Economist: Arizona not getting its fair share of stimulus - East Valley Tribune: East Valley Local News

Economist: Arizona not getting its fair share of stimulus

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Posted: Friday, March 13, 2009 3:49 pm | Updated: 1:23 am, Sat Oct 8, 2011.

An Arizona State University economist says Arizona isn't programmed to get its fair share of the Obama administration's stimulus payments - at least if job losses are the measurement.

State will get more than $4B from stimulus

Although Arizona suffered 4.5 percent of the nation's job losses between December 2007, when the recession began, and January 2009, it will gain only 1.9 percent of the jobs that will be created or saved under the stimulus program, said Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at ASU.

That's because the spending portions of the stimulus package are being allocated by population rather than economic hardship, he said.

"A key objective of the stimulus plan is to preserve and create jobs, but the plan doesn't direct money to the weakest job markets," he said.

Arizona is behind only Michigan in the percentage of job losses during this recession, based on figures from the U.S. Bureau of Labor Statistics, he said. This is largely because of declines in businesses closely related to growth and home building, he said.

"Going into the recession, Arizona was one of the leading job-growth states," he said. "So we had further to fall. ... Arizona is a high flier that went the other way."

McPheters said some adjustments in stimulus allocations may occur later, adding that he is basing his figures on the number of the jobs created on Obama's own estimates available at the recovery.gov Web site.

Among Western states, McPheters said Arizona, California, Idaho, Oregon and Nevada suffer a jobs deficit under the current distribution plan.

In California, 541,200 jobs have been lost so far in the recession, or 14.5 percent of the national total, but the Golden State is estimated to receive 11 percent of stimulus jobs, he said.

Among the states to receive disproportionately larger shares of the stimulus jobs are Colorado, New Mexico, Utah, Montana and Washington, he said.

Two states, Wyoming and Texas, have actually added jobs during the recession but are expected to benefit from the plan anyway, he said.

Complaints about inequitable distribution of money are inevitable in such government programs, said Byron Schlomach, chief economist for the Phoenix-based Goldwater Institute.

He thinks the stimulus program will cause long-term damage to the economy in the form of higher inflation, and the Arizona and national economy would be better off if allowed to recover through natural market forces. "People will do what it takes to make themselves and the country prosperous if they are allowed to do that," he said.

Schlomach also expects a lot of the infrastructure spending will be wasted on projects that will benefit contractors but few others.

"Ultimately, it will result in a lot of inflation because there is no place else for the federal government to get the money but to print it."

McPheters agreed the huge increase in the federal deficit this year is a worry, saying "we many be pressing the limits of what will allow us to maintain our image of stability and fiscal responsibility."

But he added the United States is still the best and safest place for international investment.

"In a risky time, the U.S. is the least risky," he said.

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