Arizona's 2021 economic recovery hinges on vaccine success, says economist

Posted at 2:15 PM, Jan 05, 2021
and last updated 2021-01-05 22:23:38-05

It is hard to move forward without knowing where the state stands now.

The Rebound Arizona turned to the experts at Arizona State University to see what 2021 looks like amid the pandemic to find where we are still struggling and where there is hope on the horizon.

"There was an expectation that this was going to be a catastrophic recession, like we saw in the Great Recession," said Lee McPheters.

It was just over a decade ago that the state lost 300,000 jobs and spent the next eight years climbing back to where Arizona was before.

"In April, we lost about 300,000 jobs," McPheters said. "So, it looked like kind of the same sort of job loss as the Great Recession."

McPheters is a research professor and director of the JP Morgan Chase Economic Outlook Center at ASU. He has been working at the university since the 1970s.

He explained how, despite the similarities, there has been pleasant surprises with this pandemic. McPheters believes the economy has started to recover much faster than the crisis before.

"There's a pretty strong expectation that the second half of 2021, if we can get this vaccine distributed, that second half is going to be pretty strong nationally and in Arizona," McPheters said.

While waiting for vaccine distribution to pick-up, some industries are already doing better.

McPheters reports the state has brought back nearly 70% of the jobs lost and retail spending is up nearly 20%.

"We're thinking we could add as many as 100,000 jobs by the end of the year," McPheters estimated.

With the surprising success comes serious concern.

New U.S. Census data reveals that Arizona gained over 100,000 new residents in 2020. Industries like real estate and housing are up.

This while many people in the state are at the edge of eviction.

"There's a great deal of any inequality there," said McPheters.

He explained that the continued growth of housing comes from low interest rates, which have made home-buying more affordable. While about 285,000 Arizonans are still out of work.

"The low wage jobs are still down about 20% and that category of worker, people that work in the service sector, in particular, they are not looking for a new housing," McPheters said. "They are looking to stay in the house they have right now in the face of declining income."

He believes growth is gripping on to that vaccine and its distribution. Without it, hope for a recovery will get further out of reach.

"We have an economy that is poised for recovery, but we're certainly not in recovery yet," McPheters said