Three economy experts discuss the current major economic issues
Dec. 20, 2021
Arizona’s economy has shown signs of recovery throughout the year, with job numbers improving and consumers flush with cash after pay increases and stimulus payments. But inflation concerns continue. So do the economic wild-card issues created by the pandemic. We gathered some economic experts to take a look back at the 2021 economy and to look ahead to what we can expect in 2022. Arizona Horizon’s Ted Simons was joined by Dennis Hoffman, director of the L. William Seidman Research Institute at ASU’s W.P. Carey School of Business; Jim Rounds, president of Rounds Consulting Group; and Lee McPheters, director of the JP Morgan Chase Economic Outlook Center at the W.P. Carey School of Business.
Dennis Hoffman began by giving us an overview of Arizona’s economy in the past year. “The trajectory was really pretty good despite some headwinds from the pandemic,” he said. “This is an economy that’s really improving,” he continued, saying that the improvement comes despite this summer’s hiccup due to the Delta variant He also noted that consumer confidence is down.
“It was really the year of trying to figure out what the numbers meant,” said Jim Rounds. “It was a little bit challenging to figure out how we were going to recover.” He says he thinks Arizona has recovered about 83% following COVID-related job losses.
Meantime, Lee McPheters took a closer looks at labor markets and unemployment. “The latest numbers we had, 3.2, we haven’t seen a number like that in close to 15 year,” he says. He says the labor force in Arizona is up, compared to the national labor force. “Job growth has been very, very solid. We’re looking at a strong 2022.”
McPheters says consumers used to be more interested in travel and experiences. During the pandemic and beyond, the interest has focused more on online purchases. “We’re ordering a lot of stuff,” he said.
Now, with the recent supply chain issues, there are more things to consider when making purchases. “The way that we think about inventory control is going to be different,” Hoffman said. People were not buying large amounts of produce pre-pandemic, but then that all changed., “Almost overnight we all wanted everything! And not services… products!”
Ted asked our panelists about the impact of inflation on the Arizona economy. “We have high inflation; we have workforce shortages,” said Rounds. He says high-skilled people are leaving their jobs and retiring early because the value of their home is fantastic and the value of their retirement portfolio is strong.
Hoffman also said we are definitely experiencing high inflation. “Inflation’s hot today,” said Hoffman. “It’s going to be hot through Q1, maybe even into Q2. I think a year from today, there’s no way it’s going to be another 6% on top of where we are.”
The panel also addressed the issue of Phoenix real estate. looking at why rent is so high and why home prices have gone through the roof. “Phoenix has seen a 33% increase over the year. “If you’re a homeowner, you’re have elation. If you’re in the market looking for a home, you’re feeling anguish,” McPheters said.
Looking ahead, the analysts predict positive things for our state’s economy in 2022. “I think it’s going to be an 8,” said Hoffman, looking at a scale of 1 to 10. “The economy will continue to recover… it’s onward and upward.