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State unemployment drop misleading

By Howard Fischer

Phoenix, AZ – The state's jobless rate dropped last month. But as Arizona Public Radio's Howard Fischer reports, it's not because the economy is improving.

On paper, the seasonally adjusted unemployment rate dropped from
4.3 percent to 4.0 percent. But Dennis Doby of the state
Department of Commerce said the underlying reason is some people
got discouraged and simply stopped looking for work. Therefore
they're not unemployed. The big losses last month were in
construction and retail. Doby said that latter factor is directly
related to lack of consumer confidence. People are spending less.

(Consumers are being careful and watchful about how they spend
their dollars. One of the big-ticket items that seems to be on
the decline, if you look at automobile sales they're on the
decline from what they were in the past.)

All of that could have a ripple effect on the state's financial
crisis, as about 40 percent of the budget comes from sales taxes.

(Well, certainly you can make the implication that if people are
spending less there's going to be less revenue generated. Whether
that's going to be the case or not, I would hate to specuate.)

Doby did say there may be reason to hope for some recovery soon
for the construction industry. He said construction permits for
new homes are down, meaning that once the glut of houses on the
market shrinks that may again create a demand for new ones. For
Arizona Public Radio this is Howard Fischer.