Arizona is at risk of falling back into recession, according to a senior analyst from Moody’s.
Chris Lafakis, an economist with the international financial research firm, said Arizona is showing declines in consumer spending.
And Arizona’s housing market remains troubled, he said. It wasn’t helped, for example, by the expiration of a federal tax credit for first-time home buyers.
Lafakis presented the information on Arizona, as well as all other states, during a national conference Friday for Capitol beat reporters in downtown Phoenix.
But local economists disagreed with the assessment.
“In order to slip back into a recession, you had to have been growing at a somewhat respectable pace and then you see the economy slowing again,” said Jim Rounds of Elliott D. Pollack and Company. “We’ve been growing but it hasn’t been that impressive.”
He added: “It’s not so much that we had strong growth and now are starting to fade. It’s more like we never had a decent lift off to begin with.”
Lee McPheters, a professor with the W. P. Carey School of Business, said among a group of weak Western states, Arizona’s economy is actually doing better since it has recently added jobs.
Arizona’s economy stopped contracting, but like other economists, McPheters said recovery is very slow.
“I would say that the economy is certainly just very slowly improving, but I think we’re going in the right direction,” he said. “I don’t think there’s any threat of a reversal right now at all.”
Rounds echoed the assessment, saying Arizona’s economic outlook is positive. It is growing, although not at an impressive rate, and it will take a while before it gets back to where it was before the recession.
Actually, Arizona isn’t the worst off as seven other states, including neighboring Nevada and New Mexico. Those states remain in recession, according to Lafakis’ presentation.
Lafakis said there are causes for optimism in the country.
The Federal Reserve is expected to remain aggressive, corporations are reporting strong balance sheets, household debt burdens are falling, and pent-up demand is developing, he said.