Should Arizona be worried about slowdown in job creation?

PHOENIX – Job creation has slowed down in Arizona this year, but an expert on the state’s economy says it’s not time to panic.

Through May, Arizona ranked 47th in the nation for 2025 job creation growth, according to U.S. Bureau of Labor Statistics data. It’s a big fall from the first five months of 2024, when Arizona ranked second in the U.S.

In fact, Arizona is one of just four states — along with Massachusetts, Iowa and West Virginia – with negative job growth so far this year.

“I don’t think there’s a reason to panic, but things have slowed down pretty significantly,” George Hammond, director of the University of Arizona’s Economic and Business Research Center, told KTAR News 92.3 FM’s Arizona’s Morning News on Tuesday.

Why is Arizona job creation slowing?

Hammond said the Grand Canyon State’s falloff is due to a variety of factors.

“It’s a reflection of slowing growth nationally,” he said. “In part, it reflects the fact that we were growing fairly rapidly still in 2023 and early 2024.”

Hammond also said high interest rates and the phasing out of pandemic stimulus funds have impacted Arizona’s job creation.

In addition, artificial intelligence is starting to replace humans in some fields.

“I think it will have an impact and we’re seeing the beginning of that impact on sectors like call centers, where AI really can take over from humans (for) kind of the easy parts of a call center job,” Hammond said. “And I think that will expand going forward.”

However, the UofA professor said that in the long run, AI “will be good for overall economic growth” in Arizona as residents age out of the labor force.

“This growth in the use of AI is something that we need in order to see our standard of living continue to rise,” he said.

What does the future of Arizona job creation look like?

Arizona finished 16th nationally in job creation in 2024, with 1.27% growth. Hammond expects the state to fall short of that mark this year.

“I think we’re going to see job growth this year of about 1%,” he said. “But we are experiencing significantly slower growth than we did initially coming out of the pandemic.”

However, Hammond said he has reason to be optimistic about the state’s future job creation prospects.

“We are experiencing slow growth now, but things are going to pick up, I think, as we look forward over the next couple of years,” he said.

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