Arizona's economy is looking pretty grim as the state shifted from adding jobs to losing jobs in the first quarter.
That's according to the latest JP Morgan Chase Arizona Blue Chip Economic Forecast. Following over-the-year job growth of less than 1 percent in January, employment held steady in February, then dropped by 7,500 jobs in March.
The state's nonagricultural employment was up by just 3,500 jobs in the first quarter over the same quarter in 2007. That equals a 0.1 percent gain.
In contrast, the state's economy grew 6.2 percent and created 152,100 jobs in the first quarter of 2006.
"The number of jobs created in the first quarter just two years ago was 40 times larger than the most current quarter," said Lee McPheters, director of the center and senior associate dean in the W.P. Carey School of Business at Arizona State University.
Nationally, unemployment reached 5.5 percent in May, and Arizona most likely will see unemployment rise above 5 percent into 2009, he said. Arizona's jobless rate was 3.9 percent in April, and the state Department of Commerce will release the May jobless rate on June 19.
"For the recession of 2001, that recession was over and yet unemployment rates still went up in the next two years," McPheters said. "So perhaps if this official recession ... ends in 2008, there will still be weak labor markets on into 2009 because these adjustments are just slow to take place."
For job seekers, there are still opportunities in health care, and professional and business services, he said.
"There's still opportunities for people who have good professional qualifications in most areas, but in particular health care," McPheters said. "In general, though, I would say the parts of the economy that depend on a confident consumer ... are very, very weak. Auto sales are weak, retailing is weak, people are not buying and building new homes, and in spite of the fact that the dollar is in decline, manufacturing employment, which should be going up because we're exporting more, is continuing to deteriorate."
One surprising aspect is food service remains strong and has even added jobs, McPheters said.
"Most economists have thought that eating out would be one of the things that people would give up, but apparently they're continuing to sort of hold onto that part of their lifestyle, and that's the case also in Arizona," he said.
Continuing population growth will prevent Arizona from suffering larger employment cuts, he said.