The Phoenix economy has turned the corner after suffering a devastating collapse in real estate values. Metro area economic growth is outpacing the national average and is expected to remain strong in 2014. Phoenix year-over-year payroll employment growth has consistently outpaced the national average over the past two years. Annual job growth for the region is expected to maintain its positive trend at around 2.2 percent for 2014 and 2015. The unemployment rate for Phoenix was down to 7.0 percent in October, just below the U.S. average of 7.3 percent.
Residential real estate markets, which play a major role in the Phoenix economy, were resilient in 2013 and will continue to improve next year. Housing starts for Phoenix through late summer were up about 20 percent from a year earlier, consistent with the national average. Demand for single-family homes is increasing, putting upward pressure on home values. According to the Case-Shiller data, Phoenix home prices were up 18.6 percent from a year ago in September, outpacing the 13.3 percent for the composite U.S. 20-city index. Rising home prices and low mortgage rates are allowing homeowners to build equity in their homes rapidly; this, along with steady income growth, will be a boost to local retail sales in 2014.
Phoenix officials are interested in establishing a new trade and tourism office in Mexico City. In 2012, the U.S. Department of Commerce reported that Mexico was Arizona’s largest merchandise export partner with a value of $6.3 billion. The potential for stronger economic growth in Mexico is good news for the Phoenix economy.
U.S. Airways and American Airlines are now merged, creating the world’s largest airline. The headquarters for the new airline is located in Fort Worth, TX. As part of the legal settlement allowing the merger, Phoenix will remain a hub for the new American Airlines.
Click here for the complete Phoenix MSA Regional Economic Update: Phoenix 2013Q3.