The future is bright for Southern Arizona and the nation as a whole, according to local economists like George Hammond and Anthony Chan.
The duo headlined The University of Arizona’s Eller College of Management recent Economic Outlook Luncheon at the Westin La Paloma. At the yearly event, Chan addressed national and worldwide economic projections, while Hammond, who runs the college’s Economic and Business Research Center, focused on local matters.
Both expressed similar positivity in their assessments. Chan—who is the chief economist for Chase Bank—expects the recent surge in economic growth worldwide to continue unabated in the months ahead.
Chan said his confidence is rooted in the steady growth in the world’s major markets, including the NASDAQ and Standard and Poor’s Index, as well as markets in Europe and Asia.
“We’re going to continue to see, not only improvements in 2017 and 18, but also in 2019,” Chan said. “We do see the global economy growing somewhere in the neighborhood of about 3.4 percent and that of course will improve even slightly into 2019 nationally.”
Chan cited his belief that Congress will pass tax reform, which he projects to add about a half-percent of economic stimulus to the American economy, which would counteract any rate increases put in place by the Federal Reserve in the near-distant future.
Chan believes the tax reform package, which was in conference committee last week, will free people to spend more money and spur economic growth across the country.
The longtime economist said the current plan isn’t perfect, but thought it was better than not doing anything at all.
“I think that if you look at the tax reform package you will see that there are going to be some individuals that benefit more than others,” Chan said. “So, I think everybody will benefit, I think clearly some will benefit a little bit more than others.”
Chan added that lowering the corporate tax rate, especially for small and medium-sized businesses, will go a long way to creating more equitable growth.
“That’s why they’ve made some progress on that and are working even harder,” he said. “And now they’ve managed to put forth a proposal where you can actually exempt as much as 23 percent of your income, so small- and medium-sized business will actually benefit from this.”
Chan said he combined all of the aforementioned factors when projecting worldwide growth over the coming year, and believes there will be growth of 3.8 percent in America, and 3.6 percent worldwide, thanks to strong and steady economic output, with American markets up 18.3 percent this year alone.
Chan believes economic stimulus will positively impact Americans nationwide, and to take a pride in the recovery worldwide.
“What I want to add is that without making any judgments, when you have stimulus it makes the economy grow a little faster,” Chan said. “And since we all live in the United States, I think we all will benefit from that, and we’ll enjoy the benefits of continued growth.”
Hammond said the economy in Southern Arizona is much rosier than many believe. The longtime Eller School economist cited growth in employment (1.3 percent) and new businesses (0.4 percent), as well as an improvement in median household income as his reasoning.
“I think Tucson is actually doing a lot better in 2017 than we’re getting out of the preliminary data,” Hammond said. “And so, what I think is going to happen next year is we’re going to carry that momentum into 2018 and 2019, assuming the national economy continues to grow.”
One of the greatest strengths that Tucson has, according to Hammond’s research, is its plethora of affordable housing.
Hammond, in coordination with his colleagues at ERBS, came up with a quantitative study on the average housing costs in cities throughout the western half of the country.
The results showed that 76.3 percent of homes sold in Tucson in 2015 were affordable to those earning the local median family income.
That number dwarfed the percentages in comparable cities, ahead of cities like Albuquerque (74.5 percent), Las Vegas (67.4 percent), Phoenix (66.9 percent) and Denver (54.8 percent).
Hammond said that the majority of Tucson’s job growth has come in fields such as healthcare, as well as construction.
Hammond said economic output in Southern Arizona stagnated between 2012 and 2014, because of the area’s reliance on federal jobs—which were hammered by the budget sequestration of 2013.
One of Hammond’s major concerns with the region is its lack of productivity, which is derived from educational attainment and other metrics.
Hammond says that Tucson’s production is about 13 percent below the national average, which should be a warning sign to local and statewide leaders.
“I think Arizona needs to pay a lot more attention to human capital development,” Hammond said. “Clearly, educational attainment in infrastructure matters as well. You know infrastructure is something that can—if you’re not careful—the lack of infrastructure can really choke off growth that would otherwise occur.”