As we begin the new year, the economy is contracting due to higher interest rates and the ending of Corona stimulus money programs ending. This is projected to slow the growth in Arizona and the nation.
The outlook for Arizona, Phoenix, and Tucson depends in part on national and global economic events. The baseline forecast from IHS Markit calls for U.S. real GDP to increase by 1.7% in 2022 (annual average basis) before dropping by 0.5% in 2023. Growth rebounds to 1.3% in 2024 and again to 2.0% in 2025. On a quarterly basis, the forecast calls for real GDP to decline from the fourth quarter of 2022 through the second quarter of 2023. The peak-to-trough decline is 1.1%, which would be similar to the (relatively mild) early 1990s recession.
If the U.S. economy falls into recession, it will take the wind out of Arizona’s sails. As the chart shows, Arizona job growth decelerates from 3.8% in 2022 to 1.1% in 2023 and 1.6% in 2024.Arizona’s Economy Buffeted by Shifting Winds
By George W. Hammond, Ph.D., Director and Research Professor, EBRC