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University of Arizona Eller College of Management’s Economic and Business Research Center Mid Year Report, June 2015

Arizona and Tucson will continue to see economic growth over the next decade that is buoyed by the ongoing US recovery and increased exports to Mexico.   According to the latest statistics, an expanding income gap tied to decreasing educational attainment rates threatens the state’s future.

Continuing “fiscal drag” or reduced federal government spending will continue to affect the state but the worst seems to be over according to the Eller Research Center’s Director, George Hammond.

The Center has forecast continued slow but steady growth for the region.  The Tucson metro area added 11,000 new residents for a growth rate of 1.1% above the national average but below Phoenix’s 1.5%.

Arizona is still a very attractive migration destination and Tucson will continue to pick up its share of newcomers.  This will lead to improvements in housing markets.  Housing permits went from a high of 12,000 in 2007 to a low of about 2,000 after the Great Recession.  Last year, housing permits were just over 3,000.

Over the year job growth in Tucson stands at 1.1%, about half the national rate but it is expected to pick up.

Although the state’s economy is improving, slow wage growth and increasing income gap will affect quality of life.  Low wages in the state seemed to be tied to the unemployment rate.  The rate in Arizona last year was 6.9%, above the national average and three full points higher than it was before the Great Recession began.  Per capita personal income is also down in Arizona with the state ranked 42nd in the nation last year.