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The Arizona economy has been a laggard in terms of growth through this expansion cycle.



August 2018 AZ Economic Outlook

August 13, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

The Arizona Economy Is Warming Up

    The Arizona economy has been a laggard in terms of growth through this expansion cycle. However, last year was a turning point for the state’s economy as it grew at its fastest rate since 2006, and is poised to accelerate further in 2018. Some drivers of previous strong growth of the Arizona economy remain in place. Arizona continues to be a popular destination for retiring baby boomers and an affordable alternative to nearby states like California. According to the Census Bureau’s American Community Survey, ex-Californians made up approximately 24 percent of the people who migrated to the state in 2016. The stronger positive net migration has helped Arizona population growth to steadily improve in recent years, which supports the state’s housing and healthcare industries. Tourism, another staple industry for the Arizona economy, continues to benefit from an ongoing expansion in the overall U.S. economy. Total visitors to the Grand Canyon were up 5.2 percent in May compared to May 2017 according to the National Park Service. This is consistent with the improving Arizona hotel occupancy rate in the first half of 2018. Uncertainty surrounding trade remains a headwind for the state’s manufacturing sector. According to the Census Bureau, 36 percent or $7.6 billion worth of Arizona exports are sent to Mexico, 10 percent or $2.2 billion to Canada, and 6 percent or $1.2 billion to China. A bilateral agreement between the U.S. and Mexico is a growing possibility. However, trade issues with China are going in a different direction, with new tit-for-tat tariffs announced on both sides.

For a PDF version of this article, please click here: August 2018 AZ Economic Outlook

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