No Chance for Recession
The Valley and Arizona continue to shine in a pair of new economic analyses that suggest solid near-term growth here amid broader tumult.
In one report, BBVA Compass economists estimated Arizona has a zero percent chance of falling into recession in the near term and is expected to post 2.5 percent growth in economic output. By contrast, the continued struggles in the oil industry mean Texas has an 87 percent recession risk and will see its gross domestic product shrink 0.3 percent, BBVA reported.
Separately, the JPMorgan Chase Institute found that consumer spending in metro Phoenix grew slightly faster in December than the average of the 15 major markets the organization has begun tracking regularly. The 3.1 percent spending growth over the past year was largely due to increases in restaurants and sales of non-durable goods, even as sales of durable goods such as appliances fell slightly, JPMorgan reported.
The reports are consistent with the state’s improved labor market and suggest that after years of relatively sluggish growth, Arizona is belatedly returning to better performance.
New data on wages from the U.S. Bureau of Labor Statistics showed that while the Phoenix area has made job gains in the past year, wages didn’t grow much.
The median annual wage in metro Phoenix as of May was $35,660, up 1.5 percent over 2014. The national annual median was about $36,200.
Compared to the 21 metro areas closest in population to Phoenix, other markets usually paid more and saw bigger annual gains. Phoenix ranked 17th in median wages and 18th for wage gains in 2015.
Still, Arizona was the only state that had no near-term chance of a recession in the BBVA report. Florida had a 0.1 percent chance and it was 0.7 percent for Georgia. Energy-dependent states like Texas, Louisiana and North Dakota are near-certainties for recessions these days, but most other states are seeing reasonable growth, BBVA found.
BBVA defined a recession as two consecutive quarters of declining employment.
“While the likelihood of a U.S. recession is the highest it has been since the 2009 downturn, based on a state-by-state assessment, the overall probability remains low,” BBVA economists wrote. “A majority of states stand to benefit from strengthening domestic conditions in certain sectors, such as real estate, and solid consumption of durable goods, particularly autos. In addition, non-energy transportation sectors, along with state and local governments, will benefit from substantial reductions in energy expenditures.”
The state recession risks are based largely on recent job reports, a factor that plays heavily in Arizona’s favor these days.
Last week the state announced it had formally returned in December to the employment level it had at the outset of the Great Recession. Forty-one other states filled their job holes sooner than Arizona. That eight-year wait was long, but not unexpected for a state that lost a greater share of its workers than every state in the nation except Nevada.
In recent months, Arizona has seen job growth accelerate to 3 percent over the past year, a level that is closer to the state’s historical pattern and well ahead of national growth that has lingered near 2 percent. Maricopa County is also gaining population fasterthan nearly all counties in the U.S.
The state is doing less when measuring its GDP growth. Ten other states, including California, Nevada, Utah and Washington are expected to do better than Arizona’s 2.5 percent.
The metro Phoenix spending data from JPMorgan was above average but not stellar. The area’s 3.1 percent growth ranked sixth among the 15 tracked by JPMorgan. Atlanta saw the fastest growth, 5.1 percent, and Houston had the slowest, 0.3 percent.