The Arizona economy continues to grind along at a slower-than-usual pace. Jobs are rising slowly, with reduced hiring and modestly elevated layoffs weighing on growth. Income is also slowly rising, reflecting the post-pandemic deceleration in employment costs, although taxable sales growth has rebounded. House price increases have slowed, but housing cost burdens remain elevated and housing permit activity is down so far this year. Stabilizing house prices have contributed significantly to reduced consumer price inflation in the Phoenix MSA, which is running well below the U.S.

The baseline forecast calls for Arizona’s economic growth to accelerate next year, reflecting an uptick in U.S. economic activity. Even so, state gains are expected to be modest by historical standards. That reflec

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