By Russ Wiles | The Arizona Republic
Arizona’s economy is poised to grow about half a percentage point faster than the nation both this year and next, according to a report.
Arizona’s economy will expand 2.6 percent this year and 2.8 percent in 2018, topping U.S. growth estimates of 2.2 percent both years, according to a quarterly study by BMO Financial Group of Toronto.
Business conditions — which include population growth, exports and bankruptcies — are the strongest component of Arizona’s economy, according to the analysis, while state finances — including tax receipts, state-government finances and pension liabilities — are the weakest.
BMO ranks Arizona’s business conditions to be eighth best overall, with Arizona also scoring well in housing (No. 15) and job market (No. 22) but subpar in state finances (No. 42).
Overall, Arizona has the nation’s 14th strongest economy, down two spots from a similar survey one year ago. According to BMO, the best state economies are all out west, topped by Utah and followed by Oregon, Colorado, Nevada and Washington. Kentucky has the weakest economy, according to the report.
Personal incomes in Arizona were flat last year but are on pace to grow better than 5 percent this year and next, according to the report, which also expects job growth and housing starts to trend upward while unemployment dips below 5 percent in 2018. Arizona has made great strides to promote economic growth, according to BMO. “Years of government efforts to create a more diversified economy are starting to materialize, particularly in sectors such as technology and alternative energy,” the report said. “In addition, construction activity is starting to provide some lift after an extended period of decline.” Also, Arizona is attracting more newcomers than most states. Arizona’s population of 6.93 million will top 7 million this year, if it hasn’t already, based on recent trends.
Among economic drags cited in the report, housing prices have moderated and trade with Mexico has slowed — the result of a weak peso and the potential for a renegotiation of the North American Free Trade Agreement.
