A new report Thursday shows what appears to be slow, steady growth in Arizona’s economy.
But two experts disagree on what those numbers actually mean.
The data from the Bureau of Economic Analysis show a 1.2 percent growth in personal income for state residents between the first and second quarters of the year. That pretty much tracks the national trend.
What got the attention of economist Dennis Hoffman, though, is that the report shows a 5.4 percent year-over-year growth.
Hoffman, a professor at the W.P. Carey School of Business at Arizona State University, said that rate, if it holds for the rest of the year, would be surprisingly good. Hoffman said that, at the beginning of the year, he and most other economists were predicting annual growth in the 3.2 percent range.
Marshall Vest of the Eller School of Management at the University of Arizona said he also sees some good news in just the fact that Arizona’s personal income growth between the first and second quarters of the year was close to the national average. Prior reports have had the state’s quarterly growth far into the bottom half.
Vest said, though, there may be less than meets the eye in some of the numbers.
He pointed out that the Bureau of Economic Analysis revised the actual income numbers as far back as 2008.
“In the process, they made the dip in 2009 a lot deeper,” Vest said. The result of those revisions is to make the percentage increases in 2010 and into this year look a lot larger.
Vest said he reads the numbers to show Arizona is “in an extended period of very slow growth.”
Hoffman acknowledged the effects of the revisions. But Hoffman said there are other signs that the economy has been picking up.
One is an increase in the amount of money Arizonans as a whole are earning.
He said there is no indication of a big increase in hiring.
What is happening, though, is that those with jobs are getting pay raises, bonuses or overtime. And that, Hoffman said, has translated into an increase in how much people are spending.
The economists did agree that the future remains unsettled.
Vest said that what’s happening outside the state will affect what happens here.
“The national economy is teetering on the brink of recession,” he said. “It’s time to just kind of hang on as best you can.”
Hoffman noted the stock market lost nearly 4 percent of its value just on Thursday.
“What’s that going to do to the psychology of Arizona” in terms of consumer spending,” he asked. “And will that dampen things going forward.”
But Hoffman did make a prediction of something that could jump-start the economy.
“Get ready for a gallon of gas that has a first digit of a 2,” he said.
“We’re going below $3 in the next few weeks probably,” Hoffman continued. “So that will be a welcome sign for consumers.”
And if that happens, Hoffman wants people to remember that “you heard it here first.”