Arizona Blue Chip forecasters remain pessimistic about the state’s economy this year and next despite some encouraging news.
“Although there are scattered signs that the economy may be close to bottoming out, there is little optimism about an actual upturn in key Arizona indicators during the second half of this year,” said the monthly Arizona Blue Chip Economic Forecast produced by the W.P. Carey School of Business at Arizona State University.
The few “skimpy morsels” of good news include lower fuel prices, an increase in consumer confidence and a 3.3 percent increase in the national gross domestic product in the last quarter.
But the biggest problem is the weak housing market and downward pressure on home prices. The Case-Schiller Index suggests prices have been falling about 2.5 percent a month and are just 14 percent higher than in 2004, Blue Chip said.
Blue Chip panelists also said the Federal Reserve should be more concerned about recession than inflation in the next 12 months. And 88 percent predict the Fed will try to raise short-term interest rates in the next year.