Arizona's economy has been booming since the COVID-19 pandemic began to slow. Low unemployment, growing wages, and increasing population have persisted for years, but so have less positive indicators like inflation and skyrocketing housing prices. The state's inflation numbers have decreased even though the state is still in a crisis with a key measurement that goes into inflation indexes. Housing is the biggest single component of the overall inflation measure. Non-taxed goods like groceries and health care are up, affecting sales tax collection [aad5521d].
According to a recent report, consumer prices in Phoenix, Arizona, rose by 2.6 percent between April 2023 and last month, according to data from the Bureau of Labor Statistics. This is almost down to the Federal Reserve's 2 percent target, and is far lower than the higher national annual inflation rate of 3.4 per cent. Economists say the key to Phoenix's lower inflation rate is cooling rents and home prices. In Phoenix, median home sale prices rose 5.1 percent to an average of $450,000 between April 2023 and April 2024. But the increase came as sales slowed sharply, with nearly 3 percent fewer homes sold than in the previous 12 month period. Phoenix sellers are also caving to a lack of demand, with 31 percent of homeowners slashing their asking prices in March [306ddcf9].
While Arizona's economic conditions appear strong, the state's water issues dim those prospects slightly. The state's top issues are referred to as its 'wicked problems,' including the imbalance of supply and demand on the Colorado River and the over-allocation of the river's water. 72% of the state's water usage goes toward producing agricultural goods. Reducing agriculture's water use is not a simple task, as many of the state's farms hold senior rights to Colorado River water. Arizona's population has grown by around 100,000 or more each year for more than a decade. It is important to consider the state's growth and plan for water scarcity. Dr. Sharon Megdal remains optimistic about the state's ability to overcome its water issues so it can continue to thrive [aad5521d].
Arizona’s economy is in solid shape with a normalized labor market, steady job gains, and a low unemployment rate. The state's economy is projected to outpace the U.S. despite the aging of the baby boom generation. Recent data shows that Arizona job growth was revised up to 2.6% in 2022 and 2023, above the national rate. Phoenix inflation has moderated to 2.6% and real income growth has accelerated. However, the housing market remains stressed with rising home prices and elevated mortgage interest rates. Arizona's per capita personal income in 2023 was $61,652, up 5.6% from the previous year. Housing permit activity has increased, particularly for single-family homes. The baseline outlook for Arizona calls for continued but gradually slowing growth, with job gains projected to slow from 2.6% in 2023 to 2.0% in 2025. The Phoenix and Tucson metropolitan areas also experience a slowdown in job and population growth. Overall, experts believe Arizona's economy is in a solid position, but there are concerns about housing affordability and the impact of a potential U.S. recession [306ddcf9].
Arizona's economic boom under President Biden's administration has been highlighted in a recent opinion piece. The article discusses the state's strong job growth, increased investment, and rising wages. The author attributes Arizona's success to Biden's policies, such as infrastructure spending and clean energy initiatives. The state's diverse economy, with sectors like technology, healthcare, and manufacturing contributing to its growth, is also mentioned. The author suggests that Arizona's economic success could serve as a model for other states [05b5d078].