Expert says Arizona economy is poised to soar as inflation slows, businesses hire

PHOENIX – With inflation slowing and new businesses ready to hire, the Arizona economy is poised to soar in 2025 and beyond, according to a Valley economist.

“I think we’re going to be the state to be in for those that want to have businesses that are just going to be rocketing out of the downturn,” Jim Rounds, president of Tempe’s Rounds Consulting Group, told KTAR News 92.3 FM on Wednesday.

Rounds spoke after the Bureau of Labor Statistics released its August inflation report.

The data showed annual inflation for metro Phoenix at 2.3%, the area’s second smallest year-over-year consumer price increase since February 2021. In fact, the Valley saw negative inflation over the last two months, with prices falling by 0.3% from June to August.

Nationally, annual inflation was down to 2.5% in August, the smallest year-over-year change since February 2021. As a result, the Federal Reserve is expected to start cutting interest rates soon.

“It’s right about where it should be,” Rounds said. “That means that we’re almost certainly going to see a quarter-percent cut in the key rate, and there’s probably even some pressure to do a little bit more than that.”

The inflation news was released a day after the Census Bureau reported that household income adjusted for inflation has returned to pre-COVID levels.

Why is Arizona economy strong?

Rounds said policymakers learned their lessons during the Great Recession and retooled the Arizona economy. They did so by focusing on economic development and tax policy.

“Arizona did more in those areas than any other state in the country since the great Great Recession,” he said.

The bottom line, Rounds said, is that the Arizona economy is primed for a surge in high-paying jobs.

“We heard the stories about them [businesses] coming to Arizona, and now we’re going to start to see the number of jobs increase because the businesses that landed here have built their facilities and they’re starting to hire,” he said.

That will lead to higher wages across the board, Rounds explained.

“It’s going to lead us into great things for the rest of the decade,” he said.

KTAR News 92.3 FM’s Jim Cross contributed to this report.

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