COVID-19’s Impact on the Arizona Economy

The Greater Phoenix Economic Council (GPEC), City of Phoenix, and Greater Phoenix Chamber of Commerce have recently put out valuable information about how COVID-19 – and federal funds allocated to address the crisis – have impacted Arizona’s economy. Below are some key insights from their analysis to help you stay in the know.

Economic Impact

The economic downturn created by coronavirus has dealt a huge blow to Arizona, erasing all of the state’s job gains since the last recession, making 36 percent of Arizona jobs vulnerable over the next three months (amounting to 1.1 million jobs), and potentially causing 20-25 percent of Phoenix’s small businesses to close by the time the crisis is over. Additionally, Arizona went from 4 percent unemployment pre-COVID-19 to more than 15 percent unemployment, with 560,000 Arizonans now unemployed. This is worse than during the Great Recession when Arizona unemployment peaked at 10.9 percent. No sector has gone untouched by the crisis, but here is how some of the top industries have been affected:

  • Unable to sustain themselves solely on takeout orders, Arizona’s restaurant industry has seen 70-90 percent job losses and sales down roughly 80 percent.
  • Leisure and hospitality, which accounts for 7 percent of Arizona’s GDP, has seen hotel occupancy rates drop 70 percent compared to the same time last year, which has resulted in massive layoffs.
  • When looking at Greater Phoenix commercial real estate rent payments, in April 90 percent of industrial tenants paid rent, 80 percent paid rent in office, and 40 percent in retail. This suggests the industrial market will recover relatively quickly; office will lag behind by about a year with vacancy rates going up and rental rates coming down; and there will be a major shift in the number of retail, restaurants, and event venues and how they do business.
  • Manufacturing has only seen 7-9 percent job losses overall, with a large portion of Arizona manufacturing tied to defense spending and federal contracts.
  • Healthcare, which represents 14 percent of employment in Arizona, has seen some practices shuttering or reducing hours as non-emergency services and elective surgeries went down, but the industry should recover quickly.
  • Home prices in the Phoenix metro went up in March due to a drop in both supply and demand. Phoenix may see a slight dip to a median price of $300,000 in April due to more lower-priced homes (likely short-term rentals) being listed for sale.
  • Some of the state’s largest single employers, Arizona universities get a large portion of their tuition revenue from out-of-state and international students. The University of Arizona projects 80-100 percent of international first-year students will not come to campus due to inability to get visas from closed embassies, and 20 percent of out-of-state students will not return.

Looking toward the future, a modest recovery is expected to begin in 2021 and Arizona can stay competitive as a business destination by increasing testing to boost investor confidence and providing a strong local government response to the crisis.

CARES Act Funding

The U.S. Small Business Administration (SBA) is approving a second round of $310 billion in CARES Act Paycheck Protection Program (PPP) funding after running out of the first round of $349 billion in 13 days. Of Arizona’s 114,000 small businesses, 19,280 PPP loans totaling $4.8 billion were approved in round one (amounting to only 17 percent of small businesses), and, as of May 1, 43,915 round two Arizona loans have been approved for $3.7 billion. This puts Arizona in the top 10 states receiving PPP funding in round two, recovering from 45th in the first round, according to Kimber Lanning, Executive Director of Local First Arizona. Arizona improved its rank in the second round because an increased percentage of loans went through small lenders and community banks with smaller queues of applicants and a larger focus on smaller businesses. Arizona’s dedicated economic development community also valiantly increased efforts to educate Arizona businesses on how to get funding. The City of Phoenix expects two thirds of businesses with 30 employees or less won’t receive PPP or Economic Injury Disaster Loan funds provided under the CARES Act.

For more information on the aforementioned topics, check out the GPEC webinar, Greater Phoenix Chamber webinar, and City of Phoenix Policy Session.

Posted in Community News |

Asset Management Educational Workshop in Phoenix

AECOM invites managers, engineers, planners, financiers, and operators, to an educational workshop in late April focusing on industry-leading approaches to public infrastructure asset management and condition assessment. Public infrastructure — watermains, sewers lines, facilities, roads, and buildings — form the backbone of our cities and underpin the economic vitality and growth of our communities. AECOM is involved in projects locally, throughout North America, and around the world to maintain high levels of service, protect against the risk of failure, and to strategically implement infrastructure improvements while reducing life cycle cost. Workshop participants will engage in case studies and panel discussions and hear from leaders in the field on state-of-the-industry approaches and practical application. In addition, a local agencies panel will discuss developing strategies for dealing with aging infrastructure and the challenges of addressing infrastructure rehabilitation with limited funding. Click here to RSVP with an AECOM representative or to contact for more information.

Posted in Client News |

Molera Sits Down for Extended Interview with Fox 10

John Hook, host of Fox 10 Newsmaker Saturday, interviewed Jaime A. Molera for an extended discussion on national and state politics. Molera spoke about how national political trends could impact our state, and the significant problems surrounding the income tax increase initiative pushed by the Arizona Education Association. See the full interview here.

Posted in Community News, Molera Alvarez News |

Molera Alvarez Partner Moderates Panel of State University Presidents

Jaime A. Molera moderated a discussion of “Valley Voices” for the Greater Phoenix Chamber. Participants included the presidents of Arizona State University (Dr. Michael Crow), Northern Arizona University (Dr. Rita Cheng), and University of Arizona (Dr. Robert Robbins). Molera inquired about the effect our universities have on Arizona’s economic development and how they add to our business growth as a state.

Posted in Client News, Community News |

Chihuahua Business Delegation Explores Wichita

Molera Alvarez, along with Estrategia Global in Mexico City and Kansas Global Trade Services in Wichita, organized an investment mission for the City of Wichita, Kansas, February 18-20. A group of delegates from Chihuahua, Mexico, visited Wichita to explore investment opportunities. Overseen by the Greater Wichita Partnership, a local economic development organization, this mission brought four companies to learn about Wichita’s strong business and investment climate, educational resources, and the vitality of its international business community. Delegates had a packed agenda, which included: business-to-business meetings; a networking luncheon hosted by the Wichita Hispanic Chamber of Commerce, with Wichita Latino business owners as well as Wichita Mayor Dr. Brandon Whipple and Councilmember Brandon Johnson; a presentation of immigrant visa investment opportunities from the Kansas Regional Center/Kansas Department of Commerce; a tour of Wichita State University’s Innovation Campus and connections with local government and economic development officials, the Wichita Manufacturers Association, as well as tax and investment experts. Delegates learned about Wichita’s growing Latino community (Hispanic Wichitans make up 15.5 percent of the city’s population, which is 47,544 more people than in 1980), and immigrant-owned firms and foreign investors who have had outstanding successes in Wichita. Valuable connections were made on all sides and will enable growing Mexican businesses to bring jobs and capital to Wichita to make it a more globally integrated and diversified community that is better able to weather economic volatility and attract the best, most diverse, talent.

Posted in Client News, International News |

Inca Kola USA’s Salute to Hispanics in Sports and Entertainment

On January 28, 2020, Coca-Cola sponsored the Salute to Hispanics in Sports and Entertainment Reception, hosted by Inca Kola USA. The event took place in Miami during Super Bowl week and raised funds to support Inca Kola’s annual Humanitarian Aid mission to the Dominican Republic. A portion of the proceeds also went to the National Supermarket Association’s Scholarship Fund. At the reception, Peter Villegas, Coca-Cola’s Vice President of Latin Affairs, presented Emilio Estefan with the “Most Influential Hispanic of the Decade” award. Mr. Estefan is a Cuban-American musician and producer who has won 19 Grammy awards. Other individuals honored that evening were producer and author Nely Galan who received the Hispanic Leadership award, Florida businessman Gus Machado who received the Living Legend award, Major League baseball player Aroldis Chapman who received the Hispanic Athlete of the Year award, and former NFL Coach Tom Flores who received the Lifetime Achievement award. Pictured from left to right: Gus Machado, Gus Machado Ford; Nely Galan, Founder, Adelante Movement; Emilio Estefan, Estefan Enterprises; and Coach Tom Flores, Super Bowl-winning coach for the Oakland Raiders.

Posted in Client News, Uncategorized |

2021 State Budget Released

Governor Doug Ducey released his proposed fiscal year 2021 budget on January 17. In keeping with the governor’s “Arizona Way” theme, the budget includes investments in K-12 and higher education, child safety, public safety, infrastructure, and workforce development. Some of the budget highlights include $608 million in new K-12 investments ($175 million to complete the 20 by 2020 plan), $80 million for Arizona’s public universities ($35 million ongoing for the New Economy Initiative), $33 million to accommodate the closure of the Florence Prison, $1 million for rural tourism marketing, $45 million to fully exempt military pension pay from income tax, and $25 million in the rainy day fund. Further FY2021 budget related information can be found here, here, here and here.

Posted in Legislative News |

Latino Leaders Network Honors Mayors

This month, the Latino Leaders Network (LLN) hosted more than 350 elected officials, corporate and public leaders at the Mayflower Hotel in Washington, DC, for the 32nd annual Tribute to Mayors event. This included more than 70 mayors, in town for the winter meeting of the U.S. Conference of Mayors. The event began with remarks by Mayor Regina Romero, the first Latina Mayor of Tucson, and U.S. Conference of Mayors President Bryan Barnett. During the event, San Jose Mayor Sam Liccardo was honored with The Antonio Villaraigosa Leadership Award for the his commitment to uniting diverse communities. Congressman Tony Cardenas of California was presented with the Chairman’s Award for outstanding leadership in public service. MA Managing Partner Ruben Alvarez serves on the board of directors for LLN, which was founded in 2004 by Chair Mickey Ibarra and hosts six events each year, bringing together leaders from across the political spectrum to establish relationships, build unity, and share their stories of overcoming adversity to achieve success.

Posted in Community News, Molera Alvarez News |

FDI Mission to Montreal

Molera Alvarez organized a foreign direct investment attraction mission for the City of Wichita, Kansas, in Montreal, Canada, December 4-6, 2019. Wichita’s local economic development organization (EDO), the Greater Wichita Partnership, met with 13 Montreal companies, key business organizations, and government entities to promote Wichita as an investment location and to build Canadian business relationships. Molera Alvarez performed market research, recruited companies for matchmaking meetings, and facilitated Wichita’s participation in the SelectUSA Montreal Conference. Organized by the U.S. Embassy and the American Chamber of Commerce in Canada, the SelectUSA conference featured one-on-one matchmaking meetings between EDOs and vetted Canadian companies looking for investment opportunities in the U.S.

Posted in Client News, International News, Molera Alvarez News |

Governor Ducey Lays Out Priorities for 2020 in State of the State

January 13, 2020 marked the beginning of the 54th Legislature – Second Regular Session. To begin the legislative session, Governor Doug Ducey addressed the legislature and delivered the State of the State Address. In the governor’s address, he praised Arizona’s growth and strong economy, declining crime rates, rising school test scores, and strong trade partnerships for the passage of the USMCA. Governor Ducey emphasized the phrase that he has touted throughout his time as governor: “No new taxes!” Some of the governor’s priorities emphasized in the address include: increased access to mental health care, elimination of taxes on military pensions, investment in post-secondary educational programs, rural infrastructure needs, rural broadband grants in smart highway corridors, completion of compact negotiations, support of the state university system’s New Economy Initiative, investment in tourism, second chance programs for Arizona’s inmate population and raising correctional officer pay, closing of one of Arizona’s state prisons, and a workforce development partnership with Local First to bolster the economy for small businesses. For further detail on Governor Ducey’s State of the State Address, view the full speech here.

Posted in Community News, Legislative News |