Arizona Economy to Moderate in 2023
The Arizonan economy rebounded sharply in the latter half of 2022, following a deep contraction in the first half of last year. Going forward, the Arizonan economy is expected to grow a moderate 1.0% in 2023. Softer consumer spending from high inflation and interest rates and a weaker housing market are expected to weigh on the Grand Canyon State’s economy.
Population gains from in-migration are expected to moderate as Arizona’s economy cools. Job growth is forecast to slow as well, with payroll growth of 1.0% in 2023 after 4.2% last year. The unemployment rate is expected to average 4.4% in 2023, up over half a percentage point from 3.8% in 2022. Like in much of the rest of the country, Arizona’s total personal income grew solidly in the second half of 2022. Going forward, sequential growth is likely to be slower.
Housing starts declined sharply last year. Residential construction is expected to continue to decline in 2023, with the pull-back centered on the pricier single-family segment. This is expected to be partially offset by increased construction of more affordable multifamily units. A down market is expected to weigh on house transaction prices, which are projected to fall in year-over-year terms through the end of 2023.
For a PDF version of this publication, click here: April 2023 Arizona State Outlook
