The "good" news is that, economically, the Northwest and greater Tucson have hit the bottom.

The "bad" news? It's a wide, long bottom, and it'll take time to once again find a robust business and housing climate, two speakers at an economic forecast conference said Friday.

"We are in the beginnings of a recovery," said Marshall Vest, the University of Arizona economist. He believes the bottom arrived six months ago. He points to stabilizing employment and rising consumer confidence.

"The good news is the great recession is over, the economy is on the mend," Vest said. "Not all sectors are participating quite yet. I see the economy gaining momentum as we go forward, but I think it's going to be slow."

"We are closer to the end of this mess than we were yesterday," said John Strobeck, the Bright Futures Business Consultants owner who is an authority on the Southern Arizona housing market.

"We're going to get out of this, but it's going to be slow. We are on the bottom, but the bottom is this wide."

How wide? In 2005, governments in greater Tucson issued 11,762 permits for single-family homes. This year, the number is likely to be near 2,100 permits. He projects growth to about 3,600 permits a year by 2015.

In 2006, homebuilding contributed $2.4 billion to the Pima County economy. In 2009, the figure was $400 million.

Increases in homebuilding earlier this year were "strictly a result of the tax credits," Strobeck said. When the federal incentives expired, so did home building.

"We need some home building to go on in this area," said Strobeck. The Northwest is "an excellent area," though "Sahuarita and Vail are beating you in volumes right now."

The resale housing market "is being run by foreclosures right now," Strobeck said. There were 385 sales of foreclosed homes in May, above the average of 320 a month. The median price of a foreclosed home is $125,000. "Man!" Strobeck said, later adding "if you want to buy a house, it's a great time to buy a house."

Foreclosure filings in Pima County have been near 1,200 a month, which means approximately 25 percent of foreclosed properties are moving to liquidation through that process. What happens to troubled properties not being sold through foreclosure proceedings? Some are moved through as "short sales," and the market is further influenced by what he called "hold backs," properties the financial institutions are "either not able to process" due to the volume, or they are "holding back so we don't crash the market like we did before."

Strobeck does not believe the housing market needs government programs to sort it. "They're just going to postpone the recovery," he believes. "Let's get out of it as soon as we can, and clear off the houses that are out there, going through foreclosure.

"Jobs are crucial," Strobeck said. "Anything that can be done to create jobs will help us get out of this mess."

Vest said Southern Arizona lost 30,000 jobs in this "most severe recession ever experienced, certainly in Southern Arizona, and the entire state of Arizona."

Initial unemployment claims continue to "come down very sharply" from the statistical peak. The unemployment rate has dropped almost ½ of 1 percentage point. "I think the unemployment rate is very near the peak," said Vest. "I see it at 6-1/2 percent at the end of next year.

"In the last six months, we've created in metropolitan Tucson 4,606 jobs," he said. "We still have a long way to go to recover all the jobs we've lost. At least the direction is positive."

Population growth has "ground to a virtual halt," something that "really, has never happened before," Vest continued. That void has left vacant housing clogging the market. Houses must be filled, and population increased, "before we get some housing moving." Vest expects Arizona to gain 15,000 residents this year, maybe 20,000 in 2011, and 25,000 a year after that. The state's job growth sectors are education and health services, leisure and hospitality, trade, transportation and utilities.

State and local governments are in "fiscal distress," strapped for cash and reducing their spending. Vest pointed out state and local government represents 13 percent of Arizona's gross domestic product, "bigger than exports, bigger than business investment in equipment and software."

Nationally, he pointed out, oil spills, turmoil in Europe, and volatility in the stock market wear on economic activity. So may Arizona's new immigration law. Still, Vest believes, "chances for recession, the next year are very small," Vest said.

He sees economic acceleration in 2011, with "a return of the fairly rapid growth, normal for the business sector," in 2012 and 2013.

Economist wonders: What's Tucson's role in Sun Corridor?

People "cringe" when Marshall Vest tells them Tucson "is really just a suburb of Phoenix," the University of Arizona economist acknowledges.

That recognition, though, triggers a longer-term question in Vest's mind.

"What role can Tucson play in the Sun Corridor?" he asked a Northwest YMCA forum crowd Friday at the Omni Tucson National Resort.

Tucson "can become a center for research and development," with the University of Arizona at its core. Health and wellness are strengths and assets. Tucson can be "a gateway to Mexico and Latin America, assuming of course we haven't alienated everybody" with Senate Bill 1070, the immigration enforcement law.

In 30 years, he believes, Tucson could have 1.6 million people, up from its current count near 1 million. "What kind of place will Tucson be? There's still a lot to be determined."

Vest said Arizona "can't continue marketing this part of the country as the 'low-cost leader.' It would be a much better strategy if we could convince people this is a place where people want to live, a place where people want to work.

"What is the role of Northwest Tucson? I leave that to your imagination."

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