1. By: Jim Rounds December 1, 2009 City of Maricopa Economic and Workforce Briefing

2. Synopsis: Yes, we are improving, but the recovery will not be all that impressive. Continue to be cautious.

3. So finally going in the right direction, but…

5. Employment: We will be getting bad employment news for some time, even after the recession is technically over.

7. Real Gross Domestic Product Percent Change Quarter Ago, Annualized 1971 – 2009 * Source: Bureau of Economic Analysis * Data through 3rd quarter 2009 Recession Periods

8. Real Personal Income Net of Government Transfers Percent Change Quarter Ago, Annualized 1971 – 2009 * Source: Bureau of Economic Analysis * Data through third quarter 2009 Recession Periods

9. National Employment Percent Change Month Ago, Annualized (S/A) 1981 – 2009* Source: U.S. Bureau of Labor Statistics *Data through October 2009 Recession Periods

10. Industrial Production Percent Change Year Ago 1973 – 2009* Source: The Conference Board *Data through September 2009 Recession Periods

11. Real Retail Sales U.S. Percent Change Year Ago 1973 – 2009* Source: Federal Reserve *Data through September 2009 **Three-month moving average Recession Periods

13. The recession MAY TECHNICALLY be over, but… … The recovery will be very weak and consumers will be a drag.

14. Financial Obligation Ratio** 1980 – 2009 * Source: Federal Reserve *Data through second quarter 2009 **Ratio of mortgage and consumer debt (including auto, rent and tax payments) to disposable income. Recession Periods

15. Mortgage Equity Withdrawal as a share of Disposable Income U.S.: 1971 – 2009* Source: Bureau of Economic Analysis * Data through second quarter 2009 Recession Periods

16. Savings Rate 1973 – 2009* Source: Federal Reserve *Data through September 2009 **Three-month moving average Recession Periods

17. State of Business? Still Ugly?

18. Corporate Profit (Billions of Dollars, SA) 1975-2009* Source: Freelunch.com * Data through second quarter 2009 Recession Periods

19. Hours Worked Percent Change from Year Ago 1976 – 2009** Source: Bureau of Labor Statistics **Data through third quarter 2009 Recession Periods

20. Capacity Utilization Rate 1970 – 2009* Source: The Conference Board *Data through September 2009 Recession Periods

21. Percentage of Large U.S. Banks Reporting Easier Standards on Business Loans 1997 – 2009* Source: Federal Reserve, Board of Governors * Data as of October 2009 survey. Recession Periods

22. U.S. Summary: You are here (mixed news) Longer term?

25. State of Arizona

26. 9 4 1 5 2 10 3 7 Job Growth 2006 11 15 6 22 8 Source: US BLS

27. 3 YTD September 09 v YTD September 08 50 13 26 39 2 30 8 16 47 Job Growth Update: Arizona Falls to 50 th 48 Hawaii 44 1 7 5 Alaska 4 18 6 27

28. = 300,000 lost AZ jobs during last two years. (>10% of jobs)

30. Arizona Employment Rank Among 50 States 1980 – 2009 Growth Over Previous Year Source: Arizona State University 1980 2008 1994 1982 1984 1986 1988 1990 1992 1996 1998 2000 2002 2004 2006 = YTD September = 50 Recession Periods

32. Greater Phoenix Population Annual Percent Change 1976–2010* Source: Arizona State University & Department of Commerce, Research Administration 2007 and 2008 are estimates put out by ADES and may be subject to substantial revision. * 2009 & 2010 forecast is from Elliott D. Pollack & Co. 2008 = 1%? 2009 = 0%? Recession Periods

33. Phoenix-Mesa MSA Employment* Annual Percent Change 1975–2010** Source: Department of Commerce, Research Administration *Non-agricultural wage & salary employment. Changed from SIC to NAICS reporting in 1990. ** 2008, 2009, & 2010 forecast is from Elliott D. Pollack & Co. Recession Periods

34. Phoenix-Mesa Employment Source: Arizona Department of Commerce, Research Administration Sectors Increasing NONE!!! -1.0% Health Services -1.2% Educational Services -6.6% Other Services -9.9% Transp. & Utilities -8.0% Manufacturing -2.8% Leisure & hosp svcs -5.0% Government -11.7% Prof. & Bus. Services -25.5% Construction -7.7% Trade -6.5% -5.3% -20.5% Financial Activities Information Mining Sectors in Decline

35. I don’t always buy houses, but when I do, I prefer foreclosures. Stay thirsty my friends.

36. Investors: 1/3 to 1/2 of Market?

38. Home Prices Indices 2000 – 2009 Source: Macro Markets, LLC; AMLS ? Recession Periods

39. Single-Family Permits Greater Phoenix 1975–2008 Source: PMHS / RL Brown # Permits Recession Periods

40. Excess SF supply is likely greater than 50,000 75,000 units right now. Not much better in 2010.

41. Balance between supply and demand will not be fully achieved until about 2014. But building will still occur between now and then. Distinguish between % growth and level !!!

42. Commercial Real Estate?

47. How is Maricopa Doing?

48. New Home Sales Fairly Level Over Last 12 Months – Consistent Pattern with G.P.

49. Foreclosure Activity City of Maricopa

50. History of Active Listings City of Maricopa

51. May 2009 ARMLS Listings City of Maricopa October 2009

52. May 2009 Revised Permit Projections City of Maricopa YTD through September 2009 there have been 272 SFR permits issued. October 2009

53. SURVEY HIGHLIGHTS

55. Employment

56. Employment

57. Labor Force – Diversified Skills

58. Employment – Travel Still an Issue

59. Employment – Travel Still an Issue

60. Employment – Travel Still an Issue

61. Employment – Travel Still an Issue

62. Employment – Travel Still an Issue

64. Education

66. Household Income – Comparable to Maricopa County

67. Residency

68. Where They Came From – Comparable to Last Year’s Survey

69. High Percentage of Homeowners.

70. Household Size

71. FINAL QUESTION

72. FINAL QUESTION

75. ELLIOTT D. POLLACK & Company 7505 East Sixth Avenue, Suite 100 Scottsdale, Arizona 85251 480-423-9200 P 480-423-5942 F www.arizonaeconomy.com Economic and Real Estate Consulting WWW.ARIZONAECONOMY.COM INFO @ EDPCO.COM