The national chatter over the flailing home lending industry and its effect on the U.S. economy quickly gravitated to a “mortgage apocalypse” scenario where more than a million Americans fall behind on payments and lose their homes. Whispers of an ensuing recession in the United States rattled world equity markets.
Still, it’s not time to fear the Four Horsemen’s arrival in Arizona.
“Is recession a possibility? Sure. Is recession a certainty? No,” said Dennis Hoffman, an economics professor at Arizona State University.
So far, housing market shakiness is only cooling Arizona’s economy a bit in 2007. For example:
● We’re spending less money. Sales tax collections in January rose a disappointing 1 percent because of a lackluster holiday season.
Revenue for the month was $7 million below the June 2006 forecast, according to the Joint Legislative Budget Committee.
The uncertain real estate market should continue to curtail consumer spending, particularly on home improvement items.
● Retail jobs are slowing. Arizona lost nearly 40,000 retail jobs in January. While that was blamed on post-holiday layoffs, employment growth in that category has been anemic for months, according to Austin Litvak, associate economist at Moody’s Economy.com.
● Residential construction jobs are stalling. During the past year, construction accounted for 21 percent of all new jobs created in Arizona. Yet a drop in new housing permits is drying up some work.
Last year, the industry created more than 22,000 jobs. Between December 2006 and January 2007, it lost 4,400, according to Arizona Department of Economic Security data.
● Income growth could taper slightly. University of Arizona economist Marshall Vest predicted that wage growth would drop to about 3.5 percent from 6.1 percent.
Compared with what’s happening in other areas of the U.S., those are not dire developments.