Tucson MSA Fourth Quarter 2024 Forecast Flash

Nov. 12, 2024

By George W. Hammond, EBRC director and Eller research professor

Job growth slows this year in Tucson Image:

This post briefly describes the Tucson MSA Fourth Quarter 2024 forecast update, completed in November 2024. These forecasts do not include impacts of the recent elections.

The detailed 10-year forecast data are available in Eviews and Excel files on the Forecast Databases page.

This forecast incorporates updated national projections from S&P Global released in October 2024.

The U.S. baseline forecast assumes a soft landing for the U.S. economy. On a quarterly basis, the forecast calls for real GDP to increase through 2034 (no recession).

For the current U.S. and Tucson forecasts, the baseline projections are assigned a 55% probability. The pessimistic scenario has a 25% probability, and the optimistic scenario has a 20% probability.

Tucson MSA growth is projected to decelerate modestly as the economy adjusts to slowing national growth.

Tucson job growth is forecast to decelerate from 1.6% in 2023 to 1.0% in 2024 and 1.1% in 2025, reflecting slowing national gains.

Net migration drove Tucson population gains last year, translating into 0.7% growth. Population growth is forecast to accelerate modestly to 0.9% per year in 2024 and 0.8% in 2025.

Housing permits are forecast to rise from 5,255 (revised actual) in 2023 to 5,858 in 2024, then drop to 5,380 in 2025 due to slow population growth and reduced affordability.

Tucson personal income growth is forecast to accelerate to 5.3% in 2023 (historical data ends in 2022 for counties and metropolitan areas), stay steady at 5.3% in 2024, then accelerate to 5.7% in 2025.

Real retail sales (broadly defined to include retail, food, restaurants and bars, and gas) are forecast to decline in 2024 (down 2.7%) and then gradually pick up steam through 2027.

The pessimistic scenario assumes a modest national downturn during the first three quarters of 2025, driven by problems arising from escalations of conflicts in the Ukraine and the Middle East. This generates slower growth in Arizona as well. The optimistic scenario assumes gains faster than expected under the baseline.

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.