Arizona hurt by stagnant, declining population

If Arizona has lost people in recent years, as some evidence indicates, Arizona could go four years - from 2009 through 2012 - with virtually no population increase, says University of Arizona economist Marshall Vest in his latest "Arizona's Economy" forecast.

And that's not good for the economy, especially the housing market.

Vest, who produces quarterly forecasts, revised his economic and population predictions "significantly downward" this quarter because of indications that the state's population may have fallen in recent years.


Vest cautioned that his new forecast is just a "preliminary, exploratory kind of look at what if the population actually declined."

Census numbers are in dispute. Even the Census Bureau said in February that Arizona's population, which the bureau estimates at almost 6.4 million, may have been undercounted by as much as 4 percent.

The tough job market and stricter immigration policies may have persuaded many Hispanics and others to leave in recent years. The Pew Hispanic Center has estimated the number of Hispanics in Arizona, Utah and Nevada fell by 160,000 from 2007 through 2010.

A declining population would help explain, Vest points out, why Arizona's job, retail-sales and housing numbers have had such a tough time recovering.

Arizona naturally gains about 45,000 to 50,000 residents a year because of births that exceed deaths. But new census estimates show that aside from those babies, the state's net population growth was negative in 2009 and 2010. Vest forecasts no net population change this year and a gain of about 36,000 net new residents, 0.5 percent, next year.

His new forecast calls for about 7.5 million Arizonans by 2020, a gain of 1.1 million during the current decade compared with the past decade. That's almost a million less than he predicted in his last forecast.

Based on a declining population, Vest revised several economic projections. Although he had predicted the job growth would be 3.3 percent next year, he now predicts it will be 1.3 percent. Personal income, previously expected to grow 5 percent in 2012, is now expected to rise 2.9 percent.

Instead of adding 228,400 jobs from this year through the end of 2013 as he previously predicted, he now forecasts only 91,000 new jobs.

Vest believes declining housing prices are preventing many homeowners elsewhere from selling their homes and moving to Arizona.

"This is the lowest mobility rate we have seen in this nation for six decades," Vest said.

He worries about a downward spiral. As foreclosures rise, housing prices fall. That, in turn, causes more foreclosures. And that, in turn, causes prices to fall more. He predicts, or hopes, that spiral will stop by 2015 and people once again will be on the move - to Arizona.

by Betty Beard The Arizona Republic Apr. 10, 2011 12:00 AM





Arizona hurt by stagnant, declining population