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consumer confidence is in good shape, and the stock market Commenting on a rejected ballot measure last year that
doesn’t expect more rate hikes because of “Wall Street gyrations.” would have increased taxes on the wealthy, Hoffman noted that
Hoffman said immediate risks to the economy include an the purpose was to provide a stable source of revenue for public
inflation scare that spooks equities and bond markets, a capital education. “Putting a high tax on high income individuals is not
investment boom fails to materialize, the trade war proves to stable,” he said.
be disruptive, big deficits stifle opportunities for infrastructure At the end of Hoffman’s presentation, AASBO
investments, and more money is spent on walls than on roads Executive Director David Lewis asked what is his greatest
and bridges. economic concern and how would he rate the trade war
He identified opportunities as immigration reform, whether with China.
tax reform spurs capital investment, trade reform with real “Hoffman responded; “I worry about a dramatic acceleration
improvements that promote unbridled free trade, and a plan of the trade war that dramatically disrupts global supply chains.
for fiscal responsibility longer term We have low inflation because of the efficiency of the supply
Looking at the Arizona General Fund, Hoffman said the Joint chain. It keeps the lid on inflation. If there is an acceleration
Legislative Budget Committee and the Governor’s Office have of inflation, the feds will say it’s time to take the punch bowl
comparable risks for 2020, but JLBC is more cautious for 2021 away. The party’s over – and rates go up. My worst worry is an
and 2022. over-aggressive fed.”
FY 2018 finished strong, and the prospects for 2019 indicate The latest economic joke going around, Hoffman said,
solid growth in jobs and personal income, and resurging is that the Trump administration is stuck in the ‘80s – the
construction and real estate industries. Wildcards, Hoffman 1780s.
said, could be conforming with federal tax law, and the issues He said he hopes part of the trade problem will be fixed.
of inflation, recession and trade. “I’m an economist,” he said. “I worry.”
Even so, local experts expect a strong flow of revenue into
the state treasury in April. Last year was a very good year for Dennis Hoffman can be reached at: Dennis.Hoffman@asu.edu and
capital gains, but he expects them to decline going forward. (480) 965-5362.
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SPRING 2019 | THE EDGE 9
