By Tammy Gray-Searles —
“The recession will not be viewed as over until ‘the unemployed fat lady sings.’ No concert scheduled in 2011,” University of Arizona economists declared at their annual economic outlook luncheon in December.
The economists were referring to the fact that while experts have long since declared the Great Recession over and are pointing to signs of recovery, most citizens are still feeling the pinch.
BBVA Compass economist Nathaniel Karp recently stated that Arizona’s economic recovery is among the fastest in the nation.
University of Arizona Economic and Business Research Center Director Marshall Vest has noted, however, that the state faces some tough challenges and he expects progress to be slow.
“The best bet is that the recovery will proceed slowly during 2011 due to a multitude of headwinds, and that more robust growth will follow,” he stated.
Among the “headwinds” identified by Vest are shrinking credit available to individuals and businesses, housing market problems, unemployment, expiring federal stimulus programs, rising health care costs and uncertainty of business taxes.
In Navajo County, many of those economic indicators are sending a mixed message, with unemployment remaining high, foreclosure rates and retail sales on a roller-coaster ride, and tourism dipping slightly in most areas.
According to the U.S. Bureau of Labor Statistics, the unemployment rate in Navajo County has been climbing steadily since it hit a 20-year low of 5.5 percent in May 2007. As of December 2010, the most recent month available, unemployment was 15.8 percent in Navajo County. For both the state and the nation, the unemployment rate in December was 9.4 percent.
While there have been peaks and valleys in Navajo County’s unemployment rate over the last few years, it has generally continued on an upward trend. The high since 2007 was 16.2 percent in February 2010. The fastest yearly increase came during 2008, when the rate jumped from 8.2 percent in February 2008 to 14.2 percent in February 2009. Vest noted that statewide, however, unemployment rates have leveled out over the last year.
“We expect Arizona’s economy to improve modestly as we move into 2011,” he said. “Population and employment will both grow at less than two percent annual rates.”
There were a few more foreclosure filings in January 2011 in Navajo County than there were in January 2010, with 85 filed in January 2010 and 91 in January 2011, according to ForeclosureRadar.com. Over the last few months of 2010, however, there was a downward trend. In September, 112 foreclosures were filed, compared to 82 in October, 70 in November and 62 in December. The high came in March, when 125 foreclosure proceedings were filed.
The trend was similar across Arizona, with a peak in March, another peak in July and then the number of foreclosure filings steadily decreased through the end of 2010. They rose again slightly in January 2011.
Based on county sales tax revenues, retail sales have bounced around throughout the last year. Sales tax revenues seemed steady until they plummeted in April 2010. They increased slowly, but steadily until September, dropped in October, recovered well in November and then dropped in December. In January 2011, they plummeted even further. Navajo County government received $379,527 in county sales tax revenues in January 2011, compared to $424,589 in January 2010, a year in which those revenues were already considered low.
Tourism dollars, which are vital to the county’s economy, were scarce by the end of 2009, with total visitor spending in Navajo County dropping from $306.1 million in 2008 to $255.9 million in 2009, according to the Arizona Office of Tourism. Amounts were not immediately available for the county for 2010, but statewide, total gross tourism sales dropped by 1.1 percent between November 2009 and November 2010.
Visitation to national parks in the state remained fairly steady throughout 2010, however some parks saw large drops in visitation while others had gains. Those with a major impact on tourism in Navajo County were a mixed bag, with the Grand Canyon reporting a 0.7 percent increase, Petrified Forest, a 5.2 percent increase, and Canyon de Chelly, a 0.1 percent increase in 2010. Other nearby parks reported decreases, including an 18.8 percent drop at Hubbell Trading Post, a 15.2 percent decrease at Sunset Crater and a 1.4 percent drop at Walnut Canyon.
Vest noted that he does not see a full economic recovery happening in Arizona until the credit and housing markets improve.
“For Arizona’s economy to accelerate, homebuilders need to get busy again. That won’t happen until inventories of vacant houses are reduced. And with mobility at decades-low levels, that may be awhile,” he noted. “Mobility won’t recover until credit markets heal and the de-leveraging process comes to an end. Care to guess how much longer that will take? Keep your eye on credit flows, the key to the whole process. When credit begins expanding again, good things will start to happen.”