Arizona sees slower population growth amid rising housing costs and economic uncertainty

Arizona's population growth is slowing, but it remains a key driver of economic activity, according to the latest insights from the Finance Advisory Committee meeting held on April 17, 2025. The state's population continues to expand, outpacing national averages, but the pace is significantly slower than in previous decades.

The Arizona Office of Economic Opportunity reported that discrepancies between its population estimates and those from the Census Bureau have narrowed, thanks to improved methodologies for tracking international migration. This adjustment has led to a more accurate reflection of Arizona's demographic trends, which are increasingly influenced by net migration rather than natural population increase.

While the state experienced a spike in population during the pandemic, recent data indicates a decline in net migration, with natural increase—defined as the difference between births and deaths—also on the decline. The committee highlighted that Arizona's job growth has decelerated, with Tucson experiencing outright job losses, contrasting sharply with earlier projections for 2024.

Despite these challenges, Phoenix's inflation rates remain lower than the national average, although rising costs in consumer goods like food and gasoline are beginning to emerge. Housing prices continue to climb, contributing to high housing cost burdens for residents. The committee noted that while overall housing permits remained stable, there was a significant drop in multi-family housing activity, indicating a shift in the housing market.

Looking ahead, the committee warned of elevated risks to economic growth stemming from macroeconomic uncertainties, including potential tariffs and federal spending cuts. As Arizona's population growth continues to slow, the reliance on net migration as the primary source of population increase will become more pronounced, raising questions about future economic sustainability and tax revenue generation.

The discussions underscored the importance of monitoring these demographic shifts, as they will have lasting implications for Arizona's economy and public policy in the years to come.