Arizona’s economy is still growing, but growth likely will be slower in 2020 than in the previous two years, an annual economic forecast from Arizona State University predicted Wednesday.
Arizona likely will continue attracting new residents at one of the highest rates in the country next year, though that could be a smaller total number amount than in 2018 and 2019.
And the state should remain among the leading growth states in the country, according to the forecast by Lee McPheters, an economics professor at ASU and director of the JPMorgan Chase Economic Outlook Center.
Many signs are positive for Arizona: Unemployment remains low. McPheters projected the population will grow by 110,000 people in 2020. The state will add 70,000 new jobs next year, down from 78,800 in 2018, he said.
Our economy is diversifying and no longer relies strongly on any one industry, like it did on construction and real estate earlier this century, he said.
While construction is still the fastest-growing sector in the greater Phoenix area, other sectors like education, transport and warehouses, professional and technical, and manufacturing all showed strong growth.
“We’re seeing diverse growth, and there’s really no reason to think that is going to change much,” McPheters said. “Unless something dire happens at the national level.”
Uncertainty, particularly over trade policy and other federal issues, could affect the state.
Nationally, uncertainty over these policies continues to affect investments, said Robert J. Barro, an economics professor at Harvard University.
“Growth has been disappointing, since it looked good for a while particularly 2018, beginning of 2019,” Barro said. “I think that has to do with the trade war as to why it’s somewhat disappointing now. But the economy is still doing OK.”
This year marks the 56th annual forecast from ASU.
ASU’s forecast aligned with an economic outlook given by the University of Arizona earlier this month. Both forecasts predicted continued growth that will outpace the nation, albeit at a slower pace than the previous year.
National outlook good, with uncertainty
Despite concerns over a looming recession, indicators don’t seem to show those threats, according to Bart Hobijn, an economics professor at ASU.
Some of the economic pessimism comes from the expectation that the current expansion, the longest post-war economic expansion, will have to end eventually, Hobijn said.
And while it’s true the growth will eventually end, it doesn’t appear imminent, he said.
Business spending has been a weak point in the economy, though, Barro and Hobijn said, as uncertainty over federal policies has led companies to put off investments.
Part of that uncertainty comes from the Trump administration’s trade policies, Barro said.
“Trump loves this instrument as a way to get what he wants from other countries,” Barro said. “And I think it’s very dangerous.”
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