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PHOENIX — Arizona's economy won't hit bottom until late next year and may not fully recover until 2013, economists say.

The predictions came Wednesday at the annual forecast of the W.P. Carey School of Business at Arizona State University. Three of the economists who made presentations said they foresee tough times ahead for the immediate future.

While they differed somewhat on the details — including the exact timeline for when things will get better — they did agree that psychology will be a factor in any recovery. Simply put, prosperity will require that consumers again feel comfortable spending on non-essential items — spending that would get the economy moving.

"We seem to have moved from a period of irrational exuberance to irrational despondence," economist Joel Naroff said.

Economist Elliott Pollack said that for too long, people were spending like nothing could go wrong.

"The average guy has too much debt and not enough savings," he said.

Pollack said people relied on a booming stock market in the 1990s to keep increasing the value of their 401(k) retirement accounts while they borrowed against the ever-increasing value of their homes, using it "like a credit card."

"That's over," Pollack said. What that leaves is the kind of economy that existed in the 1970s and 1980s, "where you actually have to have a reasonable debt level and no more, and you actually have to have some savings, some money in the bank."

"The psychological part is: At what point do they feel that we've done it enough — we can go spend again?" he explained. But that won't occur until consumers have reduced their debt and increased their savings, something they are doing by reducing their spending now.

All that reduced spending is what has put the economy in its current dire straits, including the rising unemployment rate.

And Lee McPheters, a professor at the ASU business school, said he doesn't foresee that changing in the near term.

He said over-the-year job losses in Arizona total 2.8 percent, a figure the state has not seen since the 1976 recession.

"And the expectation is as we go into 2009, it is going to get even worse," he said.

Of particular note, McPheters said, is what amounts to economic whiplash.

He said that just two years ago, Arizona produced the highest rate of job creation in the country. Now, McPheters said, the state ranks 49th.

"If it were not for Rhode Island, we would be the worst economy in the country," he said. And McPheters said there is a consensus among economists that the state's current 6.1 percent jobless rate will top 7 percent in 2009.

Here, too, the problem is people cutting back on the things they don't need. But he said some parts of the economy do appear to be "recession-proof."

"Food, guns and alcohol are holding up well," he said.

The state continues to add jobs in the health-care industry, McPheters added.

Pollack said economic recovery, particularly in the construction industry, will be complicated by the slowdown in Arizona's population growth.

He said that before the economy started to sour about a year ago, Maricopa County's population was growing by about 125,000 people a year.

Figuring at least 75 percent bought single-family homes, with an average of about 2.5 people per household, that would mean 40,000 added home sales per year.

Dropping that population increase to 80,000 a year, fewer than 70 percent of whom could afford a home, the need would drop to less than 20,000 homes. And if the state's population growth is actually half of historical averages, which is what University of Arizona economist Marshall Vest has said, then just 10,000 homes are needed.

"Well, we built more than 10,000 units this year," Pollack said, meaning there has been no reduction in the excess inventory of homes on the market that has driven prices sharply down.

"So population is needed to absorb the excess supply."

Pollack said that same situation exists in Tucson, where there also is excess inventory, the result of developers putting up homes before they had buyers lined up.

There is some good news.

"Affordability (of housing) is now better than it has been at any time in our history," Pollack said, with more than 70 percent of Arizonans now able to afford a medium-priced home.

"The problem is, nobody wants to take a bite at the apple right now," he said. "Most shoppers are looking for foreclosed properties."