Phoenix Business Journal
September 30, 2011
Hang on, Phoenix. Better days are ahead.
That news may be of little consolation to the homeowner who recently lost his house to foreclosure, or the unemployed executive still searching for a job; but it’s the consensus of national and local economists that Phoenix’s worst days are in the rearview mirror.
Forbes magazine reported in July that Phoenix will be among the top 10 U.S. boom cities of the next decade. The magazine bases the ranking — which places Phoenix at No. 9 — on research by Forbes and Praxis Strategy Group evaluating the 52 largest metro areas in the country according to data indicating past, current and future vitality.
Phoenix, researchers concede, suffered mightily through the Great Recession, but still has more jobs now than it did in 2000.
“Warm weather, pro-business environments and, most critically, a large supply of affordable housing should allow these regions to grow, if not in the overheated fashion of the past, at rates both steadier and more sustainable,” Joel Kotkin wrote in the article, referring to Phoenix and Orlando, Fla., which was ranked No. 10 on the list.
According to the report, Austin will boom the biggest in the coming decade, followed by San Antonio, Houston and Dallas. Other top 10 boom towns include Raleigh, N.C.; Nashville, Tenn.; Washington; and Charlotte, N.C.
Alan Maguire, president and principal economist of the Maguire Co., a Phoenix-based independent economic forecasting and public policy consulting firm, said he agrees with the Forbes list, up to a point.
“If anything, I was a little surprised that Phoenix was that far down on the list,” he said. “I expected us to be higher. Arizona, Maricopa County and Phoenix since the 1950s have been among the most dynamic communities in the country. Nothing has changed; in fact, if anything, we’re in a better position than before.”
Maguire said despite the damaging effects of the economy, Phoenix’s infrastructure and core economy have continued to improve.
Job creation remains a challenge, as does the housing industry, which has been stubbornly slow to recover, he said.
Steve Matteucci, Western U.S. president for Harris Private Bank, expects Phoenix’s favorable climate and cost of living as well as Western migration patterns to continue to boost growth in the coming decade, but he believes they’re not enough to generate a sustainable recovery.
“It’s critical we develop an environment that’s attractive to businesses selling products or services on an international scale,” Matteucci said. “Additionally, in order to compete with other Western cities like Dallas, Denver, Seattle and Austin, we need to establish a much more robust hiring environment for entry-level workers.”
Economist Debra Roubik of VisionEcon is predicting 3 percent annual job growth by 2014. She agrees with Phoenix’s position on the Forbes list, adding she believes true small-business growth hinges on the ability of companies to secure venture capital funding.
“That’s a big threat,” she said. “If we can’t support small business, then my forecast is out the window.”
Both Maguire and Roubik said they are much more bullish on the local economy’s short-term performance than they are on what’s happening on the national front.
Roubik disagrees with Forbes Publisher Rich Karlgaard’s prediction at the 2012 SRP Economic Forecast earlier this month, where he announced that 2012 will be a year of “upside surprise” for the national economy.
“All the devastation is oversold,” Karlgaard told the crowd of more than 850 business leaders from across the state.
But Roubik countered, “Until some national policy turns positive, we’re in trouble.”
Maguire agreed: “I have grave concerns about the global and U.S. economies because of the new normal that looks like Europe. That’s very bad overall.”
He said by comparison, Arizona’s fundamentals appear strong — flaws and all.
“I don’t want to sound like a booster,” Maguire said, “but there are a lot of great things about Arizona.”