Panel: employment momentum remains but hiring slowdown and housing costs cloud outlook

Panelists at the Finance Advisory Committee meeting described a mixed employment picture for Arizona: measured job growth and a rising labor force alongside a slowdown in hiring that may weigh on future gains.

Doug Walz, Labor Market Information Director at the Office of Economic Opportunity, said Bureau of Labor Statistics preliminary benchmarking indicates Arizona’s employment was likely underestimated by nearly 35,000 jobs for March 2025; most other states saw downward revisions. "Arizona bucked that trend, and they found that Arizona's employment had been underestimated by nearly 35,000 jobs for March 2025," he said, and JLBC expects those upward revisions to be realized in the January 2026 data release.

At the same time, university and private panelists emphasized a decline in the hires rate and in month‑to‑month job growth relative to the immediate post‑pandemic period. George Hammond (University of Arizona) said slower job growth this year reflects a sharp drop in the rate at which firms are hiring, not necessarily a spike in layoffs.

Housing and affordability: Panelists flagged housing costs as a key constraint on household budgets and migration dynamics. Using national median comparisons, panelists noted that housing cost burdens (ratio of mortgage to median income) place Phoenix and Tucson near national stress thresholds (mid‑40s percent of median income). High home prices and construction input costs will limit housing supply and keep affordability pressures elevated unless construction costs fall or targeted policy interventions occur.

Other indicators: Panelists reported continued labor force growth (Doug cited roughly 50,000 additions over the previous year) and low unemployment rates relative to the nation, while initial unemployment claims remained down about 15% year‑over‑year. However, Ben (remote panelist) and others cautioned that consumer spending strength appears concentrated among higher‑income households, which could leave aggregate demand vulnerable if that group retrenches.

Takeaway: The panel’s consensus was for modest growth but increased downside risk. Revisions to BLS benchmarks should improve historical employment totals for Arizona, but weak hiring rates, high housing costs and the possibility of slowing consumer spending outside the top income brackets argue for conservative forecast assumptions in the near term.

Sources: Oral remarks from Doug Walz (Office of Economic Opportunity), Ben (remote agency representative), George Hammond (University of Arizona) and other panelists at the JLBC Finance Advisory Committee meeting.