Despite some recent notable layoffs, Arizona seems set for another year of strong job growth. However, some economists warn that potential policies like tariffs and mass deportations under a new presidential administration could negatively impact job prospects.

Arizona continues to be a leader in employment with an unemployment rate of just 3.6% as of October, yet it has encountered some setbacks. A notable event is the announcement from Nikola Corp., a company specializing in battery-electric and hydrogen-fueled heavy trucks, which recently laid off staff, following previous cuts last year.

While Nikola did not specify how many jobs were lost, they stated in an email to The Arizona Republic that they need to “adjust and rescale our staff needs.”

A trucking industry website, FreightWaves, reported in October that about 135 positions were cut. Nikola had approximately 870 employees at its Phoenix headquarters and manufacturing facility in Coolidge by the end of 2023, down from around 1,500 at the end of 2022.

What Other Layoffs Have Occurred Recently?

Absolutely. A significant layoff was announced by Intel Corp. in October when it stated it would cut around 385 jobs at its Chandler facility, part of a larger reduction of approximately 15,000 jobs nationwide.

Additionally, Steward Health Care announced job cuts affecting more than 250 employees in the Phoenix area, primarily at a downtown hospital, while Boeing in Mesa reported over 180 layoffs in November.

In early December, Steve Sanghi, the interim CEO of Microchip Technology, indicated that the company would close its factory in Tempe, potentially impacting around 500 employees as part of cost-cutting efforts. He noted that only about 15% of those affected might find other positions within the company, which currently employs around 2,300 in Arizona and numerous others elsewhere.

Do These Layoffs Indicate a Decline in Job Opportunities?

Not necessarily. Since mid-2024, approximately 20 companies have signaled their intent to conduct layoffs, affecting over 2,400 employees through WARN (Worker Adjustment and Retraining Notification) notices.

In comparison, comparable notices during the latter half of 2023 impacted nearly 4,000 jobs in Arizona.

When looking at the impending layoffs, they represent less than 0.1% of Arizona’s workforce of approximately 3.75 million.

It’s essential to note that layoffs often stem from company-specific challenges rather than broad economic issues.

For instance, Nikola has faced ongoing difficulties in successfully marketing its trucks profitably. While recent reports show a nearly threefold increase in truck deliveries during the first nine months of 2024 and a rise in revenues, the company still suffered losses exceeding $481 million from January to September, leading to the layoffs.

Are Economists Concerned About Arizona Due to Recent Layoffs?

Overall, no. A larger recession still seems distant.

“Despite challenges such as decreasing housing affordability, high-interest rates, and tight labor markets, Arizona continues to experience robust economic growth,” noted George Hammond, an economist from the University of Arizona, in correspondence with The Republic.

Hammond pointed out positive trends like job gains outpacing the national average and a relatively quick rise in personal income, although salaries in Arizona still lag behind the national figures.

Dennis Hoffman, an economist from Arizona State University, forecasted ongoing job growth, a low unemployment rate, stabilizing inflation, increasing wages, and lower interest rates that could enhance the housing market.

“Arizona, especially metro Phoenix, is experiencing strong momentum due to an expanding workforce and quality business relocations,” Hoffman stated in an email.

What challenges could Arizona’s economy face next year?

Several factors could impact the economy, with both Hammond and Hoffman highlighting President-elect Trump’s commitments to tariffs and mass deportations as potentially harmful to the state’s economy.

Hammond, who leads the Economic and Business Research Center at the University of Arizona, predicted that proposed significant tariff increases on imports from Canada and, particularly, Mexico could drive up local prices and disrupt supply chains.

He noted that approximately 33% of Arizona’s imports come from Mexico, totaling $11.8 billion in 2023. Additionally, Arizona exports nearly 28%, worth $8 billion, to Mexico.

Mass deportations could further affect Arizona’s workforce in sectors such as construction and agriculture, leading to higher costs, he added. “The election’s outcome creates significant uncertainty,” Hammond remarked.

Hoffman, who heads ASU’s Center for Competitiveness and Prosperity Research, mostly concurred.

“A stringent policy aimed at removing undocumented workers would disrupt many areas, both socially and economically,” he stated. “Additionally, a trade conflict with Mexico could have several detrimental effects on the state’s economy.”

It may take several months, if not more, to understand the implications of these proposals. “We will need to see what turns into action and what remains mere rhetoric,” Hoffman concluded.