Economic recovery by summer?

UA forecast if COVID controlled and new stimulus
Posted at 7:40 PM, Dec 04, 2020
and last updated 2020-12-04 21:40:34-05

TUCSON, Ariz. - The pandemic did not hit Arizona’s economy as hard as it hit many other states. There’s recovery, but a lot of uncertainty in what lies ahead. That’s the message for the University of Arizona's annual forecast from the Eller College of Management.

When COVID hit, state economies and employment rates went down hard. University of Arizona economist Doctor George Hammond says from February to April Arizona actually did a little better than some other states but still lost 295,000 jobs, about what we lost in last decade’s Great Recession.

“The difference of course is that what we just went through happened in two months and the Great Recession job losses persisted for years.”

Tourism took the biggest hit of all Arizona’s industries. And health care employment actually declined as people put off routine care for fear of catching COVID.

Hammond says by May and June about half of Arizona’s lost jobs had come back. Transportation and warehouse work picked up as more people bought on-line but in-person retail began to revive too.

Homebuilding has been hot, fueled by low mortgage rates and the urge for more space to work at home but commercial construction has been down amid questions over how many people will go back to work in conventional office space.

Retired JP Morgan Chase economist Anthony Chan says government stimulus has been a huge help but there are still hard months ahead. He says compared to the Great Recession, the COVID recession had a sharper drop and should have a sharper recovery because weak economics did not start the recession---a health crisis did. And the prospect of vaccines will help drive a recovery.

George Hammond says his baseline forecast is for the economy to be roughly back to normal by next summer with solid sales and income growth but that could push back if the virus surge gets much stronger and there’s no new government stimulus this month.

“If we don't get that then the baseline may wind up being a bit too optimistic but you know essentially the baseline forecast calls for Arizona to get back to pre pandemic employment levels by about the middle of 2021.”

Hammond says if the outbreaks get much worse or there is not a significant additional Federal stimulus full recovery could be delayed to late next year or early 2022.