By Marshall J. Vest
Eller Economic and Business Research Center
The U.S. and Arizona economies are locked into a slow recovery that is expected to continue into next year before faster growth materializes. On the bright side, evidence continues to build that housing is beginning to heal. The biggest challenge for analysts is to get a handle on absorption of the large supply of vacant homes. Over a 30-year horizon we continue to expect Arizona to become one of the ten most populous states with over 10 million people.
The Arizona economy continues to expand at a painfully slow pace. Key themes we are monitoring during this growth-challenged recovery include lethargic job growth, high unemployment, miniscule income gains, cautious spending on the part of consumers, depressed migration flows, and high inventories of vacant housing.
Job growth statewide slowed significantly during the second quarter as the number of nonfarm jobs flattened (0.0%-0.5%, after adjusting for seasonality). That’s much slower than during the first quarter, when jobs were growing by 2.5% – 3.5% at a seasonally adjusted annual rate. Gains in private sector employment during the second quarter (up 2.5%-3.0% at an annual rate) were offset by losses in the public sector (declines of 3-4%). Year-on-year, job counts stood 2.4% higher in June. We look for a gain of less than 2% for the entire calendar year and only a slightly faster pace in 2013.