The economist decided to dispense with the drama.
“It’s a full-blown recession,” Marshall Vest recently told a gathering of local business and political leaders. “I think we all know that.”
The University of Arizona economist used words like “free-fall” and “full retreat” to describe the state of the region’s housing market and consumer spending, respectively.
Lately, the tone of the Eller College of Management’s quarterly economic forecasts has been grim. And the talk at the college’s mid-year update earlier this month seemed grave.
“We’re in the most severe downturn since World War II,” Vest said.
He ticked off a list of indicators that led him to such a conclusion:
• The region’s home prices have declined 20 percent or more from their boom-time levels in 2005; with 8,500 active listings, the Tucson area has an 11-month backlog of homes on the market.
• About 4,400 Tucson-area homes are in foreclosure; the state ranked fourth nationwide with its March foreclosure rate of 9,199 filings.
• The region has lost 5,300 jobs in the past year.
• Area retail and restaurant sales are down more than $2 billion in the past year.
For businesses and banks, the time has come for them to tighten their belts, Vest explained. For consumers, who, thanks to years of easily available credit, these leaner times mean a “welcome back to Earth.”
The UA economist told listeners June 4 that an economic rebound won’t likely come until the tail end of 2009, or more realistically, not until 2010.
Still, things could be far worse, Vest seemed to suggest.
For one, the region’s unemployment rate stands at 3.8 percent, far below the national rate of 5.5 percent.
Many of the local job losses came as the housing bubble burst, Vest explained. The construction industry and financial institutions, particularly those affiliated with mortgage lenders and title companies, took the hardest hits.
Conversely, a steady uptick in hiring by government agencies and in health care and education fields has limited losses in the area job market.
While the economy in Tucson seems to be on shaky ground these days, fortunes in Phoenix are much worse.
Some 37,000 properties in the state capital are in foreclosure, according to RealtyTrac, a group that tracks real estate trends. The housing inventory in Phoenix stands at about 15 months.
“It is what it is,” UA economist Gerald Swanson said recently.
Nationwide, one in 12 mortgages are “under water,” which happens when people pay more for mortgages than their homes are worth.
Nearly every sector of the nation’s economy has been affected by everything from the housing downturn to the credit crunch to soaring energy prices.
“We know something’s wrong,” Swanson said. “We just don’t know how to get out of it.”
Neither economist suggested anything resembling a quick fix for the economic woes. Perhaps only the passing of time will provide clearer answers.
“Solvency is really the No. 1 challenge for all of us,” Vest said.
The region’s construction market continues to hemorrhage jobs while the region’s building slows. In April, 2,082 construction jobs were lost, according to the Southern Arizona Home Builders Association.
• Jobs lost: 8
• Building permits issued: 45 (up 73 percent — or 33 permits — from April 2007)
• Jobs lost: 372
• Building permits issued: 18 (down 66 percent — or 35 permits — from April 2007)
• Jobs lost: 767
• Building permits issued: 95 (down 56 percent — or 124 permits — from April 2007)
• Jobs lost: 865
• Building permits issued: 69 (down 62 percent — or 112 permits — from April 2007)
SO. PINAL COUNTY
• Jobs lost: 108
• Building permits issued: 33 (down 49 percent — or 32 permits — from April 2007)
• Jobs lost: 38
• Building permits issued: 126 (up 7 percent — or 9 permits — from April 2007)
• Jobs lost: 2,082
• Permits issued: 386 (down 40 percent — or 261 permits — April 2007)
• Sources: SAHBA, Oro Valley, Marana