The end of the road to economic recovery is starting to come into view, with researchers saying Arizona could bounce back from recession in a few years.
Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business, recently predicted Arizona’s full economic recovery will be complete in three to four years.
“When the recovery goes underway, Arizona will probably be growing faster than other parts of the country,” McPheters said. “We are a state that’s characterized by fast job growth and fast population growth, but that’s still … years away.”
Although the future appears promising, he said there are still issues Arizona is struggling with.
“We have all the same problems that exist at the national level, but some are more severe here,” McPheters said. “The housing market has not recovered, Arizona home prices are still going down, and we have more foreclosures here than most parts of the country.”
However, McPheters did predict a 40 percent increase in single-family home-building permits this year, indicating that the housing market may begin to turn around.
“The best thing to do now is to plan for the future and wait for the national economy to recover,” he said.
Other contributions to the turnaround include inventory growth, as retailers stock their shelves and add to their inventory. McPheters was also confident that consumer spending would continue to rise.
Consumers postponed buying goods during the recession, but there will always be a need to replace items that are wearing out, he said.
State House Minority Leader Rep. David Lujan, D-Phoenix, said he is hopeful about the road to recovery, but expressed concern that the state might not get there.
“My concern would be some of the things we are doing at the Legislature would hinder our ability to come out of [the recession] that soon,” Lujan said, citing examples like cuts to education funding.
“The proposed tax cuts for corporations and for the rich make it more difficult for us to provide a quality education, which is something we need to invest in significantly to attract business to this state,” Lujan said. “The cuts we are making are going to set us back for years to come.”
Rep. Rich Crandall, R-Fountain Hills, said there are issues the federal government must deal with before Arizona can fully recover, such as tribal sovereignty, Internet sales and health care.
“It’s not just about housing, not just jobs,” Crandall said.
Local businesses are having to compete with the Internet and losing out every time because of lower sales taxes on online purchases, he said. Crandall also mentioned businesses going to tax-free properties on the reservations.
“Our tax space is causing some problems with federal issues that we don’t exactly have control over,” he said.
Lujan said the recent signing of SB 1070, the immigration bill, is prompting business to leave Arizona.
“[SB 1070] is giving us a negative perception in the country,” Lujan said. “This bill will drive businesses away.”
McPheters said the impact of SB 1070 on the economy will be determined in time.
“I think we have to let it play out for a while,” he said. “If it’s found to have some flaws — perhaps it gets blocked in courts — it’s really not going to have an effect until that gets resolved.”
Despite the hurdles, McPheters said he remains optimistic that Arizona is on the road to recovery, but stressed that it will be a long process.
“This is the worst recession since the 1930s,” McPheters said. “When recovery really does get going, Arizona will probably have a stronger economy than most states.”
Reach the reporter at joseph.schmidt@asu.edu
