Economists predict Arizona will see recovery by early 2021

Arizona State University economists say the state’s economic slide due to the coronavirus pandemic will last for months but be followed by a rebound that results in a recovery by early 2021.

Economics professors predicted a recession of three to nine months as they spoke Tuesday during an annual forecasting webinar hosted by the W.P. Carey School of Business and the Economic Club of Phoenix.

They said they expect the trough to be followed by a swift recovery if consumer spending kicks in with an assist by heavy federal spending.

Professor Dennis Hoffman said there’ll be “some startling numbers” in the meantime, including state unemployment rates above 15%.

But Hoffman and fellow economics professor Lee McPheters said the recovery will be V-shaped as consumer spending and service industries rebound.

That’d put the state in a position to return to normal by early 2021, they said.

Following a dismal stretch from April to June, the second half of 2020 “could be stronger than many people expect,” McPheters said.

Federal aid, a lot of which has yet to kick in, will be a big help to the economies of both Arizona and the nation as a whole, McPheters said.

“By 2021, we’re expecting the economy to come back,” he said.

Wild cards include real estate and travel.

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National surveys have shown a decline in buyer interest on single-family homes, but sellers haven’t lowered asking prices much, said Mark Stapp, an ASU real estate professor.

There hasn’t been much impact in Arizona so far but measures such as requests for mortgage forbearance indicate there is stress on homeowners, Stapp said.

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