Housing undercuts overall job growth

Ripple effects likely to be felt in more sectors

By Christie Smythe

In February, University of Arizona economist Marshall Vest called 2008 "the year we'll all want to forget."

Vest was speaking to an audience of home builders, contractors and others in the building trades at a new-home industry forecast. That sector had already experienced a sharp slowdown in 2007.

But the ripple effects from the housing slump could be felt by other industries as well in the coming year, Vest said in an interview.

The housing industry "is so large," said Vest, who is the director of the Economic and Business Research Center at the University of Arizona 's Eller College of Management. "As it shrinks, you find that the overall level of demand in the overall economy shrinks as well."

After healthy growth over the past several years, jobs in the construction and financial services industries have taken a hit, according to preliminary employment survey figures from the state Commerce Department.

Total non-farm employment in the Tucson metro area grew by about 12 percent from January 2003 to January 2007, then dropped by about 1.3 percent over the next year, ending this January, according to the figures.

During those boom years, construction jobs jumped more than 20 percent but showed a drop of about 8 percent in the first month of this year compared with January 2007. Financial services employment jumped by more than 24 percent from 2003 to 2007 but dropped by about 11 percent in January compared with the same month a year ago.

Much of the drop in financial services employment is likely related to the collapse of Tucson-based mortgage lender First Magnus Financial Corp., which laid off about 700 Tucson employees in August.

Employment at Koedyker & Kenyon Construction dropped by about 185 full-time equivalent positions, or a decrease of about 30 percent, from the end of 2006 to the end of 2007, according to this year's Star 200 survey.

Pima County One Stop Career Centers saw substantial foot traffic from out-of-work construction workers, said Jim Mize, manager of employer outreach for Pima County .

Some construction company owners also are hearing from people who are looking for work.

"I've got all kinds of people who are looking for jobs who come from the tract home industry," said Alex Ross, co-owner of custom-home builder Casas Bonitas Development. "They did huge cutbacks."

Drop in overall employment

The drop in construction jobs and other housing-related industries is "kind of a spiral" that could affect the rest of the economy, said Randy Agron, chief of operations for builder A.F. Sterling Homes and chairman of the Southern Arizona Home Builders Association.

"Now all those people who don't have jobs can't afford new cars, new stereos and can't go out to dinner," he said.

Full story at: http://www.azstarnet.com/sn/biz-topheadlines/228643