Arizona’s economy lost steam last year, with very slow job gains. That weakness has continued into 2025, according to the preliminary data . This has been matched by modestly rising unemployment and rapidly falling hire rates. Overall, the labor market appears to be on a knife-edge, if the preliminary data are correct. Income growth was also slow to start the year, but taxable retail sales growth has firmed through June. Housing cost burdens remain very high, with housing permit activity down so far this year, compared to the same period last year. That said, as the s Arizona economy loses steam, here’s what the data paints as the forecast for 2026.

If the U.S. economy avoids recession in the near term, as assumed in the baseline forecast, the outlook calls for Arizona to post another y

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