Craig Harris
The Arizona Republic
May. 1, 2008 02:57 PM
The housing bust and a sluggish economy have made Arizona's employment market so bad that for the first time in more than a quarter century, the state is expected to lose jobs this year.
"The housing woes have hit Arizona a little harder," said Dennis Doby, Arizona Commerce Department's senior research director.
The state Commerce Department on Thursday forecast a drop of 12,500 non-farm jobs, or a 0.5 percent decline for Arizona.
The last time the state lost jobs was during the national recession of 1982, when Ronald Reagan was in the White House and Phoenix had just one professional sports franchise, the Suns. Six years ago, the state barely avoided a drop in jobs when about 100 positions were added.
Commerce officials are forecasting the Phoenix metro area will lose 9,300 jobs this year, while greater Tucson is projected to see 5,700 jobs disappear. The rest of the state is forecast to gain 2,500 jobs.
Doby said the projected overall job losses are tied to the significant decline in the construction industry, which marked 15 consecutive months of declining employment in March.
The state expects to lose 23,600 construction jobs this year after losing 15,900 jobs last year as home building plummeted because of subprime-mortgage problems and a decline in values. In the two previous years, the once-booming industry created 48,600 jobs.
Doby and Kent Ennis, the department's deputy director and an economist, said officials expect job losses to "hit bottom" in late summer or fall and then rebound by year's end.
By 2009, an extremely modest 0.1 percent job growth is projected for the state and metro Phoenix, but greater Tucson still is expected to see a decline of 0.3 percent. Those figures, however, also assume a lowering of gas prices.
Doby said Tucson has had a tougher time because its economy is smaller than Phoenix's and the state's second-largest city has been hit harder by losses in tourism.
Ennis said that overall, Arizona's job market is better positioned to rebound compared with previous economic downturns because of low interest rates for mortgages and the housing market's return to a "more realistic pricing pattern." He added that the recent federal economic-stimulus package - with some Americans receiving tax rebates this week - should provide a small boost in consumer spending.
Mari Alvarado, a Phoenix resident who teaches at Glendale Community College, said she plans to do her part by using her $300 stimulus check to buy a better TV.
"Since they want us to stimulate the economy, we can't just put it in a savings account," Alvarado said. "So we need to go out and spend it."
Ennis also said despite the projected overall job losses, natural resources and mining should see a 25 percent increase in employment through 2009. He said education and health services should see a 5.7 percent jump, while the leisure and hospitality industry may be up nearly 2 percent.
Ennis said a demand for copper mining is fueling more natural-resources jobs, but he said it's still a small industry that likely will create 3,000 jobs.
Federal and local governments are forecast to add 4,000 jobs this year and another 2,600 in 2009, but state government is not expected to add any jobs because of a hiring freeze.
The state saw its worst job creation in the 1940s, with losses recorded in 1944-46 and in 1949.
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