Arizona Personal Income Growth Reignites

Arizona personal income rose rapidly in the second quarter of 2024, increasing by 7.7% at a seasonally adjusted annual rate (Exhibit 1). That far exceeded the national pace of 5.5% and ranked the state third in the nation. Kansas posted the fastest increase in the second quarter at 10.4% while Arkansas posted the slowest at 0.9%.

Exhibit 1: U.S. State Personal Income Growth, First Quarter 2025 to Second Quarter 2025, Seasonally Adjusted Annual Rates

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Personal transfer receipts (Social Security, Medicare, Medicaid, and other transfers) rose the fastest among the major components for most states and the nation. Transfer payments rose 21.6% in the second quarter for Arizona (ranking the state third in the nation). Nationally, transfer payment rose 14.4%.

Net earnings from work rose 5.4% in Arizona in the second quarter, ranking the state ninth in the nation and outpacing the U.S. at 4.4%.

Finally, income from dividends, interest, and rent rose 1.2% over the quarter, ranking Arizona fourth in the nation, and again beating the national average of 1.0%.

Over the year, Arizona personal income rose 4.9% in the second quarter of 2025, which ranked the state 31^st in the nation. That was slower than the national pace of 5.1%.

Arizona transfer payments were up 8.5% over the year, followed by a 4.5% increase in net earnings from work, and a 2.5% increase in income from dividends, interest, and rent. Arizona growth beat the national average only for dividends, interest, and rent.

Year to date through the first half of 2025, Arizona personal income was up just 4.5% over the year, slower than the national pace of 5.1%. Net earnings from work in Arizona were up just 4.5% over the year, well below the national average of 5.2%. Overall, personal income started 2025 fairly slow.

Arizona real GDP rose 3.6% over the quarter in the second quarter of 2025 (seasonally adjusted annual rate), slower than the national pace of 3.8% (Exhibit 2). That ranked Arizona 23^rd in the nation. North Dakota ranked first with a 7.3% increase while Arkansas ranked last with a 1.1% decrease.

Exhibit 2: U.S. State Real GDP Growth, First Quarter 2025 to Second Quarter 2025, Seasonally Adjusted Annual Rates

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Over the year, Arizona real GDP rose by 2.1%, matching the national rate. That ranked Arizona 15^th in the nation. Across industries, management of companies generated the fastest increase in real GDP, with a 13.7% increase. That was followed by professional, scientific, and technical services (up 8.1%); finance and insurance (up 6.3%); and health care and social insurance (up 4.9%). 

Those gains were partly offset by declines in agriculture, forestry, fishing and hunting (down 8.7%); arts, entertainment, and recreation (down 2.9%); administrative and support services (down 2.1%); and manufacturing (down 1.8%). Within manufacturing, both durables and nondurables were down over the year.