TUCSON, Arizona (KOLD News 13) – While Tucson is recovering from the coronavirus pandemic, the recovery is only average, according to Dennis Hoffman, an economist with the WP Carey School of Business at Arizona State University in Tempe.
“I have no reason to believe that southern Arizona will lag behind the average growth of the rest of the nation,” Hoffman said. “Now it may not be that much above average anymore.”
There are a number of reasons why the economic recovery in Tucson may be a little slower than in Phoenix, for example, where the pandemic recovery is expected to be booming.
Tucson relies on tourism for its growth engine, and right now tourism is suffering because it was the first to close and the last to reopen.
Many of the 25,000 hotel workers have moved on and are unlikely to return to the low-wage jobs they left.
“People are fed up with working for low wages and now I think they have some influence,” he said. “And they’ll use that leverage to do a little bit better business for themselves.”
The higher labor costs likely mean higher industrial costs, costs that are likely to be passed on to the tourists.
“At the end of the day, it will likely cost more to travel and enjoy these eateries,” he said.
Another cost burden for the hospitality industry is the safety of travelers and their families.
“We want to be sure in the future that they are clean, that the air is circulating, fresh air, clean air and that will cost money,” he said. “Investments need to be made.”
Higher costs passed on to consumers are likely to slow the industry’s recovery, but Tucson and southern Arizona face another hurdle as they are heavily reliant on cross-border trade and tourism.
Due to the pandemic, only necessary journeys are currently allowed at the ports of entry.
“To the extent that you rely on the calm at the borders, it’s hard to have a lot of hope and transparency there,” Hoffman said.
While southern Arizona’s recovery is expected to be average, slower growth could have benefits.
“Maybe you will come back at a more methodical and sustainable pace,” he said. “And you’re going to do it with companies that people down there want to see.”
Slow and steady, not boom and bust.
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