New report finds small growth in Arizona economy - East Valley Tribune: Arizona

New report finds small growth in Arizona economy

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Posted: Tuesday, June 7, 2011 4:30 pm | Updated: 1:46 pm, Thu Jun 9, 2011.

Weighted down by the real estate market, Arizona's economy grew only 0.7 percent between 2009 and 2010.

Only Nevada and Wyoming fared worse.

The new report Tuesday by the U.S. Bureau of Economic Analysis put the total Arizona gross domestic product for 2010 at $228.5 billion. That compares with $226.8 billion in 2009.

But that increase, no matter how small, is a great improvement from the year before when Arizona actually posted a 5.7 percent loss in state GDP, landing ahead of only Nevada.

The figure is calculated as the sum of what consumers, businesses and government spend on goods and services, plus investments and net foreign trade.

Tom Rex, an economist at the W.P. Carey School of Business at Arizona State University, said he was not surprised by the figures.

"The economic recovery in Arizona is very slow," he said. "So much of that is due to the magnitude of the real estate crash that we continue to experience here. There were only a handful of states that had as big a boom and bust in both real estate and construction as we had."

The numbers back that up.

According to the BEA, construction spending actually decreased between 2009 and 2010.

"We're overbuilt in all sectors," Rex said. "So our new construction really plummeted in the recession because we have such an oversupply."

The same is true of the real estate rental and leasing sector which also saw an absolute decline in the amount of money changing hands in Arizona.

But other segments of the economy helped to offset those losses.

"Durables manufacturing had a big gain," Rex said, though it still was not as large as the nationwide figure. "Most durables manufacturing is highly cyclical and comes back quickly at the end of a recession."

Where the state did fare better than the national average was its mining industry. While only a relatively small portion of the economy - fewer than 10,000 jobs - the value of sales was bolstered by the high price of the copper mined and refined here.

Arizona also beat the national average with spending increases in health care. In fact, that is the one sector of the state's economy where employment has grown since the recession.

The new numbers also put the state's per capita gross domestic product at $35,745. That is 84 percent of the national average and puts the state 13th from the bottom of the list.

But Rex said only part of that can be attributed to the fact that Arizona, in comparison to many other states, has a lower percentage of high-wage jobs. Some of it, he said, is just a matter of how the math is done.

"We have an awful lot of people who aren't working, whether they be retirees or they be children," he explained. "Any time you go to a per capita type of measure, we don't look all that good."

That per capital GDP number also has increased only 3 percent in the last decade in Arizona, compared to nearly 6.7 percent nationwide.

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