Arizona Personal Income Drifted Up in the Third Quarter
By George Hammond, EBRC research professor
Manufacturing output remained down over the year
Arizona personal income growth remains sluggish. State income rose 3.2% over the quarter in the third quarter of 2025, slightly below the national pace of 3.3% (seasonally adjusted annual rates). That ranked Arizona 26th in the nation (including the District of Columbia). Kansas led the nation with an increase of 6.3% and Louisiana ranked last with growth of 0.1% (Exhibit 1).
Exhibit 1: Personal Income Growth by State, Over the Quarter, Third Quarter of 2025, Percent
Over the year, Arizona personal income rose 4.5% in the third quarter, similar to the second quarter increase of 4.4%. That ranked the state 38th in the nation. National growth was 4.7% over the year. The District of Columbia posted the slowest growth at 3.4% and South Dakota posted the fastest gain, at 7.4%.
Year to date through the third quarter of 2025, Arizona personal income was up 4.4%, well below the national pace of 4.9% and ranking the state 42nd in the nation. South Dakota posted the fastest increase (up 6.3%), while Maryland posted the slowest gain (at 3.6%).
On an over-the-year basis, Arizona net earnings by place of residence rose 3.3% in the third quarter, slower than the national pace of 4.2%. Income from dividends, interest, and rent rose 2.6% in Arizona, outpacing the U.S. at 2.1%. Transfer receipts rose 9.7% in Arizona, which was faster than the U.S. gain of 9.3%.
Net earnings by place of residence includes wages and salaries, fringe benefits, proprietors’ income, an adjustment for commuting, and is adjusted for contributions for social insurance. Transfer receipts includes Social Security, Medicare, Medicaid, and welfare payments.
Arizona real GDP rose 4.6% over the quarter in the third quarter of 2025, slightly above the national pace of 4.4%. That ranked the state 23rd in the nation. Kansas posted the fastest growth at 6.5% and North Dakota posted the slowest (at 0.4%) (Exhibit 2).
Exhibit 2: Real GDP Growth by State, Over the Quarter, Third Quarter of 2025, Percent
Over the year in the third quarter, Arizona real GDP rose 2.1%, slightly below the nation at 2.3%. That ranked the state 28th in the nation. South Carolina posted the fastest growth at 3.5%, while Wyoming posted the slowest at 0.3%.
Across industries in Arizona, management of companies posted the fastest over-the-year growth in the third quarter (up 9.0%). Arts, entertainment, and recreation posted the slowest, with a 5.7% decline. Arizona manufacturing continued its weak performance on an over-the-year basis (down 2.6%), but did post significantly improved growth over the quarter. That was a big contrast with the U.S., which posted a solid over-the-year gain. Arizona durable manufacturing output remained weak over the year, down 3.4%, but posted strong growth over the quarter.
