1. SIERRA VISTA Economic Outlook 2015 Robert Carreira, Ph.D.

2. REAL GDP GROWTH (%)

3. JOBS United StatesArizonaCochise County Pre-Recession High 138.4 mil (Jan 08) 2.69 mil (Oct 07) 39,300 (Jun 08) Recessionary Low 129.7 mil (Feb 10) 2.37 mil (Sep 10) 33,825 (Mar 15) Recessionary Job Losses -8.7 mil -6.3% -312,600 -11.6% -4,900 -12.5% Current (Mar 2015) 141.2 mil2.62 mil33,825 From High +2.8 million 2.0% -68,000 -2.5% -4,900 -12.5% From Low +11.5 mil 8.9% +245,500 10.3% 0 0.0%

4. COCHISE COUNTY JOBS BY INDUSTRY Peak Current (Mar 2015) Change from Peak Change from Peak (%) Construction (incl. mining) 2,900 (Jun 2006) 1,100 -1,800-62.1% Manufacturing 900 (Oct 2008) 500 -400-44.4% Trade, Transportation, and Utilities 7,100 (Dec 2007) 6,200 -900-12.7% Information 700 (Mar 2011) 400 -300-42.9% Financial Activities 1,100 (Dec 2008) 900 -200-18.2% Professional and Business Services 6,200 (Jan 2010) 4,400 -1,800-29.0% Educational and Health Services 5,000 (Sep 2012) 4,500 -500-10.0% Leisure and Hospitality 4,300 (Apr 2008) 3,900 -400-9.3% Other Services 1,100 (Mar 2006) 900 -200-18.2% Federal Government 6,000 (Aug 2011) 5,000 -1,000-16.7% State and Local Government 7,700 (Jun 2008) 6,700 -1,000-13.0%

5. UNEMPLOYMENT Pre- Recession Low Recessionary High One Year Ago (Mar 2014) Current (Mar 2015) United States 4.4% (May 2007) 10.0% (Oct 2009) 6.6%5.5% Arizona 3.5% (Jul 2007) 10.8% (Jan 2010) 7.3%6.2% Cochise County 3.4% (May 2007) 9.0% (Mar 2014) 9.0%6.9% Sierra Vista 2.2% (May 2007) 8.4% (Jun 2011) 8.0%5.8%

6. LOCAL LABOR MARKET OUTLOOK Upside New hospital = healthcare jobs + retirees State/national economy improvement = tourism Threats in Middle East = defense spending Economic development efforts Downside Government (federal, state & local) Population declines Overall No sign of sustained job growth Recent job numbers suggest bottom

7. RETAIL SALES Sierra VistaCochise CountyArizona 2014-1.6% -1.0%1.9% 20133.5% 1.5%7.3% 2012-1.0% 4.5% 2.5% 2011-5.5% -1.2% 7.1% 2010-1.5% -4.8% -3.1% 2009-1.4% -4.2% -10.7% 2008-6.6% -6.5% -13.1% 20072.6% -1.3% 4.3% Inflation-adjusted to CPI-U

8. RESTAURANT & BAR Sierra VistaCochise CountyArizona 20140.1% 1.4%7.3% 2013-5.3% -0.5%2.2% 2012-9.5% -4.4% 5.0% 20112.8% -0.2% 2.1% 20103.1% 0.0% 1.8% 20092.1% 0.3% -5.4% 2008-2.0% 0.2% -6.2% 20072.9% 0.1% -0.2% Inflation-adjusted to CPI-U

9. ACCOMMODATION Sierra VistaCochise CountyArizona 201417.4% -0.6%9.9% 2013-28.3% -12.2%0.4% 2012-28.2% -17.2% 1.7% 2011-10.1% -13.1% 2.0% 201011.0% 8.3% 0.8% 2009-2.0% -9.0% -16.5% 200819.4% 1.0% -8.4% 200721.1% 19.7% 1.4% Inflation-adjusted to CPI-U

10. SALES OUTLOOK Retail Continued weak performance Accommodation End of hospital construction + Fort Huachuca lodging = trouble Tourism opportunities with improving state/national economies Restaurant & Bar End of hospital construction More establishments, but demand not expanding

11. HOME SALES (SITE-BUILT ONLY)

12. MEDIAN HOME PRICE (SITE-BUILT ONLY)

13. FORECLOSURES (% OF SALES/SITE-BUILT)

14. NEW HOME CONSTRUCTION

15. NEW COMMERCIAL CONSTRUCTION SIERRA VISTA

16. REAL ESTATE & CONSTRUCTION OUTLOOK Foreclosures Upward pressure on sales Downward pressure on prices Dampened demand for new construction Population declines = downward pressure on new construction End of hospital construction = direct and ripple effects Opportunity to attract retirees

17. CONCLUSION Recession Kept out of 2008-09 recession by Fort Huachuca Cochise County recession began in 2011 Upside Improving state and national economies will help tourism Opportunities to attract retirees Downside Fort Huachuca Government declines at all levels Population losses Foreclosures End of hospital construction

18. THE END