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Report: Major Arizona cities among least recovered from recession

The city of Phoenix ranked #139 out of major US metropolitan areas in level of recovery from the recession.

The city of Phoenix ranked #139 out of major US metropolitan areas in level of recovery from the recession.

Arizona’s major cities are among the least recovered from the recession among major communities across the nation according to a new report.

An analysis of key factors by the financial advice firm WalletHub finds no Arizona cities in the top half of the 150 they studied for recovery. Scottsdale managed to come in at 114, the best of any Arizona community studied.

At the other extreme, Tucson managed to escape being at the very bottom only because the problems in San Bernardino, Calif., are even worse.

Tucson’s rankings were driven down by having the highest poverty rate of Arizona communities reviewed. And WalletHub also marked down Tucson because the number of businesses shrank by more than 8 percent between 2007 and when the recession ended last year, a figure exceeded by only four other cities nationwide.

But Mesa, Tempe and Glendale also were in the Bottom 10 of the WalletHub analysis. And Phoenix barely escaped that designation at No. 139.

“You clearly see a trend in these data,” said economist Dennis Hoffman of the W.P. Carey School of Business at Arizona State University.

“It’s really pretty clear that the geographies here that got hit the hardest by the real estate collapse have been the slowest to recover,” he continued. Hoffman said that’s why the rest of the bottom of the list is populated with communities from Nevada and Southern California.

One item of note is that several of the communities studied had a net outflow of the number of college-educated workers since the beginning of the recession, even as the overall population of those cities has increased. And among the Arizona communities, Tucson had the largest percentage loss.

“They’re just having trouble attracting and retaining employers in Tucson that are looking to hire college grads,” Hoffman said. He said much of this is driven by cutbacks in the defense industry which has meant that firms with military contracts, like Raytheon, just are not adding to staff at the rate they once were.

And the situation may actually be more dire than the data show.

Dan Anderson, economist for the Arizona Board of Regents, said this city-level data is probably at least a year old, if not more. And that predates the latest round of cuts in state support for the university system, a move that has resulted in layoffs at University of Arizona.

But this isn’t just a Tucson problem. Gilbert, Glendale, Peoria, Phoenix and Tempe also registered a net outflow of college-educated workers. Anderson said it’s a simple math problem: The supply of college graduates available exceeds the demand by Arizona employers for them.

“What we need to do is boost the demand side for the labor market, attracting businesses that are going to hire those high-wage people,” Anderson said. He said the state has done that before.

“But right now, we’re just not seeing the level of movement that’s nearly as great as had been before,” he said.

Anderson said the focus needs to be on building small businesses that have the potential to grow.

“It makes great headlines to attract some large company that has great name recognition,” he said.

“But those are hard to attract these days,” Anderson said. “The days of attracting a new Intel facility that hires literally tens of thousands of people I think are pretty few and far between.”

Hoffman, looking at the national rankings, noted many in the top half are in the Midwest, especially Texas which escaped the housing boom and bust that ravaged the economy in Arizona and Nevada and parts of California and Florida. He said they managed to rely on the demand for oil.

But Hoffman said their day may be coming, with the price of crude reaching lows it hasn’t seen in years.

In fact, Hoffman said the wholesale price of gasoline is running $1.30 a gallon. At this rate, Hoffman predicted Arizona could soon see retail prices drop below $2.

4 comments

  1. Michael S. Ellegood, PE

    Let’s see, for over twenty years our singular approach to economic development has been to lower taxes. Never mind funding education, building infrastructure, encouraging high tech or other knowledge based industries, cut taxes and jobs will come.
    The problem is it hasn’t worked!! Why do we continue to do this?

  2. Two factors are not discussed: the severe austerity policy that has been the “remedy” by state and local government and the finance domination of Wall St. banks. Wall St. banks are not friendly to small businesses and actually create a net capital outflow from the state.

  3. Until the republicans controlled every branch and every office of our state government, AZ was ALWAYS, since WWII, recession proof. Thank you, GOP, for bringing our state down to the lowest depths of the economy that we could possibly be. Our schools are in crisis, unemployment is lagging behind the rest of the nation and we cannot attract good jobs. Good people have had to move FROM AZ to seek better conditions.
    This is unprecedented in the history of our state. We need to, in this next election, recruit people to run for office who have a mission to make AZ the greatest state to live in for all the people of this state.
    The Dems have failed us in that in the past few election cycles they have failed to point this fact out. We need new blood who have the energy and the guts to just tell the simple truth.

  4. Dennis Hoffman mentions cutbacks in defense spending. What cutbacks?

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