State predicts further job losses in 2010 - East Valley Tribune: News

State predicts further job losses in 2010

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Posted: Thursday, October 1, 2009 11:12 am | Updated: 12:37 am, Sat Oct 8, 2011.

Arizona will continue to lose jobs for probably another year, the state Department of Commerce predicted Thursday.

Senior economist Jack York said the number of people working at the end of this year will be 178,500 less than when the year started. That translates to a loss of 6.8 percent.

Both those figures set new records - and by large margins.

The biggest loss in pure numbers was recorded last year when the number of employed dropped by 57,400. And in pure percentages, the biggest drop was at the end of World War II when employment declined by 2.9 percent.

State officials figure most of the jobs that they predict the state will lose this year already are gone. But they are figuring another 70,400 will be out of work by the end of the year.

But that won't be the bottom: York said job losses will continue through at least the first half of 2010.

He predicted, however, that hiring will pick up in the third quarter of the year, spurred by federal stimulus projects, war spending and even some increased consumer spending. That late-year boost, York said, should limit year-over-year losses in 2010 to 17,400.

York was less willing to predict just how high the state's jobless rate, currently 9.1 percent, will go before subsiding. But Lisa Danka, a deputy assistant director at the agency, said double-digit figures would not be surprising.

The last time Arizona's jobless rate topped 10 percent was July 1983.

Not surprisingly, York said the state's beleaguered construction industry will continue to suffer, with the 2009 job losses likely hitting close to 50,000. Part of that, he said, is related to the fact that population growth has slowed.

That mirrors an analysis earlier this week by economist Elliott Pollack.

He said as long as people can't sell their homes back East or in the Midwest - and can't find jobs out here - they will stay put. And that, in turn, means the need for new housing remains low.

York said that downturn in migration affects Arizona more than most other states.

He pointed out that Arizona construction employment at its peak in June 2006 amounted to 9.5 percent of all jobs in the state. By comparison, he said, the nationwide figure was just 5.6 percent.

Overall, construction employment by the end of 2010 will be just half of what it was at that peak.

Arizona's manufacturing sector also will continue to lose jobs this year and next. He said the likely exceptions are in the aerospace industry and military contracts.

York said the lone sector of the economy that will continue to grow is health services. He attributed that to the growing number and percentage of elderly who need care.

The prediction that Arizona is just a year from finally stopping jobs losses is not new: State economists made similar forecasts last year and in 2007.

In fact, this new forecast is gloomier than the one the Department of Commerce made just six months ago.

"We thought economic conditions would actually be better," York said of that prediction.

But York said Arizonans should believe this one.

Part of it, he said, is the amount of money being added to the economy in the form of federal economic stimulus dollars. That will fuel new construction jobs.

And York said national economists are saying it appears the recession actually might be over.

But he said there still are factors that could be a drag on the economy.

One relates to the fact that consumers, who took on large amounts of debt - much of it in home equity loans - are not going to be spending at the same rate they were earlier in the decade. York said that situation also shows up in businesses that also find themselves in debt.

There also are not yet signs that state population growth has returned to pre-recession levels.

York also said that tourism, a primary driver of the Arizona economy, is not expected to recover because of the continued weakness in the national and global economies. But he said some of that is mitigated by Arizonans deciding to vacation closer to home.

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