Alliance Bank’s Economic Forum Analyzes Economic Realities Facing Arizona, Impact on Key Industries
Alliance Bank of Arizona's Economic Forum looks at what the Arizona economy can expect in 2022.
April 20, 2022
From inflation, interest rates and the trajectory of commercial real estate and affordable housing to the national energy strategy and war in Ukraine, there were more hot topics than ever before to discuss during Alliance Bank of Arizona’s Economic Forum.
Leading economist Dr. Christopher Thornberg of Beacon Economics, a leading provider of economic research, forecasting, industry analysis and data services, analyzed the current standing of Arizona’s economy and provided insights on the most pressing issues facing Arizona’s business leaders.
“We live in a time of profound uncertainty and the world feels a lot different than it did a few years ago,” said Dr. Thornberg as he addressed the economy, inflationary pressures, labor force and wage growth, tax policy and a host of other topics.
Among the key insights he shared:
Despite growth in Arizona has slowed, the state had a larger economy at the end of 2021 than it did prior to the pandemic’s start in 2019.
Excessive consumer demand is driving inflationary pressures across the nation and in Arizona, but the question remains about how sustained inflation will be in the midst of suggestions from the Federal Reserve.
Arizona’s labor market has continued to steadily recover from the COVID-19 pandemic, adding 364,100 jobs since it hit bottom in April 2020, with payrolls increasing since the beginning of the pandemic.
The housing market continues to be the strongest spot of Arizona’s economy. The numbers are driven by the fact typical homebuyers, who are higher-income earners, have been less affected by the labor market downturn, mortgage rates are at historically low levels and inventories are near historic lows. From January 2021 to January 2022, the median home price rose 28% in Phoenix, reaching $433,599. In Tucson, the median home price rose to $318,245 in January 2022, a 21.3% increase from a year earlier.
On the commercial real estate front, with more companies returning to normal operations, demand for office properties has grown over the last year in Arizona. In Phoenix, the office vacancy rate hit 21.2% in the fourth quarter of 2021, down 0.5 percentage points from a year earlier. Vacancy rates for office properties also declined in Tucson over this period, at 22.5%, down 2.5 percentage points from a year earlier.
Identifying that Arizona, especially the Phoenix area, continues to maintain its position as a dominant national economic leader, Dr. Thornberg also weighed in on several issues that are top-of-mind for business leaders, including wage adjustments to retain and attract employees, anticipated measures to combat inflation, the role of the Federal Reserve and more.
To complement the event, Alliance Bank has also published a Regional Intelligence Report, in partnership with Beacon Economics, that takes a deeper dive into Dr. Thornberg’s insights. It can be downloaded by clicking here.
To view the slide deck that Dr. Thornberg used during his presentation, click here, or watch the video recording below: