MAGUIRE MARICOPA BOARD 200930.PDF

Economic Outlook 
Maricopa County 
Board Of Supervisors
Alan E. Maguire
October 2020

“Have we landed yet?”
• US Economy
• Arizona Economy in the US Economy
• Maricopa County in Arizona Economy
• Pertinent Observations
Economic Outlook

Economic Outlook
“Have we landed yet?”
• US Economy
• Arizona Economy in the US Economy
• Maricopa County in Arizona Economy
• Pertinent Observations

Economic Outlook
“Have we landed yet?”
US Economy
• US Gross Domestic Product
• Unemployment Benefit Payments
• Benefits by Type
• US Savings Rate
• Federal Reserve Interventions
• Mid-term Outlook

-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
2000
2004
2008
2012
2016
2020
US Economic Outlook
US GDP 2000 – 2020 Qtr Change
*
2020 Q1 & Q2

-
 5,000.0
 10,000.0
 15,000.0
 20,000.0
 25,000.0
2000
2004
2008
2012
2016
2020
US Economic Outlook
US GDP 2000 – 2020
2020 Q1 & Q2
*
Q2: Annualized Rate of 
Growth -31.4%

-
 5,000.0
 10,000.0
 15,000.0
 20,000.0
 25,000.0
2000
2004
2008
2012
2016
2020
US Economic Outlook
US GDP 2000 – 2020
2020 Q1 & Q2
Q2: Annualized Rate of 
Growth -31.4% 
Effectively Back to Q2 2017 - 3 Years!

0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
January 4, 2020
February 1, 2020
February 29, 2020
March 28, 2020
April 25, 2020
May 23, 2020
June 20, 2020
July 18, 2020
August 15, 2020
September 12, 2020
US Economic Outlook
Initial Jobless Claims Jan – Aug 2020
September 19 – 0.870 M
March 28 – 6.867 M
August – Unemployment rate 8.4% 
April – Unemployment rate 14.7%

0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
January 4, 2020
February 1, 2020
February 29, 2020
March 28, 2020
April 25, 2020
May 23, 2020
June 20, 2020
July 18, 2020
August 15, 2020
September 12, 2020
US Economic Outlook
Continuing Jobless Claims Jan – Aug 2020
September 19 – 12.580 M
May 9 – 24.912 M
August – Unemployment rate 8.4%

US Economic Outlook
US Unemployment Programs Week of September 5
State Unemployment
12,373,199
Federal Employees
13,025
Ex Service Members
13,523
PUA
11,510,888
PEUC
1,631,645
Extended Benefits (>26 wks)  279,839
State Additional Benefits
2,295
Workshare
220,538
TOTAL
26,044,952
44%

US Economic Outlook
Basic Unemployment Insurance 2020
*
$0.0
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
$3,500.0
Jan.
Feb.
Mar.
Apr.
May
Jun.
Jul.

$0.0
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
$3,500.0
Jan.
Feb.
Mar.
Apr.
May
Jun.
Jul.
US Economic Outlook
UI + PUA + Direct Payments 2020
*
Basic Unemployment
Pandemic Unemployment Assistance
Direct Payments
($1200/2400)

$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL
2019
2020
Personal Savings - MONTHLY
US Economic Outlook
US Personal Savings 2019 - 2020
$6.4 Trillion!
$3.2 Trillion
$1.2  Trillion

$0.0
$1,000.0
$2,000.0
$3,000.0
$4,000.0
$5,000.0
$6,000.0
$7,000.0
$8,000.0
$9,000.0
$10,000.0
Jan.
Feb.
Mar.
Apr.
May
Jun.
Jul.
US Economic Outlook
UI + PUA + Direct + Savings 2020
*
Savings 
Combined in April $6.4 TRILLION !

$0.0
$1,000.0
$2,000.0
$3,000.0
$4,000.0
$5,000.0
$6,000.0
$7,000.0
US Economic Outlook
Savings 2020
*
Total March thru July $19.6 TRILLION !

-15%
-10%
-5%
0%
5%
10%
Consumer Spending 2019 to 2020
US Economic Outlook
MARCH - Roughly 
½ bad month
Month over Month Change
-12.92
8.58%
6.16%
1.92%
May

Consumer Spending 2019 to 2020
US Economic Outlook
 $10,000
 $11,000
 $12,000
 $13,000
 $14,000
 $15,000
 $16,000

Economic Outlook
“Have we landed yet?”
US Economy
• Benefit Payments
• PLUS Savings Rate
• EQUALS Consumer Spending
• PLUS Federal Reserve Intervention

US Economic Outlook
Fed Balance Sheet 2008 to 2015
Jan 2008 – 0.922T
Jan 2015  – 4.498T
3.576 T – 84 months
Note: August 2008 through December 2015 – 3.6 T
*

US Economic Outlook
Fed Balance Sheet 2020 to 2020
Feb 26 – 4.158T
Aug 19 – 7.01T
2.852 T – 6 months
*

US Economic Outlook
*
Fed Funds Rate 2006 to 2019

US Economic Outlook
Fed Funds Rate 2006 to 2020
2018 Q4
Market Drop

US Economic Outlook
Summary
• Millions of Workers Out of Work
• Spend $2.4 Trillion in less than 2 months
• Pump $2.8 Trillion into Financial System
• Backstop almost all Private and Public Debt
• Outcome: US Consumer Spending Bounces Back
*

US Economic Outlook
Summary
• Millions of Workers Out of Work
• Spend $2.4 Trillion in less than 2 months
• Pump $2.8 Trillion into Financial System
• Backstop almost all Private and Public Debt
• Outcome: US Consumer Spending Bounces
• But for HOW LONG?

Economic Outlook
“Where are we?”
US Economy
• US Employment – “Half Back Analysis”

100,000
 110,000
 120,000
 130,000
 140,000
 150,000
 160,000
US Economic Outlook
Total US Employment 1990 – 2020
Peak to Trough – Halfway Back
February 2001
August 2003
½ Back April 2004
8 Months 
2001 Recession
*

100,000
 110,000
 120,000
 130,000
 140,000
 150,000
 160,000
US Economic Outlook
Total US Employment 1990 – 2020
Peak to Trough – Halfway Back
January 2008
February 2010
½ Back July 2012
29 Months 
2008 Recession
*

100,000
 110,000
 120,000
 130,000
 140,000
 150,000
 160,000
US Economic Outlook
Total US Employment 1990 – 2020
Peak to Trough – Halfway Back
February 2020
August 2020
½ Back August 2020
4 Months* 
2020

US Economic Outlook
IMF Forecast – Year Ago
• IMF Forecast for 2020: 3.5 % Global GDP Growth 
Up from 3.2% for 2019
• Challenges
Brexit Uncertainty / EU Weakness
China Weakness
India Weakness

US Economic Outlook
IMF Forecast – NOW
• IMF Forecast for 2020: - 4.9 % Global GDP 
Growth 
Down from 2.9% for 2019
• Challenges
Pandemic Impact
Continued Uncertainty
(June 2020)
*

US Economic Outlook
IMF Forecast – NOW
• IMF Forecast for 2020: - 4.9 % Global GDP 
Growth 
Down from 2.9% for 2019
• Challenges
Pandemic Impact
Continued Uncertainty
(June 2020)
Sept. 24: “Outlook not as severe as 
projected  outlook in June.”
“Recent incoming data suggests that 
the outlook may be somewhat less 
dire”

US Economic Outlook
IMF Forecast – NOW
• IMF Forecasts: 2019 
2020
2021
US 
2.3
-8.0
4.5
Europe
1.3
-10.2
6.0
UK
1.4
-10.2
6.3
China
6.1
1.0
8.2
India
4.2
-4.5
6.0
(June 2020)

Economic Outlook
“Where are we?”
Medium Term Outlook
•
“I expect this rebound to continue in the U.S. as businesses learn how to produce products and 
services safely using simple, existing technology,” 
•
“This suggests that key areas of global production are well past the initial phase of the crisis and 
are likely to continue to increase economic activity under new safety protocols,” 
•
“Very rapid third-quarter GDP growth may put the U.S. economy within reach of a sort of ‘full 
recovery’ by the end of 2020,”
•
“For this to happen, real GDP would have to grow 35% at an annual rate in the third quarter, 
followed by about 10.3% at an annual rate in the fourth quarter. These are big numbers, but not 
outside the realm of possibility,” 
James Bullard, President Federal Reserve Bank of St. Louis
Sept. 24th

Economic Outlook
“Have we landed yet?”
• US Economy
• Arizona Economy in the US Economy
• Maricopa County in Arizona Economy
• Pertinent Observations

Economic Outlook
“Have we landed yet?”
Arizona Economy
• Unemployment
• Sales Tax Activity
• Budget Outlook
• Key Economic Indicators

AZ Economic Outlook
*
US Employment -- Percent Change
2006 to Current
-15
-10
-5
0
5
10

-15
-10
-5
0
5
10
AZ Economic Outlook
*
US AZ Employment -- Percent Change
2006 to Current
AZ Worse!
AZ Better!

0
50,000
100,000
150,000
200,000
250,000
300,000
07-Mar
04-Apr
02-May
30-May
27-Jun
25-Jul
22-Aug
19-Sep
AZ Economic Outlook
Arizona Initial Jobless Claims 2020
Combined Peak: July 25 – 285,737
UI Peak: April 4 – 132,428
Data Through September 19
PUA 
UI 
PUA Peak: Sept 19 
– 305,152
TOTAL

0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
AZ Economic Outlook
Arizona Continuing Jobless Claims 2020
*
Combined Peak:
July 18 – 2,998,152
Sept 19 – 320,022
Data Through September 19

-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
July 2018
Jan 2019
July 2019
Jan 2020
July 2020
Note: Month of Actual Sale –
County Receives 2  months later!
AZ Economic Outlook
Retail Sales Activity – July 2018 On
*

0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
July 2018
Jan 2019
July 2019
Jan 2020
July 2020
AZ Economic Outlook
Contracting Sales Activity  – July  2018 On
Note: Month of Actual Sale –
County Receives 2  months later!

AZ Budget Outlook
Overall State Situation
Cumulative Expected General Fund Shortfall:
($1.720) B (through FY23) (JLBC Staff)
Available Resources / Offsets – State Share
• Rainy Day Fund – $973 M
• Coronavirus Relief Fund – $1,860 M
“Necessary Expenditures due Public Health Crisis”
• Education Stabilization Fund – $634 M
• Temporary Medicaid Match Rate Increase – $237 M
*

AZ Budget Outlook
Overall State Situation
Details:
• Education Stabilization Fund – $634 M
• K-12 – $277 M (all available to supplant) 
• Higher Ed – $288 M  “50% for Student Grants”
Universities – $118 M
Community Colleges – $77 M
Privates – $93 M
Up to $66 million could supplant existing sources
• Temporary Medicaid Match Rate Increase – $237 M
January to June 2020 – May be extended
*

AZ Budget Outlook
Overall State Situation
Cumulative Expected Shortfall: ($1.720) B
Total Available Offsets – $1.550 B
Plus some portion of $1,860 M CRF
Plus Possible Medicaid Match Extension
Bottom Line – Should be OK
*

Economic Outlook
“Where are we Going?”
Blue Chip Economic Forecast
Arizona
2020
2021
• Personal Income
-2.0%
4.6%
• Retail Sales
-4.2%
6.4%
•
Population Growth
1.1%
1.3%
• Single Family Permits
-1.7%
2.2%
Probably 
too LOW!

Economic Outlook
“Where are we?”
Maricopa Economy
• Unemployment
• Taxable Sales Activity
•
Budget Outlook
Maricopa County Sales Taxes
Maricopa Employment (Phx MSA)
Ongoing Expenditure Limit Issues

-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
June
August
October
December
February
April
June
Maricopa Economic Outlook
Maricopa County Business Activity 
Measured by Taxable Sales – YTD Comparison
Lodging
Amusements
Restaurants Bars
Retail
Contracting
All ABOVE 5% Year over Year Through February!

-15
-10
-5
0
5
10
AZ Economic Outlook
*
US AZ Employment -- Percent Change
2006 to Current
AZ Better!

Maricopa Economic Outlook
US AZ Maricopa Employment -- Percent Change
2006 to Current
-15
-10
-5
0
5
10
Maricopa Worse!
Maricopa Better!

Maricopa Economic Outlook
“Where are we Going?”
Blue Chip Economic Forecast
Phoenix Metro
2020
2021
• Personal Income
1.7%
4.9%
• Retail Sales
-2.5%
5.3%
•
Population Growth
1.5%
1.6%
• Employment
-2.1%
3.8%
Probably 
too LOW!

Maricopa Economic Outlook
Some Good News!
• Housing Demand VERY Strong
• Arizona Single Family Permits Up over 25%
• US Employment Down 8.4% - AZ Only 5.2%
• Phoenix SMALLEST LOSS of Major Markets 
What About?
• Mortgage Delinquencies – High Demand
• Slow Re-Employment – Better Options
• Rent & CC Worrisome!

Maricopa Economic Outlook
Hotel Industry - US
• August Occupancy
48.8%
• August 2019
71.4%
• 40% Unemployment for Hotel Workers
• Worst markets: Hawaii, Orlando, New York, San 
Francisco, …
• Least Bad: Virginia Beach, Philly, Tampa, Phoenix, …
• Recovery: 38% say they will travel THIS YEAR
• TSA Passenger Counts down 70%+

Expenditure Limitation
Background
• Enacted by Voters Statewide in 1980
• Article IX, Section 20 Arizona Constitution
• Part of Comprehensive Program to:
Limit the Growth of State and Local Government
Limit and Reduce Reliance on Property Taxes
Equalize Property Tax Burdens cross the State

Expenditure Limitation
Continuing Challenges
• Many Budget Categories Increase Faster than 
Population and Inflation (Growth in Limitation)
• “Carry Forward” is Declining Due to Use in Prior Years
Carry Forward is revenues excluded from limit
• Positive Steps are Required
Increase Exclusions
Modify Limit
Other Options

Economic Outlook
“Where are we?”
• US Economy
• Arizona Economy in the US Economy
• Maricopa County in Arizona Economy
• Pertinent Observations

Economic Outlook
Pertinent Observations
Other Issues
• Federal Debt
• Consumer Confidence
• Arizona’s Outlook

Economic Outlook
Pertinent Observations
Explosion Of Debt
• US Federal Debt – $26.8 Trillion
• US GDP – $21.7 Trillion (End of 2019)
• Debt is now 137% of US GDP
• Debt is now $81,200 per person in US
This Doesn’t Work!
*

Economic Outlook
Pertinent Observations
EXPLOSION OF DEBT
• US Federal Budget – $4.4 Trillion FY 2019
• Interest on Debt – $375 Billion – 11.1% of Budget
Using 2000 average interest rate paid on US Debt
• Interest on Debt – $1.760 Trillion – 39.6% of Budget
•
Individual Income Tax Collections = $1.684 Trillion
•
SS + Medicare = $1.787 Trillion

60.0
70.0
80.0
90.0
100.0
110.0
120.0
130.0
2015
2016
2017
2018
2019
2020
Current Situation
Economic Outlook
US Consumer Confidence 2015 – 2020
*
Future Expectations
Overall Index
University of Michigan

60.0
70.0
80.0
90.0
100.0
110.0
120.0
January
February
March
April
May
June
July
August
Economic Outlook
US Consumer Confidence 2020
Future Expectations
Overall Index
University of Michigan
Current Situation

Economic Outlook
Pertinent Observations
The Bad News
• ONLY “Half Back” in Employment
• Continuing Uncertainty
• Delayed Stimulus (or none)
• Businesses and Households Depleting Savings

Economic Outlook
Pertinent Observations
The Good News
• Extremely Strong Coming in
• Expect Increased Re-Locations
People
Production
• Opportunity for Constructive Policy Response
Infrastructure
Manufacturing

Economic Outlook
Pertinent Observations
Takeaways
• US Gov’t. Response MUCH BETTER than 2009 /2010
• Federal Reserve Response was Magnificent
• Federal Debt is an Issue!
• BUT, Arizona is A GREAT PLACE to be!
• We came in Strong should Emerge Strong
• Maricopa is leading Arizona

Economic Outlook 
Maricopa County 
Board Of Supervisors
Alan E. Maguire
October 2020