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Trudging the Economic Recovery Road

 McPhetersAs the federal government shutdown continues to affect many Northern Arizonans, economists are mixed on the effects of the shutdown on the post-recession recovery. 

When Ryan Nichols donned a cap and gown in 2009, he joined the masses of fellow graduates looking for jobs in a dismal economy. He moved his boxes from Florida to his parents’ home in Sedona and worked odd jobs, from video production to retail. Increasingly, Nichols found himself repairing people’s computers, and because people with similar businesses closed their doors in the downturn, he found the market was ripe with opportunity.

In 2011, he opened Nichols PC Help. “At the beginning, I had two jobs a week; now, I have three to four jobs a day,” said Nichols, who travels to Flagstaff and throughout the Verde Valley repairing computers. After meeting Timon Pratt, Nichols’s business offerings expanded from tech support to full service web development as well.

While Nichols is observing signs of the economy shifting, he believes there are lessons to be learned from the recession. “People need to find different ways of doing business now. Building relationships is more important than ever,” he said. Nichols thinks a greater number of people are working for themselves today, and he says they need to put in the work to get themselves known in their communities, joining networking groups and using social media. “The approach to business has changed a lot,” said the 30-year-old.

Many computer repair businesses fared well during the recession, as people fixed their systems instead of going out and buying the latest and greatest equipment. For Nichols, who also installs new systems, business opportunities are plentiful in most market conditions.

As business models are changing and more people are working for themselves or as independent contractors, some predict employers will begin to hire more employees as the economy continues its slow recovery. Banks are lending more than they were a few years ago, but some analysts predict it will be another year until lending returns to pre-recession levels.

John Dunham is president of John Dunham and Associates, an economic research firm in Brooklyn, N.Y. He tells Flagstaff Business News that the economy is not destined to boom in the next 24 months. “We’re growing, which is better than shrinking, but we are not growing at any rapid rate in the country,” said Dunham. “You are going to see a two percent growth each year for the next couple of years, a sort of slow and steady pattern.”

Dunham, who specializes in the effects of public policy issues on products and services, says Arizona has some advantages. “Arizona is better placed than other states because it got hit so hard. The bad thing is, the state is so dependent on retirees, housing and immigration,” which Dunham says is beginning to run its course. He thinks the increase in interest rates and a slowdown of the state’s population growth will prevent another housing boom.

The good news, says Dunham, is the oil and gas developments happening throughout the West. “Arizona is just now opening up to a lot of new gas developments, in particular. That’s a good thing.”

Arizona Governor Jan Brewer is touting economic improvements, pointing to strong budget projections as a sign of steady recovery. She also is crediting her Medicaid Restoration Plan for budget projections; after fiscal year 2014, Brewer expects the state to no longer operate in a deficit.

“This remarkable cash carry forward is a stark contrast to Arizona’s position just a few short years ago, when we faced one of the largest budget deficits in the country, and a sign of our steadily-growing economic comeback,” the governor said. Her office reports a reduction in state expenditures of more than $2 billion dollars from fiscal years 2009 to 2011.

But the words “economic comeback” tell just part of the story. In Flagstaff real estate, for example, long-time Realtor Dave Lembke sees a multi-faceted story, the result of the Coldwell Banker Narico’s associate broker’s 32-year vantage point. “I think we are seeing an increase in economic upturn for Flagstaff because the market has improved but it has not improved in every neighborhood,” Lembke said. “The value changes in vacant land and higher-end homes have not recovered as well on a percentage basis compared to the entry-level market for single-family homes and distressed sales.” Lembke says he does expect to see gradual improvement in the market.

However, there are many uncertainties locally about the economic recovery and the future. Duane Taylor is an administrator for Northern Arizona Dermatology. He says overall the practice has been fairly stable in the recent past, but many healthcare practitioners are concerned about the future. “Nobody knows what is going to happen,” said Taylor, referring to questions about Medicare changes and how the Affordable Care Act will affect medical practices.

There are many questions about the economy in Arizona, with most rural areas struggling to regain a foothold. Prescott Chamber of Commerce CEO and former president/CEO of Flagstaff’s Chamber, David Maurer, said employment numbers in the Prescott area dropped recently. When contacted by Flagstaff Business News about this story, Maurer had just returned from an economic presentation by research professor Lee McPheters, director of the JP Morgan Chase Economic Outlook Center at the W.P. Carey School of Business at Arizona State University. The presentation showed that for Prescott, employment dropped by two percent between August 2012 and 2013, with a loss of 1,000 jobs. In contrast, Flagstaff gained 1,300 jobs during that timeframe and Phoenix added 42,200. And while growth statewide is on the slow upswing, statistics also show Arizona has regained just 47 percent of its jobs lost since the start of the recession, with 53 percent still to be recovered.

While Maurer called the statistics sobering, he said he learned a lot from the presentation titled, Are We There Yet? On the Road to Recovery. McPheters compiled statistics, with the overall message, “Not there yet – Recovering but not Recovered.” One of McPheters’s slides shows Arizona remained in the top 10 states for population growth, according to U.S. Census statistics; in line with that growth, single family home permits in the state are expected to reach 27,340 in 2014. FBN

 

Ryan Nichols businesses http://www.nicholspchelp.com

 

Dave Lembke’s agency http://www.cbflagstaff.com

 

The study quoted in the article can be accessed at

http://www.asufoundation.org/s/1469/foundation/PEP/index.aspx?sid=1469&gid=2&pgid=2856

Economy Computer Ryan Nichols

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