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Strong Arizona economy fueled by job growth, ASU forecaster says

Job growth is fueling a strong Arizona economy, according to ASU forecaster.
November 28, 2018

State has added half a million jobs since 2010, ranked 7th in the nation

Arizona’s economy is very strong, fueled by job creation and personal income gains — and that good news should last through 2019, according to Arizona State University’s economic outlook expert.

“2018, as we predicted, was a year of solid growth and it looks like we have solid momentum here in Arizona going into 2019,” said Lee McPheters, research professor of economics and director of the JPMorgan Chase Economic Outlook Center at ASU. He spoke at the 55th annual Economic Forecast Luncheon hosted on Wednesday by the W. P. Carey School of Business at ASU.

McPheters said that since 2010, Arizona has added half a million new jobs. Among the statistics he cited:

• Arizona was fourth in the nation for growth in gross state product in 2017.

• Arizona was fifth in the nation in personal income growth in 2017.

• Arizona’s unemployment rank sank from a high of nearly 11 percent in 2010 to 4.7 percent in October 2018 — the lowest in 10 years.

• Arizona ranked seventh in nonfarm job creation in 2017.

McPheters noted that eight of the top 10 states for job creation are in the West, with Utah, Nevada and Idaho ranked in the top three.

The biggest growth in Arizona was in the construction industry, with more than 14,000 jobs added.

“Are we in danger of a construction bubble? Well, construction was so hard hit in the downturn that we’re still building up,” he said. “We have 6 percent of the economy employed in construction, which is our long-term average.”

In 2006, 9 percent of Arizona’s jobs were in construction.

Overall, Arizona added 64,000 jobs in 2017, and is predicted to add at least 71,000 more this year and next year.

One driver of economic growth is population, and Arizona has the sixth-fastest growing population. The state is adding people who are leaving from other states, like California.

“Arizona added 63,000 people who moved into the state looking for better jobs or improved quality of life,” he said.

One area of concern is housing costs. Single-family home permits are up 15 percent in the Valley over last year.

Trade clashes are a risk to the national economy, according to Bart Hobijn, professor of economics in the W. P. Carey School. Photo by Charlie Leight/ASU Now

“Since 2010, home prices are up 50 percent in the Phoenix area while wages are up 25 percent,” he said. “So we’re in a situation where we have to deal with affordability.”

The good news is expected to continue into 2019, McPheters said, with the national economy being the biggest risk to the state’s economy. A trade war, for example. Mexico is Arizona’s biggest trade partner.

“What we see is a lot of work on Arizona aircraft parts and technology done in Mexico, and it goes back and forth across the border,” he said. “There are a lot of complexities in the supply chain, so anything that slows that down is bad for the Arizona economy.”

Trade clashes are a risk at the national level as well, according to Bart Hobijn, professor of economics in the W. P. Carey School.

“The delayed impact of global trade disputes is the biggest uncertainty we have,” he said. “We don’t even know what disputes we have — they seem to change on a day-to-day basis.”

He said tariffs, which are essentially taxes on imports, can hurt companies, especially smaller ones that can’t renegotiate their supply chains as easily.

“Most economists think that tariffs are not a good idea and in the long run will have an effect on growth in the U.S.,” he said.

The national economy also is strong, according to John Cochrane, the Rose-Marie and Jack Anderson Senior Fellow at the Hoover Institution at Stanford University. But the focus needs to be on long-term growth.

“We’re too focused on the latest recession and we’re too focused on the president’s latest tweets,” he said. “Everything depends on establishing better long-term growth.”

Cochrane said that long-term policy should work on getting “sand out of the gears” of the economy. He cited health care as an example where a patchwork of rules has created a system that’s so dysfunctional that hospitals are unable to give a price quote for a specific procedure. It started when the government gave a tax deduction for employers to provide health care in the 1940s.

“Then people who left their jobs and had pre-existing conditions didn’t have health insurance, so we created the pre-existing conditions test. Then you have to force everyone to get health care,” he said.

The country should be focusing on long-term economic growth, according to John Cochrane of Stanford University. Photo by Charlie Leight/ASU Now

“Now we have to force health insurers to cover things they don’t want to cover. The only way to do that is to limit competition, so then all the innovation goes.”

Hospitals cover their Medicare costs by overcharging private insurers.

“Every item patches up all the problems of the other items,” he said.

Cochrane said that health care is a complex personal service that people should pay for.

“You should be buying it and facing intensely competing suppliers,” he said.

“When you think about economics you should think about incentives — to work hard, save, invest, create businesses and create that disruptive innovation.”

Top photo: Lee McPheters, research professor of economics and director of the JPMorgan Chase Economic Outlook Center at ASU, gives the rosy economic forecast for Arizona at the 55th annual Economic Forecast Luncheon hosted by the W. P. Carey School of Business at ASU. Photo by Charlie Leigh/ASU Now

Mary Beth Faller

reporter , ASU Now

480-727-4503

 
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Remembering Ed Pastor's spirit of service, generosity

After leaving Congress, Pastor founded ASU center to inspire students to engage.
November 28, 2018

The lifelong Sun Devil and Arizona's first Latino congressman died Tuesday at 75

Former U.S. Rep. Ed Pastor, who in 1991 became Arizona’s first Hispanic member of Congress, left a legacy of public service to his home state when he died Tuesday night, including through his namesake Pastor Center for Politics and Public Service at his alma mater, Arizona State University.

His family announced his death at age 75 in a statement by his daughter, Phoenix City Councilwoman Laura Pastor: "Congressman Pastor will be remembered for his commitment to his family and his legacy of service to the community that he loved."

ASU President Michael M. Crow said the nation, the state and the university had lost a remarkable individual.

"As the first Mexican-American to represent Arizona in Congress, Ed served as a living representation that through hard work, education and perseverance, anyone can rise from humble beginnings and achieve greatness," Crow said. "For ASU, this is a very personal loss, because Ed was a diehard Sun Devil and ASU advocate and remained highly involved with the university after retiring from Congress. Ed and his wife, Verma, played a major role in establishing and supporting scholarships and programs to help disadvantaged students achieve their educational dreams. Many of the recipients of these programs have gone on to become leaders in the Hispanic community."

The Pastor Center — housed in the Watts College of Public Service and Community Solutions — equips students to engage politically and within the public arena. Created when he donated more than $1 million in unspent campaign funds after his retirement from Congress in 2015, the center reflects Pastor’s fierce commitment to public service, which he exhibited throughout his life.

“This is a devastating and tremendous loss to the community,” said Watts College Dean Jonathan Koppell. “Congressman Pastor exemplified what public service is about: working together to solve problems and better our communities.

"He was not interested in grandiose speechmaking or incendiary partisanship because that never got things done. Students who want to make the world a better place are inspired by Ed Pastor to jump into the political fray and make it happen.”

A life of service to Arizona

Born in the tiny mining town of Claypool tucked in between the communities of Miami and Globe, Pastor was the first in his family to graduate from college.

He took tremendous pride in being a Sun Devil, having earned a bachelor’s degree in chemistry in 1966 and a law degree in 1974 from ASU. He taught high school math before becoming a community organizer in the town of Guadalupe. He went on to work for Arizona Gov. Raul Castro before being elected to the Maricopa County Board of Supervisors, where he served for 12 years.

Pastor was elected to Congress in 1991 and served until he declined to seek re-election and retired in 2015. He was key to securing funding for the Phoenix and Tucson light rail systems. Light rail was "was key to establishing ASU’s Downtown Phoenix campus," Crow said.

In 2014, Pastor received the University Medal of Excellence, considered one of ASU’s most prestigious honors, at the fall undergraduate commencement. The medal was established in 2006 by Crow to honor innovative leaders who have worked to advance awareness and action on issues that affect the well-being and positive development of their communities, and whose leadership has helped ASU in its effort to define excellence and inclusion.

At the time of his retirement, Pastor was the most senior member of Arizona’s House delegation and served on the powerful House Appropriations Committee. It was after he left Congress that he made the gift that established the Pastor Center.

“I thought it would be a good idea to get involved because there's very few things that occur daily in our life that are not the result of political decisions,” Pastor said in 2015. “And so I just want to make sure that the students at ASU are well aware of that and engage in public service.”

Gretchen Buhlig, CEO of the ASU Foundation, said Pastor not only spent his career serving the people of Arizona, he also saw the need to equip the next generation of Arizonans to carry on that service.

“His vision aligned so well with that of ASU, to train students from all walks of life to be engaged and fearless in seeking positive change in their communities,” Buhlig said. “ASU’s Pastor Center for Politics and Public Service teaches real-world, hands-on participation in public processes that will equip our students to solve community challenges. ASU is honored to carry on his legacy.

Pastor’s history of generosity to ASU also includes support for the Indian Legal Program in ASU’s Sandra Day O’Connor College of Law. The program provides legal education and scholarships in Indian law and equips students to represent Native peoples.

He was also generous with his time and expertise, appearing at ASU to speak with scholarship recipients in the ASU Spirit of Service Scholars program about elections in Arizona, or participating in formal presentations at the College of Liberal Arts and Sciences and the law school, where he earned his degrees.

He was a member of the CLAS Dean’s Council, alumni who work with the dean to advance the college through service and philanthropy.

“His leadership on our council made such a difference in the lives of our students, and he spoke many times to various classes as an ambassador of our college,” said Lisa Roubal-Brown, senior development officer in CLAS.

Touching the lives of students

Despite the age difference, Pastor was a hit with students, said Alberto Olivas, executive director of the Pastor Center. The congressman was a frequent guest at many of the center’s events.

“His informal, genuine style captivated students and community members of all political persuasions,” Olivas said.

The Pastor Center gives students direct access to political leaders through seminars, forums and internships. One of the center’s signature programs is the Spirit of Service Scholars. Each year, about a dozen ASU students are selected to receive leadership training and learn from in-depth seminars on important public policy areas. Students are also paired with a mentor in the field they aspire to make a difference in. 

Spirit of Service Scholar and Sandra Day O’Connor Law student Thomas Kim was mentored by former Arizona Supreme Court Chief Justice Rebecca White Berch. He applauds the leadership and learning opportunities afforded by the program.

“We’re not just some students spending time in theory la-la land,” Kim said. “We’re actually coming up with an action plan. And with all the resources that this program provides, we’re going to make a dent.”

Olivas said Pastor’s legacy is much more than what he accomplished for Arizona as a public servant.

“Pastor was a role model for effective, inclusive and community-building leadership,” Olivas said. “Over the years, he inspired countless young people — particularly those from underrepresented communities — to become politically active and to consider careers in public service.”

Paul Atkinson and Melissa Bordow contributed to this article. 

Top photo: Former U.S. Rep. Ed Pastor discusses how to get beyond the partisan gridlock in Washington, along with U.S. Sen. Jon Kyl and moderator Grady Gammage Jr., at the Morrison Institute for Public Policy's State of Our State Conference in Phoenix on Nov. 16, 2016. Photo by Charlie Leight/ASU Now