Arizona's economy: More signs the expansion remains on a roll (and may be getting better)

Arizona's economy isn't just rolling along but might actually be picking up steam, according to a couple of new assessments last week.

The Arizona Office of Economic Opportunity projected the state will add nearly 166,000 jobs over a two-year period, and a visiting economist speaking in Phoenix said he sees no serious threats to the current expansion anytime soon.

Christopher Thornberg of Beacon Economics in Los Angeles said he expects 2019 to resemble last year in terms of employment, growth and other variables for Arizona. The state is getting a boost from an increase in newcomers moving here, he added.

"There's no reason to think there will be a slowdown in the economy over at least the next two years," Thornberg said at a Phoenix presentation hosted by Alliance Bank of Arizona. "The state is ticking along at a solid pace."

While some other economists in recent months have cited an elevated risk of a national slowdown, few are calling for an outright recession this year. Thornberg's analysis is in line with robust forecasts made by Arizona State University economists in late November.

Arizona jobs, income up

Separately, the Arizona Office of Economic Opportunity projected the state will add nearly 166,000 jobs over the two-year period from July 2018 through June 2020. That would mark an annual growth rate of 2.7 percent, up from a prior projection of 2.4 percent, according to the report.

The agency also cited Census Bureau data showing median household income in Arizona has been rising faster than the national average and reached a record high above $61,000 in 2017.

Thornberg too described Arizona as one of the strongest states for current economic momentum.

Temporary sluggishness

While the overall backdrop remains favorable, there are a few areas of concern.

Housing in the Phoenix area has slowed a bit, but Thornberg said he thinks that's temporary. Demand from people moving to Arizona and still-moderate interest rates are among the factors that bode well for real estate here, he said.

Lower income-tax refunds might put a crimp in consumer spending, both nationally and in Arizona, but he expects that too would be temporary. Federal and Arizona tax refunds so far this filing season are below last year's pace, with federal returns averaging $1,949, down 8.7 percent from the same period last year, the Internal Revenue Service said.

Thornberg cited a pickup in job growth in the Tucson and Flagstaff areas recently, while noting that the Phoenix metro area remains the state's economic engine.

Still, Thornberg said he senses the national mood isn't as positive as it should be, with politicians harping over problems including wealth inequality, regulations, taxes, trade tensions, immigration and more.

"It's amazing the degree of gloom and doom considering we're in one of the healthiest economies we have seen in 30 years," he said.

Reach the reporter at russ.wiles@arizonarepublic.com or 602-444-8616.

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