The Great Recession is finally in our rearview mirror; however, the road to recovery isn’t going to be easy, says the University of Arizona’s economists – Marshall Vest and Gerald Swanson – who spoke Friday to an estimated 550 members of the business community at a luncheon in Tucson at The Westin La Paloma Resort & Spa.
While Arizona has shown signs of economic recovery, mainly in the first half of 2010, the growth significantly diminished over the past six months, according to Vest.
"We've lost a lot of momentum and we've given up some of those gains," Vest continued.
The state is faced with more than one obstruction while trying to reach a full recovery, said Vest. One of which includes the tightened credit market; resulting in residents, some of whom who may be seeking to downsize or needing to relocate for a job, not being able to find buyers for their existing homes.
The end to the homebuyer tax credit has shown to have furthered slowed home sales. Additionally, Arizona’s foreclosure rate hasn’t shown much sign of improvement, Vest told listeners.
While the job market began to show signs of improvement in the beginning of the year, the growth rate has significantly slowed. Manufacturing and overall construction is in the same boat and declines have also been experienced in these sectors, Vest said.
"This spring it looked like we had reached the bottom and things were going to turn, but in recent months you can see that jobs have turned down once again and have sunk to new lows," stated Vest.
In Tucson, the solar and biotech sectors have been steadily continuing to grow and interest in the area may bring more jobs, Vest suggested.
Swanson told luncheon attendees that the economy will show improvement over time. "We may do more harm than good if we try to rush the recovery," Swanson stated.
Consumer confidence is still very low, causing many corporations to attempt to mount up cash in effort to improve their liquidity. This has resulted in yet another factor adding to the slow mending to the economy, according to Swanson. One bit of good news is that many consumers have taken it upon themselves to pay down their debt.
Arizona’s deficit continues to be a major factor of concern for the state’s leading economists.
Arizona’s deficit is expected to reach $1.2 billion in fiscal year 2012, Vest said. He then explained that with the state’s money mainly going toward Medicaid, maintaining the prison system, and education, the future will result in major cuts in those areas.
Furthermore, this is going to impact health-care providers and students more so than others, and unless something is done, it's going to eat away at Arizona resident’s standard of living, Vest said.
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