Lee McPheters, director of the JPMorgan Chase Economic Outlook Center, examined the local and regional economies for 2020. He's a research Professor of Economics in the W. P. Carey School of Business at Arizona State University and Director of the school’s JPMorgan Chase Economic Outlook Center. The Center maintains the Western Blue Chip Economic Forecast and Greater Phoenix Economic Forecast websites. McPheters also oversees the Job Growth USA website that tracks employment for all industries in the U.S. states and metropolitan areas. The website is frequently used by economists, financial analysts, economic development specialists, and, during election season, fact-checking organizations to evaluate claims by candidates regarding job creation statistics and policies. His writings on the Western region have been quoted in the Wall Street Journal, USA Today, The Economist, Business Week, The New York Times, and Newsweek as well as major metropolitan area newspapers throughout the nation. He has appeared nationally on Good Morning America, Fox News, Marketplace on NPR, and CNN commenting on the economic outlook. As director of the Economic Outlook Center, since 1987 McPheters has delivered a cumulative total of more than 500 speeches and presentations to various public and private audiences at business and academic conferences in Arizona and across the nation. McPheters has published numerous articles in books and professional journals on various topics, including immigration, executive compensation, monetary policy, international business cycles, and issues in law and economics. At the federal level, his work has been supported by the United States departments of Justice, Transportation, Agriculture, and the Treasury. In Arizona, he has completed research projects for the Arizona Department of Transportation, Sky Harbor International Airport, Boeing, and many other public and corporate sponsors. McPheters completed his undergraduate studies at San Francisco State University and received his Ph.D. in economics from Virginia Polytechnic Institute. He has been at ASU since 1976, teaching courses at the undergraduate and graduate level in monetary and regional economics. In addition, has held various administrative positions at ASU including Senior Associate Dean for Graduate Programs in the W. P. Carey School of Business from 1991 – 2008.

1. Subtitle text can go here
Extra Innings or Game Over?
Arizona/Phoenix/Western States
56th Annual
Economic Forecast Luncheon
December 11, 2019
Lee.McPheters@asu.edu

2. Arizona
Economic
Outlook
Indicator 2018 2019 2020
Employment (% change) 2.8 2.6 2.3
New Jobs (thousands) 79 74 70
Population (% change) 1.7 1.6 1.5
New Residents (thousands) 123 115 110
Single Family Permits 32,127 33,000 34,745
9• “Extra Innings” as Arizona expansion
continues well into 2020 and beyond
• Major risk is national business cycle

3. Thousands of Employees
(Seasonally Adjusted)
Peak - October 2007 2,687,000 Employees
Trough – September 2010 2,373,000 Employees
Trump
Administration
October 2019 2,952,000 Employees
U. S. Bureau of Labor Statistics, St. Louis Federal Reserve Bank
Arizona Has Added 579,000 Jobs Since
Current Expansion Began 109 Months Ago

4. Arizona and U.S. Unemployment Rates
Dip to Record Lows From 2010 Cycle Peak
U.S. Bureau of Labor Statistics
Arizona
United States AZ July 2018 4.7%
Lowest in 10 Years
U. S. Nov 2019 3.5%
Lowest in 50 Years
21th STRAIGHT MONTH
U.S. UNEMPLOYMENT
AT OR BELOW 4%
2019

5. Arizona Ranks 3rd in US With 2.6%
Job Creation Year-To-Date 2019
Ranked by % Change: 3 Qtrs. 2019 over 2018
UT
2
U. S. Bureau of Labor Statistics
& W. P. Cary School of Business
NV
1
WA
5
OR ID
6
CO
9
AZ
3
AL
10TX
7
FL
4
NC
GA
Color Code
Top 10 10
Others Faster
Than U.S.
6
Slower
Than U.S.
34
Lost Jobs 0
US = 1.6%
AK
HI
SD
8
CA
NM
TN

6. These Top 5 Arizona Growth Industries
Make Up 7 Out of 10 New Jobs This Year
Construction 16,900 jobs + 11% 3rd in US
Health Care 14,000 jobs +3.7% 6th in US
Manufacturing 7,700 jobs +4.5% 4th in US
Science, Tech 6,900 jobs +4.5% 8th in US
Transport &
Warehousing 6,400 jobs +6.5% 1st in US

7. Health Care is A Recession-Resistant
Growth Driver For the Arizona Economy
2000 2002 2004 2006 2008 2010 2012 2014 2016
390,000 Jobs
Health care has twice as
many workers as construction
or manufacturing in Arizona
43% of Residents
Two out of every five
Arizona residents receives
Medicaid or Medicare health
funding
Health Care Job Growth:
Arizona vs. All States
2015 2016 2017 2018 2019
3rd 2nd 4th 8th 6th
All Arizona Jobs
(left axis)
Health Care Jobs
(right axis)
U.S. Bureau of Labor Statistics, Kaiser Foundation, AHCCCS
Arizona Employment (000 of Jobs)

8. Walmart, Healthcare or University: Largest
Single Employer in 90 Percent of States

9. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
25,300
50,100
57,700
50,250
66,100
72,400
68,000
78,000
74,000 70,000
Arizona To Add 70,000 Jobs in 2020
Total Employment to Reach Record High 3 Million
U. S. Bureau of Labor Statistics & W. P. Carey School of Business
Forecast

10. Utah, Idaho, Nevada, Arizona Projected
To Set 2020 Pace for Western States
UT
2.5%
NV
2.3% CO
1.8%
NM
1.5%
OR
1.7%
TX
2.2%
WY
1.2%
CA
1.3%
AZ
2.3%
ID
2.4%
MT
1.1%
WA
1.9%
Western Blue Chip Economic Forecast
W. P. Carey School of Business
Forecast:
Non-Farm
Job Growth
2020

11. Arizona Population: 2018
 14th Largest State (7.2 mil)
 3rd Largest in West (behind Calif., Wash.)
 4th Fastest Growth in U.S. (1.7%)
 4th In New Residents (122.8K)
 2nd in Domestic Migration (83,240)
 17th in International Migration (14,335)
U. S. Census Bureau, December 2018

12. 1
3
5
9
U. S. States Ranked by
Percent Change 2017-2018
4
U. S. Census Bureau, Dec. 2018
8
7
6
2
24
10
39
Top 10 Growth States Lost Population
Arizona Ranked 4th Fastest (1.7%)
In Population Growth in 2018
11
Alaska
Hawaii

13. 3
7
4
1
5
6
9
8
Arizona is 2nd Favored Destination
for Movers From Other U.S. States
2
Alaska
Hawaii
27 States in Red Lost
Domestic Population
to 23 States in Green
Gained In-Migrants Lost Out-Migrants
10
U. S. Census Bureau, Dec. 2018

14. U.S. Population is Growing but
Fewer People Move Each Year

15. Domestic Migration to Arizona Has
Increased Steadily in Past 5 Years
3,496 10,583
30,078
23,960
40,464
45,315
61,949
62,930
83,240
2010 2011 2012 2013 2014 2015 2016 2017 2018
U. S. Census Bureau, Dec. 2018

16. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
65723
83,132
78,370
98,841 99,756
111,856
103,424
122,770
115,000
110,000
ForecastU.S. Census Bureau and W. P. Carey School of Business
Arizona Population Growth: 2020
Fifth Consecutive Year of More Than 100,000 New Residents

17. Millennials Are Out of the Basement
and Now Driving Housing Markets
• Born 1981 – 1996
• Now 24 – 38 years old
• Median marriage age 28
• Household formations up
• Outnumber Boomers
And...they are coming to
the Greater Phoenix Area
Millennial Desirability Ranking
Rank Metro Area
1 Dallas
2 Houston
3 Austin
4 Phoenix
5 Orlando
Meyers Research, based on job
growth, other economic indicators

18. Millennials Dominate Phoenix
Metro Mortgage Originations
6%
26%
23%
19%
14%
11%
18-24
25-34
35-44
45-54
55-64
65 Plus
Share of Primary Resident Mortgage Originations By Age
Realtor.com

19. Metro Phoenix Home Prices are
Rising More Rapidly than Wages
Index: 2010 = 100
Data through Q2 2019
Phoenix Metro Home Prices up 71% since 2010*
*(Note: Q2 2019 home prices = 84% of 2006 peak)
U. S. Bureau of Labor Statistics, S&P Dow Jones Indices, St. Louis Federal Reserve Bank
Phoenix Metro Wages up 29% since 2010

20. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
10,294
16,121
18,237 17,281
22,620
24,409
27,588
32,127
33,091 34,745
Arizona Single Family Permits
6th Year of Home Building Gains
5% Arizona Rise Expected in 2020
U.S. Census Bureau & W. P. Carey School of Business
Forecast
Issues
• Land Costs
• Materials
• Labor
• Local Fees
• Affordability

21. Greater
Phoenix
Outlook
Indicator 2018 2019 2020
Employment (% change) 3.4 2.9 2.8
New Jobs (thousands) 68 61 62
Population (% change) 2.0 2.0 1.9
New Residents (thousands) 96 97 94
Single Family Permits 22,072 24,148 25,126
9
• Continuing migration of new residents and
business relocations will drive 2020 growth
• Housing availability an issue as home prices
and apartment rents rise

22. Valley Commercial Real Estate
Construction Strong in 2020
Industrial: 6.8 million sq. ft. construction,
7.4 million sq. ft. absorption
7.5% vacancy rate year end
Office: 2.1 million sq. ft. construction
1.8 million sq. ft. absorption
14.4% vacancy rate year end
Retail: 740,000 sq. ft. construction
1.8 million sq. ft. absorption
7.5% vacancy rate year end
Greater Phoenix Blue Chip Forecast, W. P. Carey School of Business,
in collaboration with Elliot D. Pollack & Company

23. • 2018 best year for job growth (78K) since
2006; 2019 slower (74K); 2020 slower still
(70K) as U.S. expansion loses steam
• Arizona will stay as top 10 state for job
creation along with other Western states
• 2020 drivers: construction, health care,
professional/technical, manufacturing,
transportation & warehousing
• Good labor market and quality of life will
attract domestic but U.S. business cycle is
main risk to Arizona economy
Arizona
Summary
2020

24. • Phoenix is the third fastest metro area
for job creation year to date, up 2.9%
• Phoenix is 1st in construction job growth,
3rd in transportation & distribution -
finance boom has cooled, retail flat
• Home prices and rents are rising rapidly
but still affordable vs. other hot metros
• Work force education lags Denver, Austin
• Support needed for innovative programs
in skilled trades to meet demand
• Will 122° heat wave be “Phoenix Katrina?”
Greater
Phoenix
Summary
2020

25. Subtitle text can go here
Extra Innings or Game Over?
Arizona/Phoenix/Western States
56th Annual
Economic Forecast Luncheon
December 11, 2019
Lee.McPheters@asu.edu