Left behind. While statistics show a more severe collapse for metro Phoenix than for the much smaller Tucson area, the economic setbacks suffered by both Arizona cities were severe. If Tucson’s collapse was somewhat shallower, its recovery is proceeding more slowly. Tucson lacks Phoenix’s broader economic connections, with California’s ports and with a large and diverse high-tech industry sector, for example, as well a broad economic base with numerous major corporate tenants. According to data provided by the U.S. Bureau of Labor Statistics (BLS), non-farm employment in the Tucson Metropolitan Statistical Area (MSA) as of August was up just 1,100 jobs (0.3%) from 12 months prior, a rate of growth a mere fraction of the 2.8% same-span increase recorded for the Phoenix area. Moreover, while growth has slowed in Tucson over the past year, as it has in much of the nation, job creation in metro Phoenix has accelerated. In July, Brookings Institute ranked Tucson 83rd among 100 U.S. economies surveyed in economic strength, Inside Tucson Business reported at the time.
“There is little demand for additional housing, offices, retail space–therefore construction, and industries related to growth operate at a reduced level,” stated a top executive at University of Arizona’s Economic and Business Research Center as cited by Inside Tucson Business in late September. While BLS data indicate small year-over-year job growth in Construction, employment in that sector per the latest August remained down 44.3% from August 2006. Minimal recent gains are indicated as well for the Professional and Business Services sector; August 2012 employment therein remained down 12.1% from pre-recession August 2007. At a slow trickle, losses persist in Manufacturing. “There is very low employment growth. Employers are cautious,” stated a spokesperson for the Tucson Regional Economic Opportunities (TREO) economic development agency. While “traditional elements” of the local economy are beginning to recover, it is critical that the region “not revert to reliance on population growth to drive our economy again.”
Among those “traditional” strengths is a high-tech sector that includes both Raytheon as well as a substantial optics sector. At the end of September, TREO reported that high-tech manufacturer; Integrated Technologies Group (a.k.a. CMI Integrated Technologies, according to Inside Tucson Business) has announced “that it is opening a new manufacturing operation in the Tucson region.” The Tucson plant will be served by 200 employees within five years. The firm, according to its top executive, “chose the Tucson region for several reasons, including its strategic location between Los Angeles and our Nogales [Mexico] plant; optics and engineering strength at the University of Arizona; the availability of a skilled workforce; and its pro-business climate.”
“Compared to other metro areas, Tucson’s greatest strength was in housing prices, which despite a 1.3% decline in the first quarter of 2012—after a 3.3% increase in the last quarter of 2011—performed better than all but 27 other metro areas,” reported Inside Tucson Business in July. According to National Association of Realtors, the $147,800 second quarter median single-family home price for the Tucson MSA was up 8.3% year-over-year and was up 7.4% for the quarter alone.