The beleaguered housing market, persistent unemployment and slow wage growth continue to drag on Tucson's economy.
And it's going to be a couple of years before the start of any accelerated growth, University of Arizona economist Marshall Vest said Friday, providing a midyear update. About 350 members of the business community attended the economic-assessment breakfast at Doubletree Hotel Tucson at Reid Park, 445 S. Alvernon Way.
"We do have a recovery that is in place, but it's going to be slow moving forward," Vest said.
One positive note, Vest said, is that consumer spending has increased. That could be due to pent-up demand, as unemployment has remained high and wages have stayed stagnant.
But there could be another explanation, Vest said. That one is directly tied to the increasing number of people with high mortgage debt who choose to walk away from their homes and let them go into foreclosure.
"If you stop paying your mortgage, obviously you have a lot more money to spend," Vest said.
Nationally, the economic snapshot wasn't much brighter.
Key economic indicators, such as gross domestic product and unemployment, continue to underperform, said UA economist Gerald Swanson.
Consumers overall remain unhappy about the progress of recovery and the government's ability to handle it.
Investors and businesses are uncertain about the future, and the government's spending and taxing policy is unsustainable, Swanson said.
Local employment continues to languish, though Tucson had added 2,500 jobs as of March since hitting a bottom in September 2010, Vest said.
The housing market also continues to strain the local economy. Foreclosures remain high and prices continue to drop.
Half of Arizona homeowners have negative equity in their mortgages and that keeps them from upgrading to another home even if they want to.
"People are frozen in their houses," Vest said.
U.S. Census Bureau data show that the current vacant housing inventory in Arizona is enough for a decade of population growth, he said.
Credit markets will start to improve in 2011, Vest predicted. Spending will bounce up and hiring will strengthen as well, he said.
But overall, the theme of the forecast echoed that of previous ones: The recovery is going to be slow and painful.
"We continue to forecast an anemic recovery for the next two to three years," Vest said.
Contact reporter Dale Quinn at email@example.com or 573-4197.