2018 Breakfast with the Economists 6/6/2018 ebr.eller.arizona.edu W elcom e . Paulo Goes Dean, Eller College of Managem ent A Look Ahead ► Revised Arizona job data show stronger growth ► Particularly for Tucson Our region ► Federal procurement spending in Arizona is on the rise Outlook for Tucson ► Which matters for defense/aerospace/Tucson ► Arizona exports to Mexico have declined significantly ► But there are signs of stabilization ► Interest rates and gas prices are moving up George Ham m ond, Ph.D. ► Increasing risks to the expansion Director, Econom ic and Business Research Center ► Continued growth is on the horizon, but keep an eye on risks 4 UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT Economic and Business Research Center Eller College of Management University of Arizona 1
2018 Breakfast with the Economists 6/6/2018 ebr.eller.arizona.edu Tucson MSA Jobs: A Look Back Arizona Job Growth Thousands Before And After Revision, 2016 To 2017 forecast.eller.arizona.edu 380 forecast.eller.arizona.edu 3.0 378 EBRC Benchmark 0.6 2.5 376 0.7 2.0 374 BLS Percent 1.5 372 2.2 370 1.0 1.7 1.4 368 0.5 366 0.1 0.0 II III IV I II III IV I II III IV Arizona Phoenix MSA Tucson MSA 2015 2016 2017 Preliminary Revision 5 6 UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT Arizona Job Growth Federal Procurement Spending Over The Year In Arizona Percent forecast.eller.arizona.edu forecast.eller.arizona.edu 8 16 6 14 12 4 10 2 $Billions 8 0 6 ‐2 Arizona 4 Phoenix MSA ‐4 Tucson MSA 2 ‐6 U.S. 0 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 ‐8 Department of Defense Non DOD 00 02 04 06 08 10 12 14 16 7 8 UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT Economic and Business Research Center Eller College of Management University of Arizona 2
2018 Breakfast with the Economists 6/6/2018 ebr.eller.arizona.edu Arizona And U.S. Real House Prices Tucson Ranks High On Affordability Federal Housing Finance Agency Single-Family Housing Affordability forecast.eller.arizona.edu 2000Q1=100 200 U.S. Arizona 180 Phoenix MSA Tucson MSA 160 140 120 100 80 00 02 04 06 08 10 12 14 16 18 9 10 UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT Housing Affordability Is Declining Housing Cost Burden Varies By Income Housing Affordability: Low Income Residents Struggle But Still Much Higher Than During The Boom mapazdashboard.arizona.edu mapazdashboard.arizona.edu 11 12 UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT Economic and Business Research Center Eller College of Management University of Arizona 3
2018 Breakfast with the Economists 6/6/2018 ebr.eller.arizona.edu Arizona And U.S. Wages Per Job Arizona Merchandise Exports Country Share Of Arizona Exports In 2017 Smoothed, Over-The-Year Growth Rates azmex.eller.arizona.edu forecast.eller.arizona.edu Percent 40% 6 36.3% 35% 5 Arizona 30% U.S. 25% 4 20% 3 15% 9.9% 2 10% 5% 1 0% Mexico Canada China United Kingdom Germany Japan United Arab Emirates Thailand Singapore Taiwan France Hong Kong Brazil Netherlands Korea, South Malaysia Saudi Arabia Israel Switzerland Australia Ireland Belgium Italy India Chile Turkey Philippines Russia Czech Republic Vietnam Spain New Zealand Indonesia Malta Qatar South Africa Poland Sweden Costa Rica Denmark Norway Austria Kuwait Bangladesh Peru Colombia Afghanistan Panama Argentina Pakistan 0 04 06 08 10 12 14 16 18 13 14 UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT Arizona-Mexico Tourism Cost Index Arizona Exports To Mexico Tucson MSA: Lodging, Gasoline, Food Away From Home Merchandise Exports And Legal Northbound Border Crossings azmex.eller.arizona.edu azmex.eller.arizona.edu 2006:1 = 100 $ Millions Millions 280 3.2 900 Arizona BPOE 3.0 800 Personal Vehicle Passenger 240 and Pedestrian Crossings 2.8 700 Peso Denominated (Left Axis) 2.6 600 200 Exports to Mexico 2.4 500 (Right Axis) 2.2 400 160 2.0 300 1.8 200 120 1.6 100 Dollar Denominated 04 06 08 10 12 14 16 18 80 06 07 08 09 10 11 12 13 14 15 16 17 18 15 16 UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT Economic and Business Research Center Eller College of Management University of Arizona 4
2018 Breakfast with the Economists 6/6/2018 ebr.eller.arizona.edu Tucson MSA Economy Scorecard Tucson MSA And U.S. Job Growth Annual Growth Rates forecast.eller.arizona.edu Percent 6 4 2 0 ‐2 Tucson U.S. ‐4 ‐6 00 05 10 15 20 25 17 18 UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT U.S. Real Federal Spending Growth U.S. Interest Rates Excluding Transfers, IHS Markit, May 2018 IHS Markit, May 2018 forecast.eller.arizona.edu forecast.eller.arizona.edu Percent Percent 12 20 8 16 4 30 Year Conv. Mtg. 12 0 10 Year 8 Treas. ‐4 Federal‐Defense 4 ‐8 Federal‐Nondefense Federal Funds 0 ‐12 80 85 90 95 00 05 10 15 20 25 2000 2005 2010 2015 2020 2025 19 20 UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT Economic and Business Research Center Eller College of Management University of Arizona 5
2018 Breakfast with the Economists 6/6/2018 ebr.eller.arizona.edu Tucson MSA Income And Sales Growth Tucson MSA Job Growth Annual Growth Rates Baseline And Alternative Scenarios forecast.eller.arizona.edu forecast.eller.arizona.edu Percent Percent 12 6 8 4 Optimistic 4 2 0 0 Pessimistic ‐4 ‐2 Retail Sales Personal Income ‐8 ‐4 ‐12 ‐6 00 05 10 15 20 25 2000 2005 2010 2015 2020 2025 21 22 UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT UNIVERSITY OF ARIZONA / ELLER COLLEGE OF MANAGEMENT Explore data for border economies. Arizona-Mexico Econom ic I ndicators azm ex.eller.arizona.edu Economic and Business Research Center Eller College of Management University of Arizona 6
2018 Breakfast with the Economists 6/6/2018 ebr.eller.arizona.edu Visit the aw ard-w inning Learn about Southern Arizona. m apazdashboard.arizona.edu Arizona’s Econom y w w w .azeconom y.org Econom ic and Business Research Center National, State and Local Recognition Our w orld U.S.-Mexico Trade and NAFTA Jesus Cañas Senior Business Econom ist, Federal Reserve Bank of Dallas Economic and Business Research Center Eller College of Management University of Arizona 7
2018 Breakfast with the Economists 6/6/2018 ebr.eller.arizona.edu Benefits and Challenges A Historic Agreement -1- of Trade under NAFTA Canada and U.S. already had an agreement Adding Mexico broke the mold Breakfast with the Economists, 2018 NAFTA’s stated objectives University of Arizona June 2018 Eliminate barriers to trade & investment Remove tariffs and non-tariff barriers Facilitate cross border movement Resolve disputes Jesus Cañas and Pia Orrenius Federal Reserve Bank of Dallas The views expressed in this presentation 30 are strictly those of the author. Average tariffs fell most in Mexico A Historic Agreement -2- following NAFTA U.S. fears: Massive job losses, falling wages Percent 12 “There will be a giant sucking sound going south” Mexican Tariffs on Imports from the United States 10.0 10 U.S. Tariffs on Imports from Mexico -Ross Perot; October 15, 1992 8 Fears unrealized, but so were aspirations 6 4 Elusive Mexican economic development 2.9 2.1 2 0.7 0 1993 1996 SOURCE: Executive Office of the President, Study on the Operation and Effects of the North American Free Trade Agreement, July 1997, p. 7. 31 32 Economic and Business Research Center Eller College of Management University of Arizona 8
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