Tucsonβs economy is expected to grow this year but remain sluggish for the next couple of years, according to the latest economic forecast from the University of Arizona.
The number of non-farm jobs here is expected to grow just 0.3 percent this year, compared with an actual increase of only 0.5 percent in 2014, according to the Economic and Business Research Center at the UAβs Eller College of Management.
And population growth in the Tucson metro area, which includes all of Pima County, is expected to flatten to just 0.2 percent, after a 1.1 percent increase in 2014, according to an economic outlook luncheon hosted Friday by the UA center at the Westin La Paloma Resort and Spa.
βGrowth has been slow β slower than after other recessions,β George Hammond, director of the Eller research center, told several hundred attendees at Fridayβs luncheon.
Beyond this year things will improve β again β slowly, Hammond said.
The UA research center predicts a 1 percent increase in jobs in 2016 and a 1.6 increase in 2017, while population is expected to grow 0.5 percent next year and 0.9 percent in 2017.
Hammond cited the βfiscal dragβ of reduced federal spending, due to budget sequestration in 2013 and a continuing lag, and cuts to state and local spending last year.
Tucson is more than twice as dependent on government outlays than the nation as a whole. In 2013, federal civilian and military activity accounted for 7.8 percent of Tucsonβs gross domestic product, compared with a national share of 3.6 percent.
And state and local government spending was 14.5 percent of Tucsonβs GDP in 2013, compared with 9 percent nationally.
One bright spot is Arizonaβs merchandise exports, which rose more than 10 percent from 2014 to 2015, after a 7.3 percent increase the prior year. Exports to Mexico β Arizonaβs biggest foreign trading partner β rose 28 percent in the past two years.
But despite an improving Mexican economy, a strong U.S. dollar may crimp future exports since it makes goods more expensive elsewhere, and it could push down Mexican tourist spending, Hammond said.
βThatβs really starting to weigh on our recovery,β Hammond said.
Despite those headwinds, Hammond said Tucson is positioned to grow, albeit slowly.
Arizona remains a popular place to move and retire, so when βresidential mobilityβ β the ability of people to move β improves, Tucson stands to gain.
Personal income is forecast to grow faster then inflation in the next few years, including a 3.6 percent increase this year and a 3.9 percent bump in 2016.
Even so, Hammond said key concerns remain about educational attainment of Tucsonβs population, which lags the state and nation, and infrastructure needed to efficiently move goods and people.
Hammond said most of the local job gains during the next two years are expected in service sectors, especially in professional and business services, leisure and hospitality, education and health services, and trade, transportation, and utilities.
Job losses are expected in government, manufacturing, and natural resources and mining, he said.
Another featured speaker at the UA outlook luncheon, JPMorgan Chase chief economist Anthony Chan, said he had good news and bad news about the national economy, but he was mostly reassuring.
Nationally, indicators point to βslow, stable growthβ next year, he said.
βFor the U.S., I think 2016 wonβt be a bad year,β Chan said.
Chan said investors shouldnβt panic over the Federal Reserveβs plans to raise interest rates, noting that it will be done gradually.
The stock market may undergo further corrections β typically viewed as a drop of 10 percent or more β but Chan noted that in investors have historically recouped there losses within months.
βCorrections are a way of life and we should understand them,β Chan said.
