Tucson MSA Third Quarter 2022 Forecast Flash
Tucson’s recovery continues in 2022 but slows in 2023
This post briefly describes the Tucson MSA third quarter 2022 forecast update, completed in August 2022.
The detailed 30-year forecast data are available in Eviews and Excel files on the Forecast Databases page.
This forecast incorporates updated national short-run forecasts from IHS Markit released in July 2022 and long-run projections released in March 2022.
For the U.S. and Arizona forecasts, the baseline projections are assigned a 50% probability. The pessimistic scenario has a 45% probability and the optimistic scenario has a 5% probability.
Tucson MSA job gains accelerate in 2022, as the recovery continues, but then decelerate in 2023 as the economy adjusts to higher interest rates and the end of federal pandemic income support.
After adding 5,700 jobs in 2021 (1.5% growth), the forecast calls for the Tucson MSA to add 11,500 jobs in 2022 (3.0%) and 8,500 in 2023 (2.2%). Growth decelerates to 1.5% in 2024.
Driven by net migration, population increases by 13,000 in 2022. That translates into 1.2% growth. Population growth then decelerates to 1.0% in 2023 and 0.9% in 2024.
Tucson housing permits surge to 6,400 in 2022, driven by a large increase in multi-family permits. Permits drop in 2023 in response to slower population gains and higher interest rates.
Income gains decelerate in 2022 with the end of pandemic-related federal income support programs. Nominal income growth is forecast to be slightly positive this year (up 0.8%) which means that real income growth is negative.
Real taxable sales (broadly defined to include retail, food, restaurants and bars, and gas) decelerate this year and next. Real sales slow this year and are essentially steady in 2023.
The pessimistic scenario calls for a slower recovery in the near term, driven by the shock to commodities prices created by the Russian invasion of Ukraine and a slower recovery from supply-chain issues. The optimistic scenario calls for stronger gains.
Exhibit 1 presents a summary of the current annual projections. Exhibit 2 provides a comparison to the prior forecast. Exhibit 3 provides a comparison of the baseline and alternative scenarios for the current forecast.
Exhibit 1: Summary of the Third Quarter 2022 Tucson MSA Forecast, Completed August 2022
Exhibit 2: Comparison of the Third Quarter 2022 (Current) and Second Quarter 2022 (Prior) Forecasts for Tucson MSA, Percent Change
Exhibit 3: Summary of the Third Quarter 2022 Tucson MSA Forecast, Baseline and Alternative Scenarios, Percent Change
