/ Modified mar 1, 2013 6:54 p.m.

AZ Week: No Recession from Budget Cuts

State could lose 30,000 jobs in 2 years, see growth slowed

(VIDEO: AZPM)

Arizona's job losses could be relatively minor at about 30,000 over two years if the full effects of federal budget cuts roll out, an economist says.

Jim Rounds portrait Economist Jim Rounds. (PHOTO: AZPM)

Jim Rounds, senior vice president and economist with Elliott D. Pollack & Co. of Scottsdale, said in an interview for Friday's Arizona Week broadcast that he does not expect the full effects of the sequestration cuts to occur, because Congress will make modifications.

If they do, Rounds said, they will reduce state job growth by 20 percent to 25 percent this year and next. He said that is lower than the 55,000 jobs some are predicting will be lost, and it means no return to recession for the state or the nation.

"Our best guess, and I think we're in the ballpark, is closer to around 30 (thousand) over a two-year period," Rounds said. "But it's going to probably not be that extreme. I think there's going to be a little bit of compromising along the way."

Arizona has once again become a national leader in job growth, and Rounds said that should continue, albeit with a slight slowdown.

"We're actually talking about dampening our rate of growth in Arizona only by a small amount," he said. "We'll be fine statewide. Where the problems occur are at these sub-regional levels."

Specifically, he said, Tucson and Sierra Vista will feel an as yet undetermined "disproportionate impact" because of their reliance on defense spending.

Tucson is home to Davis-Monthan Air Force Base and Raytheon Missile Systems, a defense contractor, and Sierra Vista is where the Army has significant installations at Fort Huachuca.

"Sierra Vista I'm concerned about," Rounds said. "I'm concerned about Tucson in the longer term with Davis-Monthan. In fact, I'm starting to be more and more concerned about the Tucson region over the next decade. This is just adding to the concern."

Overall, Rounds said, politicians and the national news media have overplayed the sequestration story.

"It's not going to be quite as extreme, because a lot of stuff can be worked out," he said. "These things tend to be a little bit softer than how they're described as being very rigid when you hear about the stories coming out of D.C."

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