Forecasting the 2012 United States Economy

Improvement in both the Arizona and U.S. economies can be expected next year, but full recovery is still a few years away. That's according to experts who spoke Wednesday at the 48th Annual Economic Forecast Luncheon, co-sponsored by ASU's W.P. Carey School of Business and JPMorgan Chase.

 More than 1,000 people packed into the Phoenix Convention Center to hear the outlook for 2012. The experts say that though U.S. economic growth was actually slower this year than last year, conditions for 2012 are looking up for the nation and state.

Although the Arizona recovery is tepid at best, every key indicator is expected to improve in 2012 as compared to 2011, including jobs, incomes, sales and even housing. Still, no indicator will be sharply better until the national economy moves onto a faster growth path.

McPheters says Arizona hasn't been rebounding with the same vigor seen in previous recovery periods. The state lost 324,000 jobs from 2007 to 2010. By the end of this year, only about 20 percent of those will be restored. However, Arizona did move from No. 49 among the states for job creation in 2010 all the way up to a Top 10 growth state this year.

After three consecutive years of lost employment, about 23,800 jobs were added in 2011. Arizona employment is expected to increase by 45,000 jobs in 2012. However, united States're now at about 9 percent unemployment in the state and expect unemployment to continue to be a problem next year, dropping to around 8.5 percent. Healthcare and manufacturing are among the sectors doing relatively well (Barry, 12-33).

McPheters also expects Arizona's population to grow by 1.5 percent in 2012, faster than the national average of about 1 percent, but slower than Texas and Colorado. Personal income is expected to go up 6 percent in Arizona. Retail sales are projected to rise by 8 percent. Cautious consumers have largely been putting off non-essential spending, but may relieve some pent-up demand next year.

In the hard-hit housing market, McPheters predicts 20-percent growth in single-family housing permits. However, Elliott D. Pollack, president of highly regarded economic and real estate consulting firm Elliott D. Pollack and Company, explained that even a large percentage growth in this area doesn't mean much (Paul, 81-102).

Permits have bottomed out, but they are still down 89 percent from the peak. About 50,000 to 55,000 excess housing units remain in the Greater Phoenix area.

Foreclosures and short sales have been dragging down existing-home prices. Pollack says, in the third quarter of this year, 25 percent of the existing-home transactions were foreclosures, and another 29 percent were short sales. Also, more than 40 percent of the homes being sold are going to investors and other owners who won't actually live there.

On the positive side, the number of units going into foreclosure is declining, and housing prices appear to have stabilized. Depending on population growth, job growth and other factors, United States could see full housing recovery in three to four years (Barry, 12-33).

Pollack says the apartment market ...