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Economics professor answers recession questions

February 08, 2008
Economy watchers everywhere are asking the same question: are we in a recession or not? This month's JPMorgan Chase Arizona Blue Chip Economic Forecast probes the similarities and differences between March, 2001 – the beginning of the 2001 recession – and fourth quarter 2007. One-third of the Arizona Blue Chip panelists believe that Arizona is already in recession.

Lee McPheters, senior associate dean and professor of economics at the W. P. Carey School of Business, concludes that the two periods share key similarities and differences. Retail sales, for example, are down – "a bad sign for the economy." Comparing to the 2001 recession, the pattern in 2007 was strikingly similar, McPheters writes. (To hear McPheters discuss his analysis, listen to his podcast, at
"Slicing the economy by sectors, we can say with some confidence that residential construction is in recession, and the overall economy is weaker as a result," writes McPheters.
In this month's Special Question, Arizona Blue Chip panelists said that weakening consumer spending is the number one reason that the state's economy is slipping into recession. The credit crisis was the second reason cited, followed by the housing bust. Energy costs were mentioned by only three panelists.
The Arizona Blue Chip Economic Forecast includes the consensus forecast of economists from 19 groups and institutions. It is published by the JPMorgan Chase Economic Outlook Center, an affiliate of the L. William Seidman Research Institute in the W. P. Carey School of Business. For information, call (480) 965-5543.