TUCSON, Ariz. (KGUN) — Arizona’s economy should continue to recover but recover more slowly in the coming year. That’s the prediction coming out of University of Arizona’s annual economic forecast from the Eller College of Management.
The COVID pandemic had a huge impact on where people worked, lived, and how they spent their money.
Demand for houses exceeded supply as people shifted to working at home, and workers able to work remotely moved to Arizona from more expensive areas like California.
Home prices boomed and supply and labor shortages pushed prices still higher. University of Arizona Economist Doctor George Hammond thinks the home supply will gradually catch up with demand.
“I doubt we'll see the 20 to 30% increase over the year. Increases in house prices last very long, but we may not see house prices, the level of house prices come down. We may see a kind of a more normal adjustment where house prices just trend along or grow more slowly or flatten out while incomes catch up.”
Hammond says it’s important that house prices not rise so high that they discourage people from moving to Arizona. Those move-ins are one of the main things that drive Arizona’s growth.
Hammond says Arizona’s employment is about 90% of what it was before the pandemic but our reaction to the pandemic changed where people are working.
Incomes jumped as federal stimulus payments gave people more money to spend. With people less likely to travel, they spent more money on products to use while they stayed at home.
That pumped up jobs in trade and transportation to deliver those goods, while tourism, which is a big part of Tucson’s economy, fell off.
Hammond says the tourism slump is part of the reason economies in Tucson and Flagstaff lagged behind the rest of Arizona.
But Hammond does not expect us to get more federal stimulus money next year and that should make spending slow down.
“So overall, I think we're in good shape to continue to be one of the faster-growing states in the nation. You know, Phoenix is going to continue to be kind of the engine of state growth. Tucson will participate as well. We'll see the Tucson economy continue to add jobs, population, and income but at a somewhat slower pace than we'll see in Phoenix," Hammond said.
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