Arizona’s Economy to Grow Faster Than the U.S. Economy in 2024
Driven by strong population growth, Arizona’s economy is forecasted to grow by 2.9% in 2024, slightly faster than last year, and above Comerica’s forecast for 2.3% national economic growth. Arizona’s employment growth is moderating from last year’s pace, with the unemployment rate set to tick higher as slower income growth in the rest of the U.S., as well as weak economic growth in key tourist source nations of Canada and Mexico, weigh on Arizona’s critical tourism sector. Slower employment growth and higher unemployment is projected to limit total personal income growth in the state to around 4%, modestly outpacing inflation.
The Grand Canyon State’s population is anticipated to grow solidly in 2024 as the traditional lures of the state, such as milder winters, housing that’s more affordable than big West-coast metros, 300 days of sunshine each year, and comparatively lower tax rates attract residents to the Grand Canyon State.
The least affordable housing market in decades weighed heavily on Arizona’s housing sales and construction in 2023. Higher population growth is expected to boost residential construction this year, despite notable headwinds from higher mortgage rates, and moderation in employment and personal incomes. Led by a solid increase in single-family construction, 61,000 new residential units are expected to be added this year. Sharp increases in vacancy rates in the past two years are limiting multifamily construction in 2024. Despite higher residential construction, demand for housing continues to outstrip supply, leading to continued house price increases this year. Nonetheless, Arizona’s annual house price increase of 3.6% in 2024 is forecast to be a full percentage point below the national housing market’s increase of 4.6%.
For a PDF version of this publication, click here: 2024 Arizona Mid-Year State Economic Outlook
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