arizonans isn't quite as bleak, at least as compared to the rest of the country.

But some economists say there's no reason to cheer the data. In fact, it may simply be a statistical aberration.

The figures from the U.S. Bureau of Economic Analysis show the per capita income of Arizonans for last year at $34,999. That is up more than $2,000 from the same report a year earlier.

That figure puts Arizona 10 spots from the bottom. Last year the state was just seventh from last.

But Marshall Vest, an economist at the University of Arizona, said there is less there than meets the eye.

The biggest factor, Vest said, is that the prior computations were based on what was an estimate of the state's population each year. These new numbers, however, are computed against the actual 2010 census count.

And that count turned up about 262,000 fewer Arizonans than the census thought were actually there.

Put simply, it changes the math.

The bureau knows that the total personal income for all residents last year was $219 billion. With fewer people to divide that among, the per capita number goes up.

Overall, total state personal income grew just 2.1 percent in 2010. That compares with 3.0 percent nationally.

"This tells the story that Arizona is still ranked in the lower quintile of personal income growth for 2010," Vest said. Only two states - Nevada and South Dakota - had smaller year-over-year growth.

Dan Anderson, an economist for the Arizona Board of Regents, said even that 2.1 percent growth may be exaggerated, at least as it reflects the state's economic health.

He said the report attributes a large proportion of that growth to what the government calls "transfer payments." That includes things like unemployment insurance, Social Security benefits and disability payments, income not linked to people actually having jobs and making money.

"Wage and salary growth has been almost virtually flat," Anderson said. In fact, the change in that factor alone between 2009 and 2010 was less than one-half of one percent.

Both economists were decidedly downbeat on the near-term future.

"It really confirms the other data that we've seen in terms of employment figures," Anderson said. "Arizona's economy is doing very poorly right now. And the likelihood that we're going to see some great growth in the next six to 12 months is probably pretty minimal."

Vest agreed.

"These are very poor readings which reflect the fact that Arizona's economy is still struggling to get a recovery under way," he said.

But Vest said there's another factor at work that actually might suggest that per capita income figure, at least, is somewhat deflated: the fact that Arizona has one of the youngest median ages. That is because there are lots of kids.

"They aren't in the labor force," he said. Vest said that anyone not earning income, whether a student or a retiree, is counted for the purpose of computing the per capita personal income.

Anderson said the only good news in the report, to the extent there is any, is that the growth numbers for the fourth quarter of 2010 over the third quarter were relatively strong at 1.1 percent. That was good enough to rank Arizona the eighth best in the nation.

"But the quarterly numbers are subject of adjustments and corrections," Anderson said. "I sure wouldn't hang my hat on that, that suddenly we're going to get a lot better."

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