Let’s Get Local

06/14/23

By Brian Ruisinger, President and CEO

We see national headlines of mass layoffs in the tech and residential mortgage industries, calls to come back in the office by major corporations and a slowing housing market. But what about Phoenix metro? Let’s take a look.

The Phoenix economy is booming in 2023, with strong job growth, low unemployment, and rising wages. The city’s unemployment rate is currently 2.9%, which is well below the national average of 3.6%. Wages are also rising in Phoenix, with average hourly earnings up 5.6% year-over-year in March 2023, which is higher than the national average of 5.3%.

The city added over 50,000 jobs in 2022, and job growth is expected to continue in 2023. The tech industry is a major driver of job growth in Phoenix, with companies like Intel, Amazon, and Google all expanding operations in the city. The healthcare industry is also growing rapidly in Phoenix, which is home to several major hospitals and medical centers.

While rising wages help to improve the quality of life for Phoenix residents and attract new businesses, they also contribute significantly to inflation.

Inflation in Phoenix has been running significantly higher than the national average in 2023 with the highest inflation rate among major U.S. cities for three consecutive months. The Consumer Price Index (CPI) for the Phoenix area rose 7.4% in April 2023, compared to a national increase of 4.9%.

There are several factors contributing to Phoenix’s higher inflation rate:

1) The rapid growth of the housing market where the median home price has increased by more than 20% in the past year. This has put upward pressure on rents and led to a housing shortage and increased housing prices.

2) The rising cost of food, which has increased by 6.8% in Phoenix over the past year, compared to the national increase of 5.3%.

3) Higher gas prices. As of May 19, 2023, the average price of a gallon of regular unleaded gasoline was $3.53, higher than the national average of $3.40. This can be attributed to the Southwest’s higher cost of living, the high demand for gasoline as a major transportation hub, and the state’s relatively high gas tax due to its reliance on imported oil.

While the Federal Reserve continues to raise interest rates to combat inflation, it’s unclear how effective these measures will be in slowing the pace of price increases. In the meantime, consumers in the Phoenix area continue to feel the pinch of higher prices.

The Phoenix economy is expected to continue to grow in 2023 with a strong job market, low unemployment, and rising wages. These factors are making Phoenix an attractive place to live, work, and do business. While frustrating for those who have been here a long time and feel encroached upon, let’s be thankful we are in a much more favorable position than many northern states that are losing population at a rapid rate where remaining residents are left to fund the state with fewer people.