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July 22, 2024 3:29 am

Local News

Arizona Economy Bouncing Back, But Still Has Some Baggage

Credit: iStock

Parker Wallis 

Under the Biden administration, parts of Arizona’s economy are reviving in a recovery effort that George Hammond, director of the Economic and Business Research Center at the University of Arizona, describes as “strong but uneven.”

According to the White House, Arizona saw a 5.3 percent employment increase in 2021, adding 152,500 jobs and recovering “114 percent of the jobs lost between February 2020 and April 2020,” the first two months of the pandemic. 

Hammond notes that Arizona still needs 134,000 more jobs to catch up to the numbers of the pre-pandemic market. He states, “While job growth is going to be strong this year, we’re going to see a major de-escalation in income growth” due to pandemic-related federal income drying up. The state, however, has a 5 billion dollar surplus, and the governor will sign the budget at the end of the month, allocating new resources to Arizona. 

The White House report adds that Arizona residents “applied to start more new businesses during President Biden’s first year in office than in any other year” since 2005. 

Arizona additionally saw its GDP grow “6.2 percent at an annual rate in the 4th quarter of 2021,” a “substantial acceleration” in comparison to the 4th quarters of 2020 and 2019, which saw a 0.8 percent and 3.8 percent increase, respectively. 

The White House also stated that Arizona’s “unemployment rate fell from 6.1 percent in January 2021 to 3.2 percent in April 2022,” the lowest unemployment rate for the state on record since 1976. Since President Biden took office, initial claims for unemployment insurance dropped 81 percent, hanging around 14,000 at the start of his presidency and plummeting to about 2,600 in the week ending in May 28 of this year. 

The record low unemployment rate is a double-edged sword, creating a labor shortage in which businesses are struggling to find workers and fill vacant positions. Among the many industries that have been braving the shortage are private security companies, like Lionheart Security Services in Tempe. 

“Until very recently the labor shortage in our area hurt our business in a big way,” said CEO Bill Herzog “The staff shortage meant we struggled to keep up with contracts and passed on lucrative jobs… There was no point in bidding since we didn’t have the people to do the job.” 

Inflation and soaring gas prices are also plaguing Arizonans. The Bureau of Labor statistics reported that the Phoenix-Mesa-Scottsdale area experienced a one-year inflation rate of 11 percent in April, compared to the national rate of 8.3 percent for that month, and according to AAA, Arizona recently recorded its highest average gas price at $5.181.

According to a March poll by OH Predictive Insights (OHPI), Biden’s approval rating has sunk to 40 percent approval in Arizona, the lowest it has been, which may suggest Arizonans view metrics like inflation and gas prices to be more accessible indicators of a healthy economy as opposed to job numbers and GDP. 

White House advisors point to Ukraine and the supply-chain issues brought on by the pandemic as contributing factors to rising prices. 

Garrick Taylor, a spokesperson for the Arizona Chamber of Commerce and Industry, explains that Arizona “does not pump oil nor does it refine it,” which leads to the state “paying for the cost of transportation and distribution on top of the production costs that have spiked.”

Hammond suggests that “if we are going to get back on that prior trend [of pre-pandemic growth],” Arizonans “need to see much faster labor force growth” in addition to “more people participating in the labor market or people moving to the state.” He says, “Without that, we’re really going to struggle to get back to that trend.”