TUCSON, ARIZONA (June 5, 2025) – With job losses, rising housing costs, and growing national uncertainty, Tucson’s economy has hit turbulent waters—yet economists at this year’s Breakfast with the Economists, held Tuesday June 3, and hosted by the University of Arizona’s Eller College of Management, say a recovery is possible if macroeconomic stability returns. Presented by J.P. Morgan Chase, the annual event featured expert analysis from George W. Hammond, PhD, director of the Eller Economic and Business Research Center, and Anthony Chan, former chief economist at J.P. Morgan Chase.
The economists painted a mixed picture of Arizona’s economic health. Statewide, job growth slowed from 2.8% in 2023 to just 1.3% in 2024, mirroring the national average. Growth in the Phoenix MSA edged slightly higher at 1.6%, but newly revised data revealed that Tucson’s job market contracted in 2024, with a net decline of 0.5%.
As highlighted in George Hammond’s column, “Tucson’s Economy Hits Turbulent Waters,” published in the June 2025 Economic Development issue of Trend Report and shared by the Pima County Economic Development Department, the composition of job changes across the state was uneven. Sectors such as private education and health services, construction, government, and leisure and hospitality posted gains, while professional and business services, financial activities, trade, and information industries declined. In Tucson, even as the MSA added 1,700 jobs in private education and health services and made modest gains in construction, manufacturing, and mining, those advances were more than offset by declines in higher-wage sectors, including professional services and finance, as well as losses in trade, transportation, and utilities.
Despite the job losses, economists at the event noted that month-over-month job growth in early 2025 has been solid, suggesting potential stabilization ahead. Tucson’s labor market also remained tight in 2024, with the unemployment rate holding steady at 3.6%, unchanged from the previous year and equal to the state average, both of which are below the national rate of 4.0%. The data suggests that many who lost jobs either exited the labor force or left the region, a dynamic highlighted by Hammond during the forecast presentation.
Housing affordability remains a significant pressure point. According to the Federal Reserve Bank of Atlanta’s index cited in Trend Report, a mortgage on a median-priced home in Tucson consumed 45.3% of median household income in 2024—just above the national average of 45.2% and well above the 30% threshold signaling a cost burden. Still, prices continued to rise. Tucson’s median home price climbed to $367,000 in March 2025, up 0.9% year-over-year, while Phoenix saw a 2.2% increase to $455,000. Meanwhile, permitting data for Tucson showed strong growth in single-family development even as multifamily permitting declined, indicating ongoing demand and constrained affordability for rental housing.
Tucson’s population increased by 6,300 residents in 2024, a 0.6% gain driven entirely by net migration. The city recorded more deaths than births last year—a rare occurrence of a negative natural increase. While Tucson’s population growth trails the national average of 1.0%, economists at the event emphasized that in-migration remains a key economic strength for the region.
During the forecast breakfast, Anthony Chan highlighted rising inflationary pressures, noting that although Phoenix MSA inflation had remained below the national average since late 2023, prices for key consumer goods—including vehicles, groceries, and fuel—have begun rising again. The latest wave of federal tariffs is expected to drive up those costs higher, creating additional stress for households.
Both Chan and Hammond expressed concern about the growing volatility in federal policy. They cited tariffs, mass deportation initiatives, and deep federal spending cuts as contributing to a climate of uncertainty, with Hammond stating plainly during the event: “The risk of an economic downturn is elevated.”
That said, if the U.S. economy avoids recession this year, the Tucson forecast becomes more optimistic. Economists at the Breakfast with the Economists event projected that the region’s employment could stabilize in 2025 and regain momentum by 2026, driven by growth in the healthcare, education, and manufacturing sectors. Modest gains are also expected in personal income, taxable sales, and population. These indicators, although subdued, suggest a recovery if macroeconomic conditions remain stable.
“While the near term looks turbulent,” Hammond writes in Trend Report, “the Arizona, Phoenix, and Tucson economies are forecast to outpace the nation in the long run.”
This year’s Breakfast with the Economists served as both a reality check and a call for perspective. For Tucson, the message was clear: the local economy weathered setbacks in 2024, but its core fundamentals—tight labor markets, in-migration, and sectoral diversity- remain intact. If national policy uncertainty is alleviated, Southern Arizona may be well-positioned to regain its economic footing and move toward a more stable future.
Reference: This article draws from the June 2025 Economic Development issue of Trend Report and the June 3, 2025, Breakfast with the Economists event presented by the Eller College of Management and J.P. Morgan Chase.