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Revised data show recession hit AZ harder than previous estimates

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Revised unemployment data indicate that the national recession hit Arizona’s job market far harder than previously believed, and the sputtering job growth continues to dampen reports of positive growth in other sectors of the economy.

Under previous estimates, Arizona’s unemployment rate never exceeded 9.7 percent during the recession.

But revised job reports from the Arizona Department of Commerce show it was actually higher than 10 percent from July 2009 through June 2010, peaking at as 10.2 percent in February last year.

The revised reports also show the job market did not begin to pick up steam in the fall of 2010, as had been widely believed, as previous estimates grossly miscalculated the number of jobs created. Rather than adding an average of 21,000 jobs per month in the last five months of 2010, the state actually lost an average of 22,000 each month.

January, when the state added 700 jobs, marked the end of a 35-month streak of job losses over the same month in the previous year.

In all, the Commerce Department believes the state lost 330,300 jobs during the recession, which began in December 2007.

There are, however, signs of recovery elsewhere.
For the seventh month in a row, February’s revenues are up, though the Legislature’s budget research unit is cautious about what the numbers mean.

Tax collections were 26.3 percent above last year.

But the upward trend was driven largely by growth in individual income tax collections, and the Joint Legislative Budget Committee reported the strong collections might be overestimating real economic activity.

In hard numbers, the state collected $52 million in individual income taxes, a whopping 278 percent more compared to February of last year.

But since job growth has been nearly flat, that might be the result of over-withholding arising from last July’s changes in the income tax table.

The refund numbers in March and April should help clarify whether the growth individual income tax revenue resulted from strong economic activity.

There are other good signs.

Year-to-date corporate income tax collections are up.

Total sales tax collections have also increased. Actually, even excluding money from the 1-cent sales tax, collections were 6 percent more than the revenues in February 2010.

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