PHOENIX BUSINESS JOURNAL
By: Erin Roman
July 8, 2013
The latest Metro Monitor Report from the Brookings Institute shows strong economic growth for Phoenix.
According to the report, Phoenix has the highest gross metropolitan product growth in the nation with Tucson a close second. The GMP is the total value of goods and services a metropolitan area produces.
The report, which looks at 2013 first-quarter data on economic progress for the country’s 100 largest metro areas, shows an output increase of 1.2 percent in Phoenix and 1.1 percent in Tucson during the first quarter.
Kenan Fikri, Brookings policy analyst and co-author of the report, said GMP data shows that Phoenix’s strength is being generated by most sectors of the economy, which he said is a sign of a durable and lasting recovery.
“Of the major sectors of the economy, output only contracted last quarter in the government sector,” Fikri said. “Likely because local government is cutting back.”
While seven out of the 10 Mountain West metro areas have already reached pre-recession output levels, Phoenix closed the quarter with a deficit of 2.6 percent.
“If output continues to grow at the pace it did last quarter, it could reach a full recovery by the end of 2013,” Fikri said. “However, employment recovery is still several years away.”
Phoenix saw 0.6 percent job growth over the quarter, which is higher than the national average of 0.4 percent. However, the employment rate is still 7.2 percent below its pre-recession peak despite consecutive quarters of above-average growth.
“Since output recovery typically precedes a job recovery, companies make more sales before they hire more people, the recent progress on the output front does point to a potentially accelerating jobs recovery, as well,” Fikri said.
The report cites health care as a driver of job creation throughout the Mountain region metro areas and the nation. In Phoenix, healthcare is responsible for 12.2 percent of jobs created since the end of the recession, an increase of more than 2 percentage points.
As for a housing recovery, the Mountain West metro areas continued to lead the nation with a 1.7 percent increase in housing prices in the first quarter compared with 0.3 percent nationwide. Phoenix ranked third in the region and fifth in the nation with 2.7 percent growth.
The report noted Phoenix as the fastest-recovering major housing market in the nation, with a housing price increase of 18.3 percent since the second quarter of 2012.
However, Fikri said Phoenix may never reach pre-recession peaks in the housing market because a significant percent of its pre-recession economy was based on the housing bubble.
Despite the positive recovery performance in Phoenix, the report also said the city has a long way to go to reach pre-recession levels of employment and output.
“Phoenix has a strong recovery,” Fikri said. “But it’s still lagging behind national progress in really achieving full recovery because it was hit so hard by the recession.”
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