Tuesday, November 14, 2006

Get over housing bubble, economists say, growth remains strong

Get over housing bubble, economists say, growth remains strong
By Lynn Ducey The Business Journal of Phoenix

Some of Arizona 's leading economists believe the housing slowdown is a short-lived bump in the road that too many people spend too much time thinking about.

Instead, Arizonans should be looking at statistics that show the state created 161,000 jobs through August of this year, more than 340,000 jobs since the end of the 2002 recession and had a whopping 8.7 percent gain in gross state product for 2005.

"It's hard to imagine a state with more economic momentum," said Kent Ennis, an economist and the director of research at the Arizona Department of Commerce.

Ennis made the comments at the 2007 SRP Economic Forecast held Wednesday at the Phoenix Convention Center .

Ennis was among panelists who also included University of Arizona President Robert N. Shelton and Stephen Happel, a professor of economics at Arizona State University W.P. Carey School of Business.

While the men agreed that Arizona 's economy would slow somewhat in the coming year, all said it would continue to expand, but at a somewhat slower pace. Saying 2007 would be a "moderate growth year," Ennis compared it to similar experiences seen in the Valley in the 1995-96 economic cycle.

Salt River Project's Associate General Manager and Chief Financial Executive Mark Bonsall said Arizona 's economy remains vibrant, despite a slower demand residentially. While commercial growth historically trailed residential growth in the utility's customer base, Bonsall said this year is markedly different.

"Now, commercial demand is just going through the roof. I think commercial growth is now playing catchup ball. The economy fundamentally is certainly strong," Bonsall said after the presentation.

At the podium, Happel identified himself as a "Kennedy Democrat," but said his "only concern right now is that Hillary ( Clinton ) gets elected in 2008."

Although Ennis suggested that a proposed $1.25 hike in the minimum wage would offset the eroding buying power of low-wage households due to inflation, Happel disagreed saying higher initial wages do nothing to improve earning power over the long term.

"The worse thing is to increase the minimum wage. It's not going to help the poor," Happel said.

An estimated 1,000 business people attended the breakfast event.

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