cochise college center for economic research economic review & outlook sierra vista, az

Cochise College Center for Economic ResearchCochise College Center for Economic Research

Cochise CollegeCochise CollegeCenter for Economic ResearchCenter for Economic Research

Economic Review & OutlookEconomic Review & Outlook

Sierra Vista, AZSierra Vista, AZ


2001 to 20032001 to 2003

• End of technology boom• Fed began cutting interest rates• September 11 increased recession fears• More rate cuts• Federal funds rate hit 1% in June 2003

(and remained there until June 2004)• Mortgage rates fell from 8.25% to 5.88%• The housing boom


Sierra Vista AreaSierra Vista AreaMortgage Rates/Home Sales Mortgage Rates/Home Sales

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

2000 2001 2002 2003 2004 2005 2006 2007

Mo

rtg

ag

e R

ate

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

Ho

me

Sa

les

Mortgage Rate Home Sales


Sierra Vista Area Sierra Vista Area Home Sales/Home PricesHome Sales/Home Prices

600

800

1,000

1,200

1,400

1,600

1,800

2000 2001 2002 2003 2004 2005 2006 2007

Ho

me

Sa

les

$100,000

$120,000

$140,000

$160,000

$180,000

$200,000

$220,000

Ho

me

Pri

ce

Home Sales Home Price


Sierra Vista Sierra Vista New Home ConstructionNew Home Construction

0

100

200

300

400

500

600

700

800

2000 2001 2002 2003 2004 2005 2006 2007

SFR Permits


Existing Home Sales/New Home PermitsExisting Home Sales/New Home Permits

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2000 2001 2002 2003 2004 2005 2006 2007

Ex

isti

ng

Ho

me

Sa

les

0

100

200

300

400

500

600

700

800

Ne

w H

om

e P

erm

its

Existing Home Sales New Home Permits


Recent ActivityRecent Activity

• Sierra Vista New Home Permits– Jan-Feb 2008: 35– Jan-Feb 2007: 16

• Sierra Vista Area MLS Home Sales– Jan-Mar 2008: 192– Jan-Mar 2007: 288


Housing Market OutlookHousing Market Outlook

• New home market may have bottomed out in 2007

• Existing home market has not yet hit bottom

• Possible return to normal growth conditions in 2008/2009


Commercial ConstructionCommercial Construction

0

5

10

15

20

25

30

35

40

45

2000 2001 2002 2003 2004 2005 2006 2007

No

. of

Pro

jec

ts

$0

$10

$20

$30

$40

$50

$60

$70

Mill

ion

s

Va

lua

tio

n

No. of Projects Valuation


Commercial Construction OutlookCommercial Construction Outlook

• Expect a slowdown

• Current projects will be completed

• Recession fears will cause firms to delay new projects


Are we in a recession?Are we in a recession?


Gross Domestic ProductGross Domestic Product

0%

1%

2%

3%

4%

5%

6%

I2004

II III IV I2005

II III IV I2006

II III IV I2007

II III IV

Seasonally Adjusted Annual Rate


Inflation (CPI)Inflation (CPI)

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

Jan07

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan08

Feb

Compared to same month previous year


The Local EconomyThe Local Economy

Cochise County and Sierra VistaCochise County and Sierra Vista


Retail Sales Growth, 2007Retail Sales Growth, 2007

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cochise County Sierra Vista

Inflation Adjusted


Sierra VistaSierra VistaAnnual Retail Sales GrowthAnnual Retail Sales Growth

0%

1%

2%

3%

4%

5%

6%

7%

2002 2003 2004 2005 2006 2007

Inflation Adjusted


Retail Sales OutlookRetail Sales Outlook

• Sales figures for November and December are ominous

• Bad holiday shopping season or sign of a future trend? - Too early to tell

• Declining sales jibes with predictions of a national recession

• Market bears close watching in coming months


Restaurant and Bar Sales Growth, 2007Restaurant and Bar Sales Growth, 2007

-40%

-30%

-20%

-10%

0%

10%

20%



Inflation Adjusted


Sierra VistaSierra VistaAnnual Restaurant & Bar Sales GrowthAnnual Restaurant & Bar Sales Growth

-2%

0%

2%

4%

6%

8%

10%

12%

2002 2003 2004 2005 2006 2007

Inflation Adjusted


Restaurant and Bar Sales OutlookRestaurant and Bar Sales Outlook

• 4th Quarter sales figures are worrisome

• Nonessential spending such as dining out is often one of the first things cut from family budgets

• Recessionary fears encourage families to cut spending

• Inflationary pressures force families to cut spending


Accommodation Sales Growth, 2007Accommodation Sales Growth, 2007

-20%

-10%

0%

10%

20%

30%

40%

50%

60%



Inflation Adjusted


Sierra Vista Sierra Vista Annual Accommodation Sales GrowthAnnual Accommodation Sales Growth

-5%

0%

5%

10%

15%

20%

25%

2002 2003 2004 2005 2006 2007

Inflation Adjusted


Accommodation Sales OutlookAccommodation Sales Outlook

• Expect slowdown, partly due to higher base for comparison

• Declining dollar should lure international tourism

• High gas prices will alter tourism patterns• Fort Huachuca unaffected by general

economic conditions• Trends toward the end of 2007 give cause

for concern


EmploymentEmployment


Annual Unemployment RatesAnnual Unemployment Rates

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

2001 2002 2003 2004 2005 2006 2007

United States

Arizona

Cochise County

Sierra Vista


Monthly Unemployment, 2007Monthly Unemployment, 2007

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%


United States

Arizona

Cochise County

Sierra Vista

Seasonally Adjusted


Cochise CountyCochise CountyLabor Force/EmploymentLabor Force/Employment

46,000

48,000

50,000

52,000

54,000

56,000

58,000

2001 2002 2003 2004 2005 2006 2007

Labor Force No. of Jobs


Cochise CountyCochise CountyMonthly Labor Force/Employment, 2007Monthly Labor Force/Employment, 2007

54,000

54,500

55,000

55,500

56,000

56,500

57,000

57,500

58,000

58,500


Labor Force No. of Jobs


Cochise CountyCochise CountyMonthly Nonfarm Job GrowthMonthly Nonfarm Job Growth

-3.5%

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

Jan07

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan08

Feb


Cochise CountyCochise CountyNonfarm Job Growth By Industry, 2007Nonfarm Job Growth By Industry, 2007

225

175

75

75

75

50

-50

-100

-150

-150

-350

-400 -300 -200 -100 0 100 200 300

Trade, Transportation, and Utilities

State and Local Government

Leisure and Hospitality

Information

Educational and Health Services

Manufacturing

Financial Activities

Other Services

Professional and Business Services

Federal Government

Construction


Employment Outlook Employment Outlook

• Continued slow job growth/job losses

• Rising unemployment


ConclusionConclusion

• Nationally– Slowed economic growth– Rising unemployment– Inflation/stagflation

• Locally– Partial recovery of new home market– Existing home market will hit bottom in 2008, recover

in 2009– Slowdown of sales across categories in 2008– Slowed job growth/job losses and rising

unemployment– Slowed population growth

cochise college center for economic research economic review & outlook sierra vista, az

Documents

slowdown of sales

declining sales jibes

normal growth conditions

new projectsare

slowed job growthjob

cochise collegecenter

completedrecession fears

comparison declining