While sectors of Arizona’s economy have suffered financial losses during the pandemic, the state is faring better than much of the nation, according to a leading economist. 

If Arizonans can stay masked, socially distanced and sanitized, it has a good chance for full recovery as soon as mid 2021, said the state’s heavyweight economic forecaster, George Hammond, a research professor and the director of the Economic and Business Research Center at the Eller College of Management at the University of Arizona.

“There’s a huge amount of uncertainty about how this is going to all play out and it’s connected to the outbreak and how the virus itself works,” said Hammond, who has been local and state economies for more than two decades from his university office in Tucson. 

Hammond issued his latest projections and talked about how the state has managed to weather the pandemic at a recent , entitled Economic Forecast: Covid 19 Impacts on Arizona’s economy, hosted by the Arizona Â鶹´«Ă˝Ół»­ of Commerce and Industry.  

Arizona jobs’ picture better than nation

Among the reasons Arizona is hanging on are jobs and unemployment reports. 

In the early months of the pandemic, the nation saw 14.5 percent of jobs lost and has since recovered to 10 percent. Arizona’s is only 5 percent lower than where it was before the pandemic.

Arizona also has a slightly lower unemployment rate. In June, the rate was 10 percent compared with the nation’s 11.1 percent.

Arizona’s healthier data is due in part to being one of the fastest growing in the country pre pandemic, and industries like construction and remote retail remain strong. Governor Doug Ducey’s early and gradual reopening of the economy also contributed to jobs and economic growth. 

Personal income bolstered by federal lifelines 

Personal income also got a boost from the bipartisan passed by the U.S. Congress in late March to help keep Americans and businesses afloat during the coronavirus shutdowns. 

These lifeline programs have helped families pay their bills and put food on the table, Hammond said. 

In the first few months of the pandemic, CARE Act programs pumped more than $17 billion into the state’s economy including:

• Increased unemployment benefits: Unemployment compensation recipients in Arizona received an extra $600 tacked on to their weekly benefit of $240 for up to two months. That injected about $8.2 billion into the state, amounting to about 2.4 percent of the state’s total personal income last year.  
• The federal Paycheck Protection Program: The program, which provides grants to small businesses to keep employees on the payroll and pay company operating expenses, injected $7 billion into the economy early in the pandemic, representing about 2.1 percent of personal income in 2019. 
• Recovery rebates:  Rebates provided another $2 billion to citizens in the state.

“So somewhere north of 5 percent of Arizona’s personal income last year was injected into Arizona’s personal income in just a couple of months,” Hammond said. “I think that’s had a significant impact in our ability to deal with the pandemic so far.”

Economic forecast for coming months 

Hammond also laid out projections for an “alphabet soup” of pandemic recovery scenarios including:

• A 20 percent chance the state will see a rapid V-shaped recovery, where the economy will quickly bounce back from the downturn, then return to pre pandemic levels by early 2021.  
• A 30 percent chance for a W-shaped recovery — the worst case scenario — that would occur if there is a surge of the coronavirus combined with a virulent flu season, forcing the state back into a shutdown and economic distress. 
• A 50 percent likelihood for a “Nike Swoosh-shaped,” or baseline, recovery where a bottoming out is followed by a steady and gradual rebound.

“If we can avoid a significant surge in the outbreak as we go through the fall and winter months, I think we’ll continue on a gradual recovery trajectory like a Nike Swoosh type recovery, getting us back to where we were before the pandemic by mid 2021 or in the second half,” Hammond said.

That will depend, of course, on the state’s ability to keep the virus in check.

“We are learning where the big risks are and what we can do to reduce those risks and what we can do ourselves to get control of the outbreak. The sooner we have control of the outbreak, the faster things will go back to normal.”

To watch the webinar in its entirety, go to: Economic Forecast:

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Before the coronavirus, Arizona’s tourism industry saw four years of record-breaking growth, with 2019 the most successful yet, according to the Arizona Office of Tourism’s (AOT) annual economic report released Wednesday. 

Visitors to the state last year generated $70 million a day, or more than $25 billion for the year. Job numbers and tax revenues supported by tourism reached new highs. Visitors from Mexico, the state’s top international market, spent more than $3 billion. 

2019 ARIZONA VISITATION DATA AT-A-GLANCE

Total Overnight Visitation: 46.8 million (Up 2.8 percent from 2018)
Visitor Spending: $25.6 billion (Up 4.7 percent) 
Tax Revenue: $3.78 billion (Up 4.2 percent)
Jobs: 194,300 (Up 1 percent)
Earnings: $7.7 billion (Up 3.7 percent)

These and other data were released Wednesday during the annual Governor’s Conference on Tourism. The conference also featured strategies for the industry’s recovery from the pandemic. 

“While we’re very focused on the recovery of our industry during the next year, this 2019 data helps reinforce the critical role a strong tourism industry plays in Arizona’s economic re-energization,” said Debbie Johnson, director of the AOT. 

About 850 people from the state’s travel and hospitality industry tuned in virtually to attend the event. 

New marketing tactics helped showcase the state

Arizona’s stellar year for tourism in 2019 was the result of a great economy but also new approaches to marketing, Johnson said.  

“Instead of a single straight message, now we talk about the seasonality in our state. We have such geographic diversity. In March, you can ski in Flagstaff in the morning and then come down to the Valley and golf in the afternoon.”

Financial free fall for industry in 2020 

Attendees also got a snapshot of how the industry is faring in 2020. Revenues are down significantly in all sectors, according to compiled for the AOT. 

For example, average daily revenue for lodging was down 14 percent in June compared to last year and down 10 percent for the year so far. Airport traffic saw an 85 percent drop in May and is down 47 percent for the year. 

Tax revenues also are suffering. In 2020, the loss of tourism revenue is expected to create a $284 million net loss to the state’s general fund.

Celebrating last year’s success 

There was some solace in reflecting on last year’s success at the conference, Johnson said. In 2019, visitors spent a record $25.6 billion, up 4.7 percent over 2018. 

Here are some key takeaways from 2019 data: 

Industry supported more than 360,000 jobs in Arizona

Spending by Arizona visitors directly generated a record 194,300 tourism industry jobs last year. When combined with indirect and induced employment, the travel industry-supported 361,300 Arizona jobs.

Record tax revenues from tourism

Record visitor spending generated another milestone — a record $3.78 billion in combined local, state and federal tax revenue. That reduced the annual tax burden by $1,400 for every Arizona household.

International visitor numbers up

Last year, Arizona welcomed 6.1 million international overnight visitors, an increase of 3.8 percent over 2018. Visitor volume increased 5.2 percent from Mexico, the state’s top international market, with 4 million overnight visitors. Arizona’s top five overseas visitor markets were Germany, the United Kingdom, France, Japan and China.

Strategic recovery plan for tourism

The AOT also unveiled its Tourism Strategic Recovery Plan at the event that offers specific tactics and to help destinations and communities recover from the pandemic.   

Presenters spoke about different strategies for recovery as travel becomes safer to attract visitors to outdoor destinations, metro Phoenix and Tucson, and rural and tribal areas. 

Suggestions for industry marketing efforts recommend a three-step strategy for recovery:

-First, market directly to Arizonans for vacations and weekend getaways within the state while travel remains restricted. To help get the word out, the AOT launched a new campaign in May to encourage residents to visit outdoor and scenic destinations across the state.  

-Second, reach out to visitors that live within six hours of Arizona’s favorite destinations.  

-Finally, focus on marketing to target cities like Denver, Dallas and Chicago once air travel is considered safe again.   

For now, there are no plans to market to the international market, Johnson said. But there is hope that the market can return in 2021.

New Leave No Trace partnership to protect scenic views  

During the conference, AOT also had a presentation on it’s new partnership with, whose mission is to educate visitors about sustainable tourism practices. The full report and a video of the conference and all the sessions will become available over the next week at: .

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Arizona researchers are studying a potential treatment for COVID-19 that does not have some of the more damaging side effects associated with other drugs undergoing trials right now. 

The HonorHealth Research Institute and HonorHealth in collaboration with the nonprofit research institute TGen are starting a clinical trial to use a combination of an antimalarial drug called atovaquone and the antibiotic azithromycin in patients with moderate-to-severe COVID-19 infection. 

A combination of the two has been previously studied in other infectious conditions and, if proven effective, may represent a “well tolerated” option for patients with COVID-19, said Dr. Michael Gordon, medical director of HonorHealth Research Institute and co-principal investigator of the trial.

“Relatively safer” than other drugs being tested 

COVID-19 is primarily a respiratory disease, but it also can damage the heart. 

Certain drugs being used in patient trials, like hydroxychloroquine, appear to also increase cardiac complications. 

“We know that a related regimen like hydroxychloroquine and azithromycin is being tried in clinical trials around the world and one of the problems with that regimen is that it can cause some cardiac toxicity,” said Dr. Sunil Sharma, one of the clinical trial’s principal investigators with dual appointments at HonorHealth Research Institute and TGen. “Atovaquone and azithromycin is relatively safer compared to that regimen.”

Homegrown treatment and analysis of COVID-19 

HonorHealth is enrolling approximately 25 infected patients into the study. 

Conducted in collaboration with TGen, an affiliate of City of Hope, the new clinical trial is one of 10 that the HonorHealth Research Institute is working on related to COVID-19 to understand the biology, spread and treatment of the infectious disease.

“This is the first trial in the United States, and the first trial made available to patients in Arizona, that involves this specific combination of therapies,” said Kiran Avancha, COO of the HonorHealth Research Institute in Scottsdale. 

“We are proud to be supporting this homegrown innovation here at the Institute, where we have been working with other front line providers, scientists and experts across the globe to bring several COVID-19 trials up in record time to support our patients and providers amid this pandemic.”

Volunteers wanted for COVID-19 clinical trials 

TGen is involved in a number of other studies of COVID-19 as well. Currently, it is seeking up to a hundred volunteer patients who have recovered from the coronavirus and may have built up antibodies to it. 

The study could eventually lead to new methods of diagnosing COVID-19 and help in the development of antibody therapies, and possibly vaccines.

“We are using cutting-edge research tools to study in depth the immune response to COVID-19,” said John Altin, an assistant professor in TGen’s Pathogen and Microbiome Division, the institute’s infectious-disease branch in Flagstaff, also known as TGen North. “Our goal is to enable urgently-needed new diagnostics and treatments for this virus.”

Dr. David Engelthaler, director of TGen North and Arizona’s former state epidemiologist, said this “citizen-science” study could help researchers better understand how the virus has moved through our community.

“This will help us learn more about how, when and why we produce antibodies in response to a COVID-19 infection. One class of antibodies tackles the infection first, and then another comes in to finish the job,” Dr. Engelthaler said. “Knowing when these different immune responses occur, and how long they last, could help us understand if some patients gain a certain degree of immunity against reinfection. We need to know how that works.”

To participate, volunteers must be U.S. residents, age 18 or older, have tested positive for COVID-19, and then recovered. To sign up, go to: .

About HonorHealth

HonorHealth is a non-profit Arizona healthcare network that operates five acute-care hospitals, an extensive medical group, outpatient surgery centers, a cancer care network, clinical research, medical education, and a foundation in the Phoenix metro region. It has approximately 12,300 employees, 3,700 affiliated physicians and 3,100 volunteers. HonorHealth was formed by a merger between Scottsdale Healthcare and John C. Lincoln Health Network. Learn more at .

About HonorHealth Research Institute

HonorHealth Research Institute is dedicated to finding cures and improving treatments in areas like gene therapy, early drug/device development, early detection and prevention of disease. Through our clinical trials and applied research, the institute has  improved the lives of patients from all 50 states and 28 different countries Find a clinical trial or learn more at , or contact a TGen Clinical Research Coordinator at: crc@tgen.org.

About TGen, an affiliate of City of Hope

Translational Genomics Research Institute (TGen) is a Phoenix, Arizona-based non-profit organization dedicated to conducting groundbreaking research with life-changing results. TGen is affiliated with, a world-renowned independent research and treatment center for cancer, diabetes and other life-threatening diseases.  For more information, visit: . Follow TGen on , and .

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May 20, 2020
TO THE MEMBERS OF THE UNITED STATES CONGRESS:

The undersigned chambers of commerce urge Congress to pass timely, temporary and targeted liability relief legislation to provide businesses a safe harbor from unwarranted lawsuits that, left unchecked, will endanger the fight against the pandemic and undermine the safe and orderly return to work for millions of Americans.

From distillers who switched to producing hand sanitizers, to manufacturers that transformed their operations to construct personal protective equipment (PPE) and ventilators, to front line medical professionals treating the afflicted, to pharmaceutical companies that are expediting research into cures, American businesses have rallied to fight the pandemic. During the stay-at-home orders, essential businesses have remained open and innovated in ways that permitted them to continue to provide critical services and supplies. Now millions of other businesses are in the process of reopening, desiring to do so in a safe manner that protects their employees and customers.

This is an unprecedented situation and despite employers’ best efforts to comply with public health guidance, many are concerned that they will be forced to defend themselves against a wave of lawsuits. Their concern is driven by the fact that each day brings news of more lawsuits that have already been filed. That is why Congress should provide a safe harbor that holds truly bad actors accountable, but that protects those employers who are working to follow public health guidance. Specifically, temporary protections should remain in place for the duration of the pandemic crisis and response that cover:

• Businesses that work to follow government guidelines against COVID-19 exposure claims.
• Healthcare providers and facilities on the front lines of the COVID-19 response.
• Manufacturers that repurposed production and distribution to provide PPE, sanitizers, and other needed countermeasures.
• Companies that have donated their stock of supplies to hospitals and medical professionals.
• Public companies that could face securities lawsuits, including those driven largely on stock price drops resulting from the global pandemic under the spurious assertion that management failed to warn investors.

To ensure that we continue to wage war against the pandemic while also safely returning Americans to work, Congress must act without delay.

Sincerely,

Business Council of Alabama
Alaska Â鶹´«Ă˝Ół»­
Arizona Â鶹´«Ă˝Ół»­ of Commerce and Industry
Arkansas State Â鶹´«Ă˝Ół»­ of Commerce/AIA
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Cox Communications, the largest private telecom company in America, is involved in two initiatives this month as part of its ongoing effort to meet a “great need” among  low-income students and their families in Arizona during the pandemic. 

In its latest effort, Cox partnered with the Arizona Cardinals and State Farm last week to give 150 computers and one free year of high speed internet to 150 families in Phoenix. Families in the Phoenix Elementary and Roosevelt school districts are receiving the free computers and one free year of Cox’s Connect2Compete high speed internet.

“As schools continue to find ways to educate kids outside the classroom, we don’t want to see kids get left behind just because their family can’t afford a computer and an internet connection in the home,” said Susan Anable, Cox’s southwest vice president of public affairs.

All of the students selected qualify for the National School Lunch Program (NSLP), Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF) or live in public housing.

Access to technology at home is critical to the quality of a student’s education, yet many students in America lack internet access, Anable said. One-third of households with children 6 to 17 years old do not have high speed internet in their homes, to Cox. 

To address the need, Cox offers an option for low-income families with school-age children through its Connect2Compete . Qualifying families can receive home internet with wifi for $9.95 a month. 

Of the parents enrolled in the program, 91 percent agree that low-cost internet service at home gives children a leg up for high school graduation.

Cox Charities accepting grant applications through May 29

Cox also announced last week that it is accepting through May 29 for grants up to $10,000 each from Arizona nonprofits that work with youth and education. 

Now more than ever, nonprofits are relying on giving to be able to continue to support children in their communities, said Anable, citing a new report conducted by the Arizona State University (ASU) Lodestar Center for Philanthropy and Nonprofit Innovation. 

The , which surveyed 449 Arizona nonprofits, portrays a sector struggling under the weight of the pandemic:

•        Nearly 80 percent reported a reduction in normal services
•        Eleven percent are not operating at all
•        Almost 40 percent of all arts and culture nonprofits are not operating
•        Just under 20 percent will not be able meet payroll in eight weeks
•        Only 5 percent report they are operating normally

That’s why supporting them is so critical right now, Anable said. 

“Continuing our history of supporting the communities in Arizona where our employees live and work, Cox recognizes how vital our youth and education-focused nonprofit community is to provide vital support for children in our state. At a time when donations are down sharply due to the pandemic, our 3,200 employees are extending a helping hand.”   

Last year, Cox Charities distributed nearly $570,000 to more than 100 youth and education-focused nonprofits across Arizona. Cox Charities funds are raised through employee-driven fundraisers and personal contributions throughout the year, as well as community fundraising partnerships. 

For the guidelines and grant applications, go to: .

Cox has almost 3 million customers in Arizona

As the largest private telecom company in the U.S., Cox has 6 million residential and commercial customers. Cox has about 20,000 employees nationwide. Total revenues in 2016 were $11 billion. 

While Cox operates cable systems in 18 states, almost half its customers are in Arizona where it employs more than 3,200 workers. In metro Phoenix, it serves more than 2.5 million subscribers and in Southern Arizona approximately 400,000. 

Cox Communications is the largest division of Cox Enterprises, a family-owned business founded in 1898 by Governor James M. Cox of Ohio.

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In Arizona, certain sectors of the economy are plunging as the pandemic delivers its heavy toll. Many restaurant workers are laid off, almost all hotel rooms are empty, small shops are closing by the day. 

Federal stimulus funding also is not reaching some small businesses that need it most. 

How severely these factors will impact Arizona’s economy in the long run is not entirely clear.  National economists’ forecasts for the U.S. overall range from a quick recovery after a brief recession to a long heavy contraction. 

In Arizona, however, economist Jim Rounds believes this decade could end up being the state’s best yet.

That does not mean there will not be a downturn for a year or two, said Rounds, president of Rounds Consulting and a longtime Arizona economist who often advises state and municipal leaders on economic policy and strategy. 

“In terms of where we’re going, we’re going to see the pain everywhere,” said Rounds who sat for an interview with Arizona Â鶹´«Ă˝Ół»­ of Commerce and Industry President and CEO Glenn Hamer recently to share his perspective on what’s ahead.  

Some businesses will not survive, he said. But the state is well positioned to weather the storm and come back stronger in the next two years.  

Arizona well positioned to weather the storm

Arizona came into the pandemic with one of the strongest economies in the nation. A healthy rainy day fund of $1 billion has proven to be sound planning, he said. Another billion would even be better.

“The beauty of this is the basic economic foundations that we’ve been setting up with the governor for the last several years. We have a good workforce. We have good infrastructure. We have a good regulatory environment — all these things that are really strong,” Rounds said. “Once those are set, it allows us to create the high wage jobs that then create all the other low wage jobs as well.”

By continuing to focus on maintaining these pillars, Arizona will see a healthy recovery and has the potential to bounce back in a huge way, Rounds said.

The key: fine tuning on front end, long term planning for back end  

It will require not only taking steps to help businesses during the current fiscal crisis, but long term planning as well. Plotting ahead with strategies like working to further fuel the growing technology and bioscience sectors and luring more suppliers to the state, he said. 

Arizona State University, the Arizona Â鶹´«Ă˝Ół»­ of Commerce & Industry, Greater Phoenix Economic Council, Arizona Commerce Authority, Arizona Office of Tourism, Valley Partnership and other organizations are already strategizing for long term survival. 

“There’s no playbook for what we’re talking about. This is so unusual, but we need a set of instructions,” Rounds said. 

“The number one key on all these complicated economic issues is to have the right info. How to maximize business retention opportunities. How we’re going to come out of this downturn.” 

Casualties, potential breakdowns on road to recovery 

Inevitably, there will be economic consequences. Small independent operators are at risk of extinction.  

“I think what we’re going to end up seeing–and I’m pretty confident in this, unfortunately–is a lot of the places that we like to go grocery shopping at, the small stores, the restaurants, they are going to be gone and they are going to be replaced with the Applebees and the Chilis. 

“Eventually some stores will be coming back because we’re still growing, but I think it’s going to shift to a larger corporate presence.” 

The state’s mushrooming unemployment figures are also troubling. More than 350,000 claims have been filed since the coronavirus outbreak several weeks ago. 

“These are huge numbers when we talk about hundreds of thousands of jobs lost or gained, we’re usually talking about the U.S. level,” Rounds said.

That’s where “fine tuning” and strategic long term planning will count, he said. 

Opportunity for a “huge” comeback 

If all the pieces come together, this could be an opportunity for the state, Rounds said. 

“Where I’m most optimistic among some of my colleagues, I feel like we can take advantage of this downturn, this crisis, and learn from it. 

“I would love to see Arizona be this huge immunology hub for the entire country going forward, a lot of high tech activities in healthcare. I’d like to see lot more manufacturing coming back and I’d like to see more suppliers locate locally because that increases the multiplier effects that creates all those jobs we talk about.”

Cover photo courtesy of KTAR.

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