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Quick recovery after recession leads to promising economic outlook for state

Income inequality could be a drag on a strong economy, ASU experts say.
May 7, 2021

ASU experts see optimism and, despite increased costs, no housing 'bubble' in Arizona

The economic outlook for Arizona and the U.S. is promising as the deep recession sparked by the pandemic quickly recedes, according to three Arizona State University experts.

“A year ago, we were wondering how deep it would be and how long it would last,” Dennis Hoffman said of the economic downturn brought on by COVID-19.

“Now we know: It was very deep but it was very short-lived."

Hoffman, director of the L. William Seidman Research Institute in the W. P. Carey School of Business, spoke at the annual economic forecast event held by the Economic Club of Phoenix, a unit of the W. P. Carey School. The panel discussion was held online Thursday.

The federal government’s economic stimulus checks are a big factor in the recovery, Hoffman said.

“The stimulus data are amazing. Without a stimulus, there would be a deep decline,” he said. “But the forecasters are clear: It’s onward and upward from here. There’s not a lot of debate around that.”

However, Hoffman noted that the recovery has not been equal for everyone.

“During the recovery, the folks making $60,000 or more had a blip and are now back to normal, but for those making $27,000, they are still well below where they were before the pandemic,” Hoffman said.

Dennis Hoffman, professor of economics and director of the L. William Seidman Research Institute at ASU, showed a slide that illustrated how the pandemic recovery has exacerbated income inequality. People earning $60,000 or more are doing as well as before the pandemic, while those who earn $27,000 or less are faring much worse. Screenshot by Charlie Leight/ASU News


Hoffman said that some are worried about inflation.

“Many companies are planning to raise prices. Food prices are up. Transportation costs are up. Lumber prices are through the roof,” he said.

“The Fed sees only a temporary price pressure, but no ongoing inflation.”

A quick recovery for Phoenix and the state

The outlook for Arizona and the Phoenix metro region also is good, according to Lee McPheters, research professor of economics in the W. P. Carey School of Business and director of the school’s JPMorgan Chase Economic Outlook Center.

“Arizona went into the pandemic with a rip-roaring economy. We were No. 1 in the country in the rate of job creation,” he said.

“We expect over 115,000 jobs to be added this year, which will replace all the jobs that were lost by the end of 2021.”

He compared the pandemic recession to the Great Recession of 2007–10.

“The Great Recession lost over 300,000 jobs in three years and took five years to recover them,” he said.

The current recession started in April 2020.

“We lost over 331,000 jobs, more than the Great Recession, but we’ve already recovered over two-thirds,” he said.

A screenshot of a Zoom presentation where a man explains a graphic about Arizona regaining lost jobs

Lee McPheters, research professor of economics and director of the JPMorgan Chase Economic Outlook Center at ASU, showed a slide illustrating the slow recovery from the Great Recession and the deep but brief recession sparked by the COVID-19 pandemic. Screenshot by Charlie Leight/ASU News

Arizona has always depended on migration to the state to drive economic development, McPheters said.

Analysts were shocked when the recent census results showed that Arizona added 774,000 people over the previous decade, and not the million new residents that were expected.

“The big issue for economists is that a lot of government money is distributed on a per-capita basis, and those dollars won’t be going to Arizona,” he said.

While in previous years, construction was the No. 1 growth industry in the Phoenix metro area, right now it’s transportation and warehousing.

“Over 60 million square feet of industrial space is under construction,” he said. “Amazon has signed 11 leases last year alone.”

One exception to the bright outlook is for small businesses, about 30% of which remain closed, McPheters said.

With real estate, experts are now starting to realize which changes wrought by the pandemic will last, according to Mark Stapp, the Fred E. Taylor Professor of Real Estate in W. P. Carey. Among those:

  • Retail was already being reimagined, but those changes are occurring more rapidly, such as a focus on “experiential retail” and health and wellness. “Retailers want to change what they’re using the brick-and-mortar spaces for, and that will change the value proposition for those spaces.”
  • The “work from anywhere” movement is here to stay. “The cost of making office spaces comfortable for employees to return is having a big impact on net operating income and affecting the value of the spaces as well.”
  • Industrial spaces are thriving. “For fulfillment and logistics, we are the place to be.”

Mark Stapp, the Fred E. Taylor Professor in Real Estate at ASU, showed a slide illustrating the results of a recent survey of commercial real estate agents, showing that 96% are optimistic about the market in Phoenix. Screenshot by Charlie Leight/ASU News

Is there a housing bubble?

ASU’s experts say that there is no housing “bubble” that could burst, leading to an economic freefall like the one in the previous decade.

McPheters said that economic development depends on the supply and affordability of housing.

“Home prices are up about 24% over a year ago,” he said.

But compared with California and other places that people are leaving to move to Arizona, the local housing is affordable.

“Even though home prices are up, incomes also are up and mortgage rates are down, so mortgage payments are not in the ‘bubble’ territory yet,” McPheters said.

Stapp said that there are simply not enough houses because the market was underbuilt over the previous decade, while the population was growing.

“We have a supply problem, and that’s not easy to fix,” he said.

“From 2011 onward, it was consuming overbuilt inventory. By 2015, we had consumed most of that and continued to build at very low rates,” Stapp said.

“It’s not a problem as long as we have better wage-earning jobs moving here and as long as interest rates stay low.”

But income inequality could be a risk factor.

“The social concern is that there are winners and losers, and we have to focus on the losers just as much as the winners,” he said.

“It will create a drag on the economy if we don’t pay close attention to it.”

Top photo of downtown Phoenix by Deanna Dent/ASU News

Mary Beth Faller

Reporter , ASU News


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ASU brings the world of engineering to local high schools

May 7, 2021

Virtual event expands outreach, allowing more students to participate and giving them more time to puzzle out solutions to real-world water issue

Phoenix-area high school students were virtually transported to rural Kenya to solve a real-world engineering challenge through an Ira A. Fulton Schools of Engineering at Arizona State University outreach program.

The Engineering Projects in Community Service program for high school students, known as EPICS High, recently hosted its first three-week EPICS High Virtual Olympiad with the ASU chapter of Engineers Without Borders. The experience was designed to introduce STEM skills and an engineering mindset to high school students.

The event helped more high school students learn engineering design skills than in past events and enabled the Engineers Without Borders undergraduate students to stay involved even as international travel has been limited due to the pandemic.

"Through the EPICS High program, we aim to provide students with experiences that mimic the work that real engineers do, and this year's Olympiad has succeeded in that," said Jennifer Velez, senior coordinator of the K–12 Engineering Education and Outreach team who organized the EPICS High Virtual Olympiad. "The feedback from teachers, students and our partners in Engineers Without Borders has been overwhelmingly positive."

Two programs combine for new outreach opportunity

High school outreach has not typically been the focus for the ASU chapter of Engineers Without Borders, said Alex Owen, a third-year civil engineering major and the chapter’s president.

“However, during this time of virtual everything, building early STEM awareness and understanding has been one of our top priorities,” Owen said.

So, in November, as a new way of giving back to the community, Engineers Without Borders got involved with the EPICS High Virtual Olympiad. Owen and other members modified a past Engineers Without Borders project and put their members to work as mentors in the EPICS High program.

The original Engineers Without Borders project involved bringing a reliable source of drinking water to a rural village in western Kenya. While rain is plentiful during some parts of the year, others are marked by extremely dry conditions. Old reservoirs and water sources had fallen into disrepair or were unreliable, so women and girls walked miles to collect water from faraway sources each day, and many sources of water were contaminated. With severely limited resources, members of Engineers Without Borders were challenged to maximize time and their budget to make an impact for the village’s 500 residents.

A new Olympiad experience

Set up with the same circumstances Engineers Without Borders members had faced in Kenya, this design challenge was much more demanding than what EPICS High Olympiad students faced in previous years. The extended timeline also offered a deeper learning experience with more opportunities to think like an engineer and solve a problem many people around the world are facing.

Before the pandemic, EPICS High Olympiad events brought hundreds of students to ASU’s Tempe campus for a rapid prototyping experience over the course of a single day. Students were given a challenge and requirements for a solution, and they would talk with undergraduate students and industry professionals who serve as their “customers.”

It’s a good “toe-dipping experience” to human-centric design, said Tirupalavanam Ganesh, a Tooker Professor and assistant dean of engineering education in the Fulton Schools who was a judge in the most recent EPICS High Virtual Olympiad.

Like any engineering challenge, the event organizers had to work within some boundaries. Going virtual meant there’d be some concessions, but it also presented opportunities. While the high school students didn’t get to visit the ASU campus, transportation and cost barriers were removed, which allowed 250 students from six high schools to participate. Extending the event across several weeks also helped students get a deeper understanding of the problem and the potential solutions.

“Giving students who are in high school this really unique opportunity to think about a problem space that’s real, has evidence and narratives of the people’s challenges, and then solve it, is really quite remarkable,” Ganesh said. “The students took the problem to heart. They put in the effort.”

A valuable, collaborative experience

A graphic of the reservoir design concept from students at Gilbert Classical Academy.

High school students from Gilbert Classical Academy on the “Repair the Reservoir” EPICS High Virtual Olympiad team designed a way to fix the village’s reservoir to store water during times of drought. Screenshot courtesy of Jennifer Velez

Lizzie Beistle, a junior at Gilbert Classical Academy, didn’t think she was particularly interested in engineering when she first signed up for EPICS High, but that all changed once she was pushed out of her comfort zone and began to think critically about real-world problems.

“From the moment our first brainstorming session began, we were hooked,” she said of her team, named Repair the Reservoir. “The challenge EPICS presented to us was frustrating, to say the least, and every single one of us was desperate to find a solution. We spent countless class periods and late-night calls trying to figure it out until we had this one glorious ‘aha!’ moment.”

That idea — repairing and reinforcing the village’s earthen reservoir dam with concrete — led to their selection for the next level of the competition as well as a first-place Olympiad finish and Impact Award, given for the project with the most potential to help the community.

Beistle says she found the budgetary, resource and labor constraints of working in rural Africa to be the most interesting part of the challenge.

“We were constantly thinking about if we could afford that, how things would be transported, if villagers could feasibly build our design and more,” Beistle said, “which ended up teaching us not only how to think like engineers but also how to predict problems before they arise.”

Advice from a professional engineer

Greg Rodzenko, the Engineers Without Borders industry mentor and former land development engineer and city of Glendale engineer, shared the real experience of working on impactful and challenging international projects.

Rodzenko got involved with ASU’s Engineers Without Borders chapter by accident in 2010. A coworker invited him to go on a project trip to Ecuador because the students needed to be accompanied by a professional engineer, and he has been involved ever since. He has also been involved in ASU’s EPICS program for five years, leading projects on the Navajo Nation.

Rodzenko has been passionate about fieldwork since he advocated for field labs in graduate school in the 1970s, and he continues to inspire students with hands-on projects.

“When you put interesting projects in front of curious humans, good things happen,” Rodzenko said.

Rodzenko was one of the industry mentors who accompanied the ASU Engineers Without Borders students to Kenya between 2012 and 2014 when they traveled there to solve some of the area’s water challenges.

“(The Kenya water challenge) is not just a high school student problem. My learning curve was equally steep and humbling,” he said. “It’s fascinating to watch the ‘lightbulbs’ turn on — it’s an intellectual process, but you also see their emotions when they ‘get it’ or have an ‘aha!’ moment.”

Creative problem-solving to impact people’s lives

Regents Professor Edward Kavazanjian, Engineers Without Borders ASU chapter industry mentor Greg Rodzenko, student president Alex Owens and member Matthew Kimball participate in a Zoom Q&A session for the EPICS High Virtual Olympiad.

Regents Professor Edward Kavazanjian, Engineers Without Borders ASU chapter industry mentor Greg Rodzenko, chapter President Alex Owen and member Matthew Kimball answer questions about the real situation they faced when addressing waterneeds in Kenya during an EPICS High Virtual Olympiad Q&A session with the high school participants. Screenshot courtesy of Jennifer Velez

In second place, Rooftop Catchment, another team of students from Gilbert Classical Academy, developed a solution to collect and filter rainwater.

As a judge, Ganesh was particularly impressed by the research and mathematical calculations the students did to understand the potential yield of rain capture into a communal basin.

The When In Rome team from Red Mountain High School in Mesa also looked into repairing the local reservoir.

The solution the Engineers Without Borders students developed during their years on the project involved capping earthwork dams with concrete to keep them from being breached and damaged. They also implemented a rainwater-harvesting system at a nearby college.

Through Q&A and debrief sessions during the event, Rodzenko, Owen, Edward Kavazanjian — an Engineers Without Borders faculty mentor, Regents Professor and Ira A. Fulton Professor of Geotechnical Engineering — and others relayed the actual experience of working in rural Kenya.

“Having the opportunity to mentor and judge the students’ presentations sharpened my own engineering skills, and it left me very encouraged for the incoming STEM students,” Owen said.

“Looking back to my own high school and middle school days, I lacked the chance to participate in any events like this,” he said. “I hope to stay involved in more outreach because STEM education is important for all students.”

Skill-building for any future

While technical skills were necessary to complete the projects, it’s not the only thing the engineers needed to help communities. The EPICS High and EPICS High Virtual Olympiad experiences are helpful for future engineers and other professionals alike.

“(Students learn) how to think. It’s a key part of becoming a professional problem-solver, engineer or scientist,” Rodzenko said. “These projects are an interesting and useful way to learn how to do research, how to organize information and how to present information to others.”

Logan Skabelund, a senior at Red Mountain High School, is planning to study mechanical or electrical engineering at ASU — he is among approximately 26 of the participating students to be admitted into the Fulton Schools for the fall.

Skabelund got involved in EPICS High to be able to solve a real-world engineering problem, and the EPICS High Virtual Olympiad was like a “mini senior capstone project” that showed him how engineering projects operate.

“It’s a different experience than working in a classroom environment because your solutions may actually be used and have a real effect in the world,” Skabelund said. “(Through EPICS High) I’ve learned so much about the engineering and manufacturing process.”

Beistle plans to attend Dartmouth and pursue studies in government, history, economics, quantitative social science and sociology.

“I think this just goes to show that the EPICS program isn’t just for ASU hopefuls and future engineers,” Beistle said. “It can be very much enjoyed by students interested in all kinds of fields.”

Top image: The EPICS High Virtual Olympiad outreach event hosted by the Ira A. Fulton Schools of Engineering at Arizona State University challenges high school students to think like engineers to generate solutions for community problems. In the most recent event, students worked with the ASU chapter of Engineers Without Borders to come up with their own solutions to a real challenge the organization faced in rural Kenya. Graphic courtesy of Shutterstock

Monique Clement

Lead communications specialist , Ira A. Fulton Schools of Engineering