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Business experts reveal economic forecasts


December 15, 2008

In the wake of our current recession, several top experts revealed their highly anticipated economic forecasts for Arizona and the nation. More than 1,000 people packed into the 45th Annual W. P. Carey School of Business/JPMorgan Chase Economic Forecast Luncheon at the Phoenix Convention Center to find out whether there was any good news.

“The combination of President-elect Obama’s stimulus proposals, Federal Reserve and Treasury actions, foreign government programs and improving confidence will help ease the recession during the first half of 2009, and conditions should improve during the second half of the year,” said Dr. Joel Naroff, president of Naroff Economic Advisors, who recently received the Lawrence R. Klein Award, sponsored and judged by the W. P. Carey School of Business, for having the most accurate economic forecast among those who participate in the widely followed Blue Chip Economic Indicators survey. “I’m more optimistic than most of my colleagues, and I think there’s reason for it.”

Naroff was named forecaster of the year by Bloomberg Business News in 2008, by the National Association for Business Economics in 2007, and by MSNBC.com in 2006. He and several others headlined the Economic Forecast Luncheon, widely recognized as the Valley’s largest and most trusted economic event.

Professor Lee McPheters, director of the W. P. Carey School of Business’ JPMorgan Chase Economic Outlook Center and editor of Economy@W. P. Carey, said he also expects things to start getting better in the second half of 2009, with a strong recovery beginning in 2010. However, he added Arizona already lost about 71,000 jobs between October 2007 and October of this year. Arizona is now among the states with the worst job growth.

“Before the current contraction is reversed, it is possible that Arizona’s unemployment rate will be higher than recorded in the previous two recessions,” said McPheters. “The strongest states are found along a band extending from Texas to Montana, where their economies focus more on energy resources and their housing markets have held up.“

McPheters notes retail sales fell about 5 percent in Arizona this year, and he believes they will stay flat next year.

Professor Rajnish Mehra, the E. N. Basha Arizona Heritage Chair of Economics at the W. P. Carey School of Business, said fear is largely to blame for the current high liquidity premium and credit spreads. He said there has been no sharp decline in after-tax corporate profits, and most likely, the stock market declined because people feared that others feared a collapse. He calls it “a classic case of self-fulfilling expectations.”

Elliott D. Pollack, president of highly regarded economic and real estate consulting firm Elliott D. Pollack & Co., said there’s one more local problem still on the way, “The greater Phoenix housing market, as in other major ‘bubble’ cities, remains in disarray. Unfortunately, it appears our commercial real estate markets are not far behind.”

To find out more about the experts’ predictions from the Economic Forecast Luncheon, you can read more quotes and analysis at Knowledge@W. P. Carey, the school’s online resource at knowledge.wpcarey.asu.edu. The annual luncheon is co-sponsored by Arizona State University’s W. P. Carey School of Business Economics Department and JPMorgan Chase.