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UA economist predicts more job growth in Tucson for 2018

George Hammond

UA economist

The local economy will gain momentum next year after a “sluggish performance” in 2017, a University of Arizona expert believes.

George Hammond, director of the Eller Economic and Business Research Center, presented his economic outlook for Tucson to more than 500 people at a luncheon Friday at the Westin La Paloma.

Here’s a Q&A with Hammond:

Q. What’s the most significant event that happened with Tucson’s economy in 2017?

A. The renegotiation of NAFTA is a big deal. It’s something we should all track carefully. However, the biggest event of the year has not happened yet and might not happen at all. It’s the tax cuts/tax reform working its way through Congress. Stay tuned.

Q. There’s been a lot of optimism about Tucson’s turning economy, but you continue to express skepticism. Why is that?

A. Earlier this year, there was a disconnect between the preliminary job data for Tucson and the buzz circulating around town. I’ve been pointing that out and waiting for more reliable data to be released. Those data have started to come out and show stronger job growth in Tucson through March 2017 than previously thought. That’s good news and it fits better with the buzz about the local economy.

Q. Do you believe the announced jobs will not materialize?

A. We’ll have to wait and see on that, but I do expect overall job growth to continue this year and into 2018.

Q. Are there things that give you optimism?

A. Yes, the strong U.S. economy really sets the stage for continued growth in Tucson. If the buzz regarding the local economy pans out, that will help as well.

Q. In what sector do you believe Tucson will see the most job growth in 2018?

A. I think we’ll see the local economy add at least 3,000 net new jobs this year, with stronger gains in 2018 of 4,400 new jobs. I think we’ll continue to see strong job gains in service-providing sectors, especially health care, tourism, manufacturing, and professional and business services.

The manufacturing job growth would be especially helpful, since those are high-paying jobs. Professional and business services includes accountants, lawyers, management consultants, computer scientists, engineers, and call centers, among others.

Q. What do you predict for residential construction and real estate?

A. I think we’ll see job growth translate into population gains during the next year. In turn, population gains will generate additional activity in residential construction. It will also continue to put upward pressure on house prices.

Q. What are the economic risks and pressure points facing Tucson?

A. The forecast assumes that the U.S. economy will continue to grow during the next year. That seems very likely at this point. However, if the U.S. economy slows dramatically or falls into recession next year, that will take the wind out of Tucson’s sails and raise the odds of a downturn locally.

I also think that a major disruption in trade relations with Mexico is a risk for Tucson. Trade with Mexico, including the spending of Mexican visitors here, is an important part of the state and local economies. That’s particularly true since Arizona’s exports to Mexico are already under pressure from a strong U.S. dollar.

Q. Anything else you want readers to know about the local economy?

A. While I think Tucson is growing this year and will generate stronger gains over the next couple of years, that growth is very likely to fall short of our long-run averages. That will reflect the demographic shift caused by the aging of the baby boom generation. This is not specific to Tucson — we’ll also see below average gains nationally, statewide, and in Phoenix.

Contact reporter Gabriela Rico at

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