1. Cochise College CENTER FOR ECONOMIC RESEARCH Economic Outlook Douglas, AZ

2. Are we in a recession yet?

3. Gross Domestic Product Seasonally Adjusted Annual Rate

4. Inflation (CPI) Compared to same month previous year

5. The Local Economy Is Cochise County in Recession? Douglas?

6. Retail Sales Growth Inflation adjusted; compared to same month previous year

7. Retail Sales Recent Activity Cochise County retail market has been in recession since November 2007 –2007: -1.3% –Jan-Aug 08: -4.6% –Sales were down in 9 of 10 months from Nov thru Aug Douglas retail market has been in recession since September 2007 –2007: -0.6% –Jan-Aug 08: -0.8% –Sales were down in 10 of 12 months from Sep thru Aug

8. Retail Sales Outlook Continued slowdown is expected –Recessionary concerns –Inflation –Consumer confidence –Decline in border crossing activity Lower gas prices may help

9. Restaurant and Bar Sales Growth Inflation adjusted; compared to same month previous year

10. Restaurant & Bar Sales Recent Activity Cochise County restaurant & bar sales have been in recession since October 2007 –2007: 0.1% –Jan-Aug 08: 1.4% –Sales were down in 8 of 11 months from Oct thru Aug Douglas restaurant & bar sales have been in recession since July 2007 –2007: -2.9% –Jan-Aug 08: -8.9% –Sales were down in 12 of 14 months from Jul 07 thru Aug 08

11. Restaurant and Bar Sales Outlook Continued slowdown expected Nonessential spending cut from family budgets –Recessionary fears encourage families to cut spending –Inflationary pressures force families to cut spending Lower gas prices may help

12. Employment

13. Unemployment Rates * Jan-Sep only; seasonally adjusted

14. Monthly Unemployment Seasonally Adjusted

15. Cochise County Monthly Nonfarm Job Growth Compared to same month previous year

16. Cochise County Nonfarm Job Gains/Losses By Industry 12 months ending Sep 2008

17. Cochise County Nonfarm Job Growth By Industry 12 months ending Sep 2008

18. Employment Outlook Continued job losses Rising unemployment Bright spots –Douglas: ACT Call Center –Cochise County: Fort Huachuca

19. Housing, Real Estate, and Commercial Construction

20. New Home Construction Single Family Residential Building Permits

21. Recent Permit Activity Douglas –Jan-Sep 08: 15 (-53.1%) –Jan-Sep 07: 32 Cochise County –Jan-May 08: 206 (-8.0%) –Jan-May 07: 224

22. Existing Home Sales (Growth) * Jan-Sep only; compared to same period the year prior

23. Existing Home Sales (The Numbers) Cochise County 2004: 1,689 2005: 1,976 (17.0%) 2006: 1,566 (-20.7%) 2007: 1,406 (-10.2%) 2008: 861 (-22.8%)* Douglas 2004: 100 2005: 91 (-9.0%) 2006: 94 (3.3%) 2007: 112 (19.1%) 2008: 78 (-7.1%)* *Jan-Sep only; comparison to same period previous year

24. Median Home Prices * Jan-Sep only

25. Median Home Prices/Increases Cochise County 2004: $139,900 2005: $173,900 (24.3%) 2006: $195,569 (12.5%) 2007: $195,000 (-0.3%) 2008: $188,000 (-3.6%)* Douglas 2004: $55,000 2005: $67,000 (21.8%) 2006: $91,000 (35.8%) 2007: $90,000 (-1.1%) 2008: $97,500 (8.3%)* *Jan-Sep only; comparison to previous year-end figures

26. Housing Market Outlook Cochise County –New home market may have bottomed out in 2007 –Existing home market has not yet hit bottom Douglas –New home market has not yet hit bottom –Existing home market just beginning to decline –Border Patrol policies of new Administration –Call center impact

27. New Commercial Construction (Douglas) Jan-Sep 08: $1.2 million (-75.4%)

28. Commercial Construction Outlook Recession fears will cause firms to delay new projects

29. Conclusion Nationally –Recession Job losses Rising unemployment rate –Inflation Locally –Slowdown of sales across categories –Slowed job growth/job losses and rising unemployment –Partial recovery of new home market at county level –Countywide existing home market may hit bottom in 2008, recover in 2009 –Douglas outlook less certain (Border Patrol and call center will play major role)