More people. More jobs. Likely higher interest rates.
Add them up and it’s a mostly positive economic outlook in Arizona and the East Valley, according to a panel of economists speaking at a luncheon sponsored by the Economic Club of Phoenix and the W. P. Carey School of Business at Arizona State University.
The area’s continued growth is the key its financial future, they said.
In 2003, Arizona ranked as the second fastest growing state behind Nevada. It ranked fifth in new residents and is now the 18th largest state. The population in the Valley is 3.5 million, larger than 20 states, according to Lee McPheters, associate dean of the business school.
Arizona’s overall job growth improved in recent months, McPheters said. In January, February and March, jobs grew at 2 percent or more compared with the same months in 2003. An increase of 1 percent equals 25,000 jobs a year.
While McPheters said job growth is still about half of what’s expected at this point of an economic recovery, 45,000 to 55,000 new jobs are being added right now compared with a year ago, and 80,000 are forecast to be added for the entire year, the strongest gain in four years, he said.
Arizona’s per capita income is about 85 percent of the national average, ranking the state 44th nationally in per capita income growth in 2003. McPheters said the ranking reflects the state’s rapid population increase and wages that are below the national average.
Real estate economist Elliott Pollack said the housing market will remain strong in the Valley despite an expected increase in interest rates, which could come as early as late this year.
There is demand for as many as 40,000 new homes this year and 110,000 next year, Pollack said.
"There is no housing recession on the horizon even though it’s going to slow," Pollack said, adding a 20-year decline in mortgage rates appears to be reversing.
If rates increase, variable rate mortgages will be affected more than long-term ones, he said.
Nationally, Sedona economist Robert Eggert said economic growth is expected in increase 4.6 percent this month and 3.8 percent in May of 2005, while consumer prices are expected to increase only 1.9 percent this month and 2.1 percent the same month next year.
Gilbert-based Alcor Engine Co. was purchased Tuesday by the Timken Co., a leading manufacturer of highly engineered bearings and alloy steels and related products with operations in 27 countries.
Terms of the sale were not disclosed. Alcor is a producer of replacement parts for gas turbine engines and components used in the aviation industry. It has 22 employees. Timken spokesman Dwight Keeney said there are no plans to change staffing levels.
"He’s the only economist I know who can address Alan Greenspan as Sonny Boy."
McPheters on Eggert , who recently turned 90.