The Phoenix area has always been a major gateway to the southwest. Tourism is a major employment sector in the area, as is manufacturing. Phoenix has experienced a significant economic slump since the start of the recession and the unemployment rate has followed suit. Currently it sits at just over 9%, on par with the national average of 10.2%. The area has been affected by less tourist traffic and major demand cuts in the agriculture, electronics, and chemicals manufacturing industries. These sectors have also been hardest hit by job losses.
The entire desert southwest has suffered under the economic burden of the recession. Cities near Phoenix like Las Vegas and Albuquerque have seen major employment cutbacks. Las Vegas especially has suffered as one of the country’s worst recessions has turned its job market into one of the least fertile in the nation. The unemployment increase in this region is reflected in Phoenix’s numbers as well.
Construction, manufacturing, and leisure and hospitality services sectors have shouldered the majority of the weight of area job losses. Without any real recovery in the real estate market, construction and manufacturing appear doomed. And with fewer and fewer people willing to shell out the kind of cash they used to on vacations, even domestically, there is little hope for a swift recovery in the Phoenix area under the current circumstances.
Phoenix’s government employment sector, which traditionally employs around 60,000 people, has seen little action since the beginning of the recession. With a long, slow recovery likely, and with the Obama administration increasing government funding for many stimulus and recovery-related programs, this sector may be one of the only safe spots in the economy outside of the education sector, which has seen minimal job losses to date as well.
One bright spot for the Arizona capital is the fact that the city has r ecently been able to draw more and more businesses to headquarter there. The rise in the potential employment in markets like financial services and business and professional services has helped to mitigate losses in other areas. But the city’s clout as one of the most beautiful, and financially attractive southwest metropolitan areas has faded in light of the fact that its neighbors have received so much bad press. The lower tax rates and many business incentives give this city much potential. But Phoenix has shown little in the way of results, which up until the recession wasn’t such a big deal. Now that the recession is upon us, Phoenix’s inability to really diversify and restructure its economy and employment base is hurting its unemployment rate and chances that it will make a quick recovery from the economic storm that is being unleashed upon the entire globe.
The Phoenix area looks like a city that will recover economically at the same pace as the rest of the country. Other cities that have been more successful at drawing more high-tech and healthcare related companies to base their headquarters will likely be better suited to recover rather quickly one the recession disappears over the horizon. There are far better places to look for a job in nearly every industry, but you certainly can’t beat the weather in Phoenix 9 months out of the year!