Phoenix Business Journal
September 30, 2011
The Phoenix Business Journal asked local economists to dust off their crystal balls and predict what Arizona will look like five and 10 years from now. Here’s their view of the state’s economic future.
Beckie Holmes, economist and director of marketing intelligence, Cox Communications
Alan Maguire, president and principal economist, The Maguire Co.
Debra Roubik, economist, VisionEcon
Marshall Vest, director, Economic and Business Research Center, University of Arizona’s Eller College of Management
Holmes: The unemployment rate will still be above average by 2016, but will be substantially lower than today. By 2016, the unemployment rate should have almost halved from today’s rate of almost 10 percent to 5 percent or 6 percent. By 2021, the rate should decline to 4 percent or 5 percent.
Vest: The unemployment rate will be in the range of 6 percent to 7 percent five years from now. In 10 years, a rate of 5 percent is expected. The number of jobs will exceed 3.1 million.
Holmes: Housing should be in full recovery by 2016, with statewide permits in excess of 50,000, a level consistent with historical averages and a population growth of about 150,000 people per year. By 2021, the mix of single-family and multifamily units built should be back at the historical average of approximately 15 percent to
20 percent multifamily, 80 percent to 85 percent single-family. We will have absorbed all of the excess housing units developed during the boom, and development will begin moving into previously undeveloped areas in Pinal County and western Maricopa County.
Vest: Home builders will be busy again, providing roughly 60,000 new homes each year, an amount that is needed to accommodate 130,000 to 140,000 new residents. As the housing bubble was inflating, over 90,000 units were built each year during 2004 and 2005.
Holmes: Between 2016 and 2021, more and more baby boomers will reach retirement age and either permanently move into their seasonal Arizona homes or purchase homes in Arizona. This will contribute to Arizona’s population growth and will increase demand for housing in active-adult communities.
Vest: Ten years from now, Arizona’s population will top 7.5 million, up from the 6.4 million counted during the 2010 census. That should make Arizona the 13th-largest state, overtaking Indiana, Massachusetts and Washington in the process.
Holmes: Between 2011 and 2021, Arizona will see above-average growth in professional and business services as the U.S. economy continues to shift toward services and away from manufacturing. Arizona companies will continue to focus their domestic efforts on high value-added activities such as engineering, research and development, management and marketing. Manufacturing — other than solar manufacturing and semiconductors — and mining will continue to decline as a share of total employment in Arizona. Government employment may experience modest growth, but should also fall as a share of the total.
Vest: Most new jobs will be created in health services, professional and business services, and trade. We should continue to see large increases in educational services (privately owned, including charter schools), while public schools grow slowly. Both manufacturing and government will shrink as a share of total employment.
Roubik: Top Arizona industries of the future will center around the acronym SOS. “S” stands for savings — companies or innovations that help people save money. “O” is for online. Anything online will go gangbusters. We haven’t even begun to see the boom in the Internet. The last “S” stands for simplicity. Businesses in the green industries that support people going back to the simple life, back to nature, will do well.
Maguire: I expect to see small to medium-sized light manufacturing moving to Arizona from California, due to increased regulatory constraints and rising taxes in that state. We will see big movement in 100- to 500-employee manufacturing businesses to Arizona. Financial services will expand. The size of government will continue to decline.