Arizona’s Economic Momentum to Continue
The Arizona economy is expected to continue improving into 2019. Our outlook is supported by strong population growth and ongoing job growth. We expect net migration into the state to continue at a moderate pace as the state’s comparatively low taxes and affordable house prices remain significant draws, especially compared with nearby California. We expect to see strong job growth through Q4, supported by gains in the construction, government, and private services sectors. Construction employment is expected to improve further, motivated by a tight housing market, particularly around Phoenix. We forecast Arizona’s real gross domestic product growth to be above the U.S. average through the last half of 2018 and into 2019. However, long-run hurdles for the Arizona economy persist, including low household income and education attainment, which impact spending and the skillsets of the labor force. Despite a high profile teacher walkout in Q2, educational funding continues to face headwinds in Arizona. Voters passed Proposition 126 this November, which prohibits Arizona’s state and local governments from levying sales taxes on most services. Critics of the measure believe it will put additional strain on the state’s educational system. Meanwhile, the resolution of the U.S.-Mexico-Canada Agreement on trade, which remains to be ratified by each country, removes some uncertainty for Arizona businesses moving forward. According to the Census Bureau, 36 percent or $7.6 billion worth of Arizona exports are sent to Mexico, with 10 percent or $2.2 billion to Canada.
For a PDF version of this report, click here: November 2018 AZ Economic Outlook
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