Economy in long, slow recovery, speaker says

Two years ago when he spoke to the Greater Yuma Economic Development Corp., economist Jim Rounds stunned the audience when he used the “R” word to warn that the nation was in the grip of a recession.

Back again for the organization's annual investors dinner, Rounds, senior vice president of Elliott D. Pollack and Company, brought better news about another “R” word.

The economy is recovering, although it will be a long, slow process with some ups and downs, he said.

“The best guess is no to a double-dip recession, yes to a lousy year,” he cautioned Thursday. “I'm not painting a rosy picture. Tough times are still ahead for the next several quarters, but we're moving in the right direction. The economy is in better shape than we've been hearing about in the media.”

Still, Rounds predicted, it will be 2014 to 2015 before a full recovery will be realized.

“The light at the end of the tunnel is visible, but it's a still a bit distant.”

The federal government isn't really helping, Rounds said, with its “wishy-washy” approach, stimulus funds that were often wasted and didn't contribute to real job growth, such programs as the cash for clunkers and mortgage assistance that often just delayed the inevitable.

On the positive side, he said, the real GDP (gross domestic product) is up slightly, real income is up and industrial production and whole-retail sales are picking up. But employment, adjusting for the temporary census jobs, is flat.

The true unemployment rate is higher than reported because a number of people have given up looking for work and therefore are not being counted as part of the work force, he said.

For example, he said, Arizona's true unemployment rate is closer to 16 percent than the 9.7 percent reported by the Department of Commerce Thursday in its monthly report. Meanwhile, Yuma County's unemployment rate for September was reported at a seasonally adjusted 23.9 percent, a number that continues to rise.

Undercounting of unemployment has been detrimental to the state, he said, because federal assistance decisions are being made based on job losses and foreclosures.

In reality, Rounds said, Arizona is the poster child for the recession, plunging from the second highest job growth rate in the nation in 2006 to 49th in 2009. Meanwhile, 51 percent of homes in Arizona have negative equity, compared with the national average of 23 percent.

That makes it hard to sell and buy homes, he said. And it is contributing not only to a high foreclosure rate in Arizona but a nearly zero population growth for the state as people wanting to move here can't sell their homes elsewhere.

For too long, he said, Arizona has depended on its attributes to attract growth and create jobs. It will take some serious reform of its economic development policy to make the state competitive.

As for Yuma County, Rounds said he expects to see the economy recover more quickly here than the Phoenix area, for one thing because it had less overbuilding of homes. He also sees opportunities for the local community to grow its economy on its own.

“There are simple solutions,” he said, ones that don't need a lot of money. “The problem is finding the political will to do something.”

Rounds outlined programs he is helping Maricopa County develop in hopes of turning around its economy.

And he's been invited by GYEDC to work with Yuma County public entities to come up with programs to create jobs here, said Julie Engel, GYEDC president and CEO.

Joyce Lobeck can be reached at jlobeck@yumasun.com or 539-6853.