August 2020 Arizona State Outlook

Robert A. Dye, Ph.D.


Daniel Sanabria

Arizona City

The Arizona economy officially dipped into recession in the first quarter of 2020, followed by a historic contraction in Q2.

Rocky Year for Arizona’s Economy

The Arizona economy officially dipped into recession in the first quarter of 2020, followed by a historic contraction in Q2. The Arizona economic outlook is entering a new phase of uncertainty as states hit the reset button on their economies. Net migration and population growth will likely remain positive in the near-term as people and businesses continue to relocate from higher cost states. The Census Bureau is expected to deliver redistricting counts from the 2020 Census to states at the end of March 2021. State population and net-migration data will be re-benchmarked to those results. Many state economic forecasts, including Arizona’s, are sensitive to net-migration estimates and so the 2020 Census represents yet another source of uncertainty for state economies. The relatively fast growing population for Arizona is supportive of the housing market. Phoenix topped the S&P Case-Shiller 20 City Index for the 11th consecutive month, up 9.0 percent year-over-year in May. The tight supply of existing homes on the market, in a low mortgage rate environment, will motivate new home construction in the near-term. However, we expect housing demand to be somewhat bifurcated due to a lingering high unemployment rate through 2021. Workers caught jobless in a suddenly weak labor market will be shutout of new housing opportunities. Arizona’s tourism industry will remain under stress for the rest of this year due to the reset in air travel. This will contribute to weak tax revenues this year. Fortunately, to date, the tax revenue shortfall has been less than feared, now estimated at $190 million for this fiscal year.


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The articles and opinions in this publication are for general information only, are subject to change, and are not intended to provide specific investment, legal, tax or other advice or recommendations. The information contained herein reflects the thoughts and opinions of the noted authors only, and such information does not necessarily reflect the thoughts and opinions of Comerica or its management team. We are not offering or soliciting any transaction based on this information. We suggest that you consult your attorney, accountant or tax or financial advisor with regard to your situation. Although the information has been obtained from sources we believe to be reliable, neither the authors nor Comerica guarantee its accuracy, and such information may be incomplete or condensed. Neither the authors nor Comerica shall be liable for any typographical errors or incorrect data obtained from reliable sources or factual information.

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August 17, 2020
Robert A. Dye, Ph.D., Senior Vice President and Chief Economist at Comerica Bank

Robert A. Dye, Ph.D.

Senior Vice President and Chief Economist
Daniel Sanabria, Senior Economist at Comerica Bank

Daniel Sanabria

Senior Economist