Economists predicted today that Arizona will fully recover from the recent recession in about three years.
The growth will be slow — more like a crawl than a sprint — but it will be steady, they said, adding that indicators point to Arizona once again securing its place among the top states in job growth.
But they warned that if the federal government fails to resolve the “fiscal cliff,” the probability of another recession is very high and Arizona’s economy could face another downward spiral.
The “cliff” refers to a series of tax hikes and spending cuts that will take effect Jan. 1 if the Obama administration and Congress can’t reach a compromise to halt them.
“If we go over it, you can rip up everything I’m saying,”economist Elliott Pollack said during a forecast forum this morning organized by ASU’s W. P. Carey School of Business and JPMorgan Chase.
But if the political and fiscal uncertainty is resolved, Arizona is expected to add 60,000 jobs in 2013, when the unemployment rate is expected to dip to 7.6 percent.
Arizona still needs to gain 220,000 jobs to reach its pre-recession employment levels. Economists said Arizona will get there by 2015 or 2016.
Prof. Lee McPheters, an economist from ASU, expects improvements all around.
In 2013, he anticipates personal income to grow by five percent, retail sales to go up by six percent, and Arizona’s population to add another 1.5 percent.
Pollack said it’s hard not to be optimistic about the housing market. He said distressed inventory has decreased, foreclosure notices are down and permitting is up.
The number of jobs being created, combined with modest population growth, low interest rates and growing consumer confidence, has led to more permitting activity in the first seven months of 2012 compared to 2011, Pollack noted.
While the growth still isn’t close to the peak levels of a few years ago, any increase in the number of houses being built will help the economy, he added.
Meanwhile, Beth Ann Bovino, the deputy chief economist at Standard & Poor’s, is also optimistic about the U.S. economy, which she expects to grow by 2.3 percent next year.
Reports indicate a stronger job market and there are signs that people are again willing to buy big-ticket items, such as cars and homes, she said.
Bovino said it looks like the economy is on in its way to a self-sustaining recovery, but like other economists, she’s worried about Congress failing to act on the “fiscal cliff.”
If the issue is quickly resolved, however, Bovino said the economy could rally as companies, which are sitting on a lot of cash, start spending.