Tucson’s pandemic recovery is ‘average’
TUCSON, Ariz. (KOLD News 13) - While Tucson is recovering following the coronavirus pandemic, it’s recovery is just about average according to Dennis Hoffman, an economist from the W.P Carey School of Business at Arizona State University in Tempe.
“Seems no reason for me to believe that Southern Arizona will lag the average growth of the rest of the nation,” Hoffman said. “Now it may not be that much above average.”
There are a couple of reasons why the economic recovery may be a bit slower in Tucson than Phoenix, where the pandemic recovery is expected to boom.
Tucson relies on tourism as its growth engine and right now tourism is hurting because it was the first to shut down and will be the last to reopen.
Many of the 25,000 hospitality workers have moved on and likely won’t return to the low wage jobs they left.
“Folks got pretty sick and tired of working for low wages and now I think they have some leverage,” he said. “And they’ll use that leverage to recontract a little bit better deal for themselves.”
The higher cost of labor likely means higher costs for the industry, costs that will likely be passed on to the tourists.
“At the end of the day, it’s probably going to cost more to travel and enjoy those hospitality venues,” he said.
Another cost burden for the hospitality industry is for the safety of the travelers and their families.
“Going forward, we want to be insured that they’re clean, the air is circulating, fresh air, clean air and that’s going to cost money,” he said. “There going to have to be capital investments.”
Higher costs passed on to the consumer will likely slow the recovery in the industry, but Tucson and Southern Arizona face another roadblock because it relies heavily on cross border trade and tourism.
Right now, because of the pandemic, only essential travel is allowed at the ports of entry.
“To the extent you’re relying on border tranquility, it’s hard to have much hope and transparency there,” Hoffman said.
Still, even though the recovery in Southern Arizona is expected to be average, slower growth may have an upside.
“Maybe what you’ll do is you’ll come back in a more methodical, sustainable pace,” he said. “And you’ll do it with businesses that folks want to see down there.”
Slow and steady, not boom and bust.
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