Arizona’s personal income growth ranked 46th in the nation last quarter, according to an analysis.
Arizona personal income rose by 5.4% over the quarter in the first quarter of 2025, well below the U.S. increase of 6.7%. That ranked Arizona 46th in the nation, including the District of Columbia (Exhibit 1). North Dakota posted the fastest increase in the nation, at 12.7%, while Washington posted the slowest at 3.2%.
Exhibit 1: Personal Income Growth by U.S. State, 2024Q4 to 2025Q1, Seasonally Adjusted Annual Rates
Of Arizona’s 5.4% growth in the first quarter, net earnings from work contributed just 1.6 percentage points. Income from dividends, interest, and rent contributed 1.5 percentage points and transfer receipts contributed 2.3 percentage points. Of the nation’s 6.7% growth, net earnings contributed 3.1 percentage points; dividends, interest, and rent contributed 1.1 percentage points; and transfer receipts contributed 2.5 percentage points.
Arizona’s slow growth in net earnings from work (relative to the U.S.) was driven in large part by outright declines in durable goods manufacturing, retail trade, farms, and utilities.
Over the year, Arizona personal income rose by 4.5% in the first quarter of 2025, down from 7.2% in the fourth quarter and matching the national pace. Net earnings were up 4.9%. Income from dividends, interest and rent rose 3.0% and transfer receipts rose 4.8%.
With Phoenix MSA inflation at 1.8% over the year in the first quarter of 2025, Arizona’s real personal income rose by 2.7%. U.S. real personal income rose by 1.7%.
In contrast to the growth in real personal income, Arizona’s real GDP declined by 0.5% in the first quarter, matching the national drop (Exhibit 2). That ranked Arizona 23rd in the nation.
Exhibit 2: Real GDP Growth by U.S. State, 2024Q4 to 2025Q1, Seasonally Adjusted Annual Rates
Contributing the most to the decline in the first quarter in Arizona were retail trade; utilities; finance and insurance; wholesale trade, agriculture, forestry, and fishing; durable goods manufacturing; transportation and warehousing; and accommodation and food services. Real estate and rental and leasing; information; state and local government partially offset the overall decline.
Author: George W. Hammond, Ph.D., is the director and research professor at the Economic and Business Research Center (EBRC).
