Predictions of a coming economic slowdown are not a cause for great concern, according to Brian Coughlan of Compass Bank. He said a slowdown at this point -- after highs in various sectors -- is really just a return to norms.
Coughlan presented a program on the state of the economy for the Payson Regional Economic Development Corporation, Jan. 9.
While the title of the program was "State of the Rim Country Economy," the data available was largely from the national level and the metropolitan areas of Phoenix and Tucson.
Discussion of the economy on a more local level was based on projections -- what is happening in the Valley and Tucson will eventually be happening in the Rim Country.
On a national level, Coughlan said the stock market has been good for the past several years.
"The Dow Jones is up 16 percent and the Standard & Poor's is up 14 percent," Coughlan said.
He said the good performance is due to record corporate profits and the low cost of borrowing.
"We're at bargain rates," Coughlan said of the cost of borrowing.
Additionally, a lot of people are working and there is a high use of manufacturing infrastructure, he said.
"(We) anticipate a slowdown coming into the new year -- profit margins and unitization will be coming back to normal."
The one national trend most likely to impact the Rim Country is the cool-off of the housing market.
Coughlan said, nationally, the construction of new homes is down 34 percent. Inventories of homes available for purchase are increasing.
"There is no real national real estate market," Coughlan said. "Arizona has never had a negative outflow (people moving away from the state). On average, we've grown by about 200,000 people per year. Over the past two years, wages are up 6.1 percent on average and employment was up 4.2 percent through October.
"Construction was the largest gainer, so it will have the biggest drop (with a slow down in housing starts)."
He said, when the housing market was at its strongest point in recent years, fully one-third of the purchases were being made by investors.
The biggest risk to the economy, Coughlan said, would be if consumers stopped spending. Two-thirds of the economy is powered by consumers.
"Personally, I think this is the biggest threat," Coughlan said.
"People have less money and are buying more," he said. The percentage of disposable income going to pay credit debt has risen considerably in recent years. The personal savings rate is negative, he said. "However, the statistics don't include 401(k) funds which are among the leading savings vehicles today."
Bringing the topic to a more local level, Coughlan said, if construction declines and limits are placed on growth, but the number of newly retired Baby Boomers moving into the area continues, the demand for the scarce housing will push the prices up.