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Provided the national economy keeps growing, ÃÛèÖÖ±²¥ job growth will decelerate in 2022 and 2023 before modestly accelerating in 2024, according to the baseline scenario in an outlook issued Wednesday by the .

“While the baseline forecast calls for continued state and national growth in the near term, the pessimistic scenario, which includes a national recession, is almost as likely,� wrote UA Economist George Hammond, director of the UA research center and the forecast’s author.

Under that bleaker scenario, he said, ÃÛèÖÖ±²¥ could see a significant slowdown in growth, with modest job losses in early 2023.

The direction of ÃÛèÖÖ±²¥â€™s economy depends on national and global economic conditions, Hammond said.

Under a pessimistic scenario, the Russia-Ukraine war pushes energy prices higher, and supply-chain issues linger, he said, resulting in a recession with six consecutive quarters of negative real growth in gross domestic product.

The UA forecast is based on projections for the U.S. economy released in July by , a major market and economic research firm.

Hammond says there’s a 50% probability that its baseline forecast will come true — and a 45% probability that the pessimistic scenario will play out, with just a 5% chance of a more optimistic outcome.

Under the baseline forecast for ÃÛèÖÖ±²¥:

The state’s annual non-farm job growth rate will slow to 3.3% this year from 3.7% in 2021, then fall to 1.9% in 2023 before nudging up to 2.2% in 2024.

Personal income, which jumped 7.5% in 2021 as employers struggled to attract workers, is expected to grow just 2.7% this year before rebounding to grow 5.7% in 2023 and 6.4% in 2024.

Retail and remote sales, up 19.9% in 2021, are expected to grow 6.9% this year before growth slows to 2.1% in 2023, and 4.4% in 2024.

Population growth is expected to stay flat at 1.5% annually through 2023, before slipping to 1.4% in 2024.

The statewide unemployment rate, 4.9% in 2021, is projected at 3.4% for this year, rising to 4.4% in 2023 and 4.9% in 2024.

Permits for new single-family homes are expected to drop slightly this year to 65,291 from 65,334, and fall to about 48,000 by 2024.

‘Cross currents’

Hammond said that perceptions of the current economy depend on your point of view.

The labor market remains very tight, generating strong job gains, low unemployment rates, rapid wage increases and “a mountain of open jobs,� he said.

Hammond noted that ÃÛèÖÖ±²¥ added 22,900 jobs in July, nearly quadruple the average monthly job gain during the five years before the pandemic began.

ÃÛèÖÖ±²¥ has 87,000 more jobs than before the pandemic, driven by growth in trade, transportation and utilities, financial activities, manufacturing, education and health services, construction, professional and business services, and information.

But at the same time, retail sales have begun to slow, inflation far exceeds income growth, housing affordability has plunged, and interest rates are rising, Hammond wrote.

Driven by a surge in housing costs, Phoenix prices are now rising at a much faster pace than nationally, with a price index for all items up 12.3% in June compared to a year earlier, while prices rose 9.1% nationwide.

ÃÛèÖÖ±²¥ home price increases began to soften in June with the median price in Phoenix dropping by 2.0% over the month to $500,000 and then again in July to $485,000. The median home price in ÃÛèÖÖ±²¥ was flat in July at $370,000.

But over the year, median home prices in July were still up 12.8% in Phoenix and 17.5% in ÃÛèÖÖ±²¥.

High inflation has eaten into the purchasing power of personal income, Hammond said.

After adjustment for inflation, ÃÛèÖÖ±²¥â€™s personal income has been drifting down recently, he said, though he noted that income in the first quarter of 2022 was still above its pre-pandemic level by 2.8%.

Longer look

Over the longer term, ÃÛèÖÖ±²¥ is projected to far outpace national growth, with the Phoenix metro area leading the way, and ÃÛèÖÖ±²¥ growing at a slower pace.

“Downside risks appear elevated in the long run as well, particularly as drought raises concerns about the long-term availability and cost of water,� Hammond said.

ÃÛèÖÖ±²¥ faces challenges in maintaining population growth through in-migration as birth rates fall, and in increasing productivity as the college-level education of the state’s working-age population lags the nation, he said.

And the state will need continued investment in commercial and industrial facilities, as well as in critical infrastructure including highways, roads, utilities, air transportation infrastructure, border ports and telecommunications.

Check out the UA forecast online at .