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Predicting Arizona's 2020 economy

May 2, 2019

ASU experts meet with local business leaders to forecast the health of the state's economy

Arizona’s economy is thriving and is likely to flourish at least for another year, according to economics experts at Arizona State University.

“We’re coming off a super-strong year, and it’s giving us a lot of momentum,” said Lee McPheters, research professor of economics in the W. P. Carey School of Business at ASU and director of the school’s JPMorgan Chase Economic Outlook Center. He spoke at the annual economic forecast luncheon held by the Economic Club of Phoenix, a unit of W. P. Carey.

McPheters said that 2018 surprised even analysts like him. He predicted that 69,000 new jobs would be added in Arizona for the year, when in fact, 78,800 jobs were added. Arizona was fourth in the nation for job creation.

“We’re continuing to get the benefit of more people moving here and a relatively robust birth rate and that’s a key driver for the economy,” he said, noting that Arizona is also fourth in the nation for population growth. “There is no recession in sight for our forecast.”

The job growth is mostly in construction, followed by health care, professional/scientific, manufacturing and transportation.

McPheters said that people remember the recession of 2008, when the vigorous housing market collapsed.

“Are we on the verge of a bubble? Well, as a percent of all jobs, construction is about 5.7%, not the 9 or 10% it was in 2006,” he said.

Also, the additional construction jobs are supporting job growth.

“It’s construction of office space, distribution space and public-sector investment.”

McPheters sounded an alarm about affordable housing. He said that wages have gone up 12% while home prices have increased 31%.

“That is putting a squeeze on people,” he said.

economic forecast

(From left) Dennis Hoffman, Lee McPheters and Mark Stapp answer questions at the Economic Club of Phoenix's annual economic outlook luncheon on Thursday. The three offered views ranging from national trends to local factors in their consensus view that the Arizona will continue growing, but will slow down a little in the coming year. Photo by Charlie Leight/ASU Now

McPheters said the biggest threat to Arizona’s economy is the national economy. On that front, Dennis Hoffman was optimistic.

“We’re in a strong employment expansion that has been unrelenting since 2014 and should continue for the foreseeable future,” said Hoffman, an economist and the director of the L. William Seidman Research Institute at the W. P. Carey School of Business.

“What’s fueling the economy? Less regulation is behind some of it,” he said. “People argue about regulation and the long-term consequences, but I think it sustained the growth in 2017 and 2018.”

Hoffman discussed several potential problems ahead.

“People worry about global warming, but I worry about global graying,” he said. “For the first time ever, we have more people 65 and older than 5 and younger.

“That will change the way people consume, what they’ll buy and how much they spend.”

He’s also worried about the increasing national debt.

“What’s driving it is mandatory entitlements. Nobody wants to hear this, but we simply do not have enough in receipts to pay for the Medicare that Baby Boomers expect.”

The commercial real estate market also is booming as workers are filling up all the new space, according to Mark Stapp, the Fred E. Taylor Professor in Real Estate in the W. P. Carey School of Business.

“Whatever we’re building, we’re absorbing,” he said. “I don’t think we’ll run the risk of oversupply. If we want to see job growth, we have to have space for those jobs to go.”

One interesting trend has been a change in the use of retail space. More than 6,000 stores have closed nationwide this year, while only 2,600 have opened. 

“But now we’re seeing other kinds of users,” he said. “Eighteen percent of medical offices now occupy retail space. This is a shift to put them closer to where people need them.”

Stapp echoed McPheters’ concerns about affordable housing.

“We are building what we need to house the population that is moving here and not building in excess, and that continues to push prices up,” he said. “There’s no slack in the inventory.”

Stapp said that new housing is gobbling up 6,000 acres a year in the Valley.

“Where do you get those 6,000 acres? We are pushing toward the edges again — Coolidge, Florence, Queen Creek, Casa Grande, Buckeye.”

Stapp said that one positive effect of the recession, when 10 million people nationwide lost their homes, has been the de-stigmatization of renting. One new trend he expects to grow is the construction of single-family rental communities.

“It solves the problem of ‘I don’t want to buy. I can’t afford it. But I still want a single-family home.’” 

Top photo: JP Morgan Chase Economic Outlook Director Lee McPheters speaks at the Economic Club of Phoenix's annual economic outlook luncheon at the Scottsdale Resort at McCormick Ranch on Thursday. Photo by Charlie Leight/ASU Now

Mary Beth Faller

Reporter , ASU News


ASU student-led payloads launched on Blue Origin space vehicle

May 2, 2019

Three Arizona State University student-led payload projects launched into space Thursday at 6:34 a.m. Pacific Standard Time on Blue Origin’s New Shepard space vehicle.

The payloads launched from Blue Origin’s facility in west Texas, approximately two hours east of El Paso. The New Shepard vertical takeoff and landing vehicle is capable of carrying hundreds of pounds of payload per flight and is ultimately expected to carry six astronauts to altitudes beyond 100 kilometers, the internationally recognized boundary of space.  Blue Origin's New Shepard space vehicle launches on May 2 in west Texas, with three ASU student-led payloads on board. Download Full Image

The student-led payloads were selected during a competitive pitching competition last year at ASU’s School of Earth and Space Exploration. To earn a spot, students were challenged to do one of three things for their payload project: Answer a science question, test technology development or engage the five senses (smell, taste, sight, touch, sound) in space.

The finalists’ payloads are the Suborbital Coagulation and Aggregation in Microgravity (science category), the Remote Acoustic Sensor (technology category) and Space Devils (five senses in space category). The teams are composed of students from both the Ira A. Fulton Schools of Engineering and the School of Earth and Space Exploration. They were built and designed at ASU and remotely by the students with guidance from ASU faculty mentors.

“These are the first-ever ASU student-designed and -built payloads to be launched into space and brought back to Earth,” said project lead Tanya Harrison, who is the director of research at ASU’s NewSpace Initiative. “The New Shepard suborbital rocket took our student payloads beyond the ‘Kármán line’ — the defined boundary of space.”

The payload slots on New Shepard were funded by ASU’s Interplanetary Initiative, a universitywide effort to build the future of humans in space; NewSpace, which is leading the integration of academic and commercial space enterprises using ASU’s strengths in space science, engineering and education; and by a generous donation from private donors Peter and Cathy Swan. 

“These student-led payload projects show that the opportunity exists for ASU students to design, build and fly in space,” said Peter Swan, who is also an Interplanetary Initiative team member and space industry expert. “This collaboration with Blue Origin opens up the future to our ASU students."

New Shepard launch

Watching from Blue Origin’s West Texas Launch Site along with Harrison were student-payload team members Logan Sisca and David Bates. Sisca and Bates are team members of the Remote Acoustic Sensor (RAS) payload, which was designed to capture acoustic data from bees and record their vibrations, pressures and orientation in space. 

"It is always rewarding to see your team's space hardware take flight, and this mission is no exception since our ASU engineering educations have led up to this moment,” said Sisca. “I am most excited to see the data and onboard video and I hope that the compelling in-space footage inspires future engineers and scientists to pursue their passion for exploration." 

When the RAS payload team members arrived at Blue Origin’s launch site, they loaded 24 locally sourced honeybees into the payload's experiment chamber, which is about the size of a softball. The bees remained in the chamber for the duration of the mission and were provided with sugar cubes to maintain their energy levels. Following the successful completion of their space mission, the bees — also known as "Flapstronauts" — were released into the wild to pollinate crops on Earth. 

“For our payload, we wanted to study the behavior of honeybees in space because, as prime pollinators, they are essential in any space colonization effort where crops are needed to be grown for food,” explained Sisca.

"The RAS payload has two goals,” said Bates. “The first is to observe the behavior of honeybees in the varying gravity and acceleration environments of space travel; and the second is to prove the viability of the remote acoustic sensor that measures air pressure variations like a microphone. RAS analyzes variations in light intensity that are produced when vibrating objects pass in front of the sensor and then converts that data into a sound file.”

As Bates explained, the RAS is able to "hear" objects in the vacuum of space and the successful operation of this experiment will verify that the RAS technology can operate aboard a spacecraft and that it can be used to gather information about the bees during flight.

“With good enough optical sensors, we can use ordinary light to hear vibrations even miles away,” added Danny Jacobs of the School of Earth and Space Exploration, who is a faculty mentor for the RAS team. “Given the task of demonstrating this technique on a rocket flight but constrained to a small box, the team conceived the novel application of monitoring insects. With much trial and error, the team recreated a RAS sensor, demonstrated it on bees and built a really nice experiment around it. This was all accomplished working remotely online and mailing hardware to each other. What a tour de force!”

Members of the original team include Ira A. Fulton Schools of Engineering electrical engineering undergrads Bates, Sisca, Bryan Trinidad and Roland Lizana. This team consisted entirely of online students spread across the country, as well as one student, Trinidad, who was working aboard a naval vessel in the Persian Gulf. While some team communication was done online, the team also shipped the payload around the world so each team member could physically work on it. Their faculty capstone leader is Mike Goryll with the School of Electrical, Computer and Energy Engineering.

“This project raises the technology readiness level of the remote acoustic technology which was invented by Dan Slater and promoted by Rex Ridenoure of Ecliptic Enterprises,” added Jacobs. “They were important mentors for this team and provided lots of help during the early concept development and testing of the sensor.”

Other ASU student-led payloads

The Suborbital Coagulation and Aggregation in Microgravity (SCAM) payload seeks to test the agglomeration of small particles, ranging from millimeter to centimeter in size, as they make collisions in microgravity, helping us to understand how planets form.  

Original members of the team include School of Earth and Space Exploration undergraduates Pat Jackson (exploration systems design), Jason Pickering (astrophysics), Chris Huglin (exploration systems design), Jin Kim (astrophysics), Kevin White (astrobiology), Kanishka Nirmale (astrophysics) and Mitchell Drake (explorations systems design). Their faculty mentor is Chris Groppi with the School of Earth and Space Exploration.

The Space Devils “Five Senses” payload measures and collects data on sight, smell, taste, touch and sound in space. It has, as its centerpiece, an ASU Sparky figure attached to a spring. During ascent and descent, Sparky is pushed up and down, creating the illusion that Sparky is doing pushups, which is measured by an accelerometer. A camera recorded the pushups, a microphone captured the sounds of the spaceflight, and air was pulled into the payload and passed through scent paper to capture the smell of space. 

The original members of the team include Ira A. Fulton Schools of Engineering mechanical engineering undergrads: Cody Bisbing, Gabby Bovaird, Clint Farnsworth, Josh Fixel, Peter Marple and Landon Wiltbank. Their faculty capstone leader is Abdelrahman Shuaib with the Mechanical Engineering Department.

Karin Valentine

Media Relations & Marketing manager, School of Earth and Space Exploration