Arizona economists say a number of factors point to the state recovering fully from the recession in as little as three years. At the annual economic forecast luncheon sponsored ASU’s W.P. Carey School of Business and JP Morgan Chase, experts said 2013 looks to be a promising year for Arizona.

Professor Lee McPheters says Arizona’s population growth – while not what it once was – is starting to return to pre-downturn levels.

"Population growth is associated with increased demand for housing. Increased demand for housing leads to expanded commcercial and office and industrial building. Typically, construction and population growth go hand in hand. That's always been a hallmark of Arizona economy growth, to see those two indicators increasing."

McPheters says Arizona is on track to add 60,000 jobs in 2013, which could bring unemployment under 8 percent.

But he warns that the across-the-board defense cuts that will go into effect if the U.S. goes off the fiscal cliff could be very damaging. McPheters says Arizona is ninth in the nation for defense spending, and if a budget deal cuts lower-priority items from the defense budget it would probably be good for the state.

"Arizona’s contribution to the defense industry is high tech, it’s research oriented, and that’s not likely to be cut. But the fiscal cliff, of course, is not based that way. It’s strictly across the board, so until that’s resolved, Arizona is one of the more vulnerable states.”

McPheters says he assumes the debate over the fiscal cliff will lead to a solution, but that there are no guarantees.