Economist brings slightly better message

A year ago, economist Jim Rounds stunned the audience at a Greater Yuma Economic Development Corp. lunch with the use of the "R" word, announcing that the country was in a recession and had been for some time.

For his return engagement this week, the news he brought was slightly better, but still cautious.

Rounds, vice president and senior economist for Elliott D. Pollock and Co., said during Tuesday's GYEDC lunch that the economy is recovering. However, it will be a slow process, he cautioned, one that could well take until 2014 before the peak levels are again seen.

He is more optimistic about prospects for the Yuma area than the rest of Arizona, though. That's particularly true when compared to the greater Phoenix area, he said, describing it as a prime example of an economic bust with its excessive homebuilding and staggering job losses.

In his speech before GYEDC in September 2008, Rounds predicted that not only was the nation in a recession, it "would be a long and painful" one with only a weak recovery in 2009 before starting to rebound more fully in 2010.

This time around, the theme for his talk was, "bad, but it could be worse."

"We're getting ready to see more positive news," he said, although job losses likely will continue for awhile and job gains will be slow to materialize. At least, he said, the volume of job losses is slowing.

Other drags on the recovery are a lingering lack of consumer spending and the excessive inventory of housing, he said.

Rounds noted that in 2006, Arizona was No. 2 in the nation for job growth. Today it's 49th, behind only Michigan.

"How did Arizona go from second to 49th?" he asked. The answer can be seen in the loss of 280,000 jobs in the state in the last two years as the rate of new residents ground to a halt.

The solution for Arizona is very simple, he said. It will take a resurgence of people moving into Arizona to absorb the excess in housing, create jobs and stimulate the economy.

"You can have the best economic policies in the world," he said. "But you need growth as a base industry. If you don't, it will be 20 years before recovery."

The good news for the Yuma area, he said, is that it felt the effects of the recession later than other areas and therefore has less far to go to recover. It also helped that the housing market was less overbuilt here. He also sees an opportunity for Yuma in the pent-up demand for second homes by retirees in the warmer climate.

As for the massive infusion of government into the economy, Rounds said he's seen little of it go for economic development.

"The recovery isn't as strong as advertised," he said. "There's been very little impact on our getting out of the recession."

Further down the road, he said, he sees trouble from the amount of government spending.

Joyce Lobeck can be reached at jlobeck@yumasun.com or 539-6853. To read more about Rounds' presentation, visit www.arizonaeconomy.com, and click on speeches.