Arizona’s economy lost momentum last year. Statewide job growth slowed to its weakest pace since the pandemic recovery, driven mainly by weaker hiring. Tucson saw virtually no net job gains. Population growth continues to slow, reflecting weakening natural increase and a growing reliance on migration, even as federal policy is constraining it. Housing permit activity is expected to soften as population gains gradually lose steam. While housing affordability remained better than in many other Western regions, many households still struggle to find affordable options. Even with slower growth, the labor market has held up relatively well. Unemployment has risen modestly but remains manageable, while employment cost growth has moderated as hiring demand cools and job churn slows.
Where are the state and local economies headed next? How will global and national uncertainty, including conflict in the Middle East, higher gas prices, tariffs, immigration policy changes, and federal economic uncertainty, affect Arizona and Tucson? Are we headed toward a recession or a continued slowdown, and what should businesses plan for? When will housing affordability meaningfully improve, or has it already? Is inflation at risk of reaccelerating?
Looking further out, how will demographic change and automation shape Arizona’s future workforce? What industries face the greatest disruption from AI, and which are currently most insulated? What do low graduation rates, youth disconnection, and lagging college attainment mean for Arizona’s long-run workforce? Are we already experiencing an AI productivity shift, with GDP growing even as job counts stagnate?
Join Breakfast with the Economists to discuss these questions and what they mean for Arizona’s economy.