George Hammond, EBRC Director and Research Professor
Arizona per capita personal income ranked 39th in the nation last year
Arizona personal income rose by 7.9% (seasonally-adjusted annual rate) over the quarter in the fourth quarter of 2022, outpacing the national average of 7.4% and the Phoenix MSA rate of inflation of 3.6%. State income growth ranked 14th in the nation. Massachusetts posted the fastest growth at 15.3% while Colorado registered the slowest growth with a decline of 2.5% (Exhibit 1).
Exhibit 1: Personal Income by State, Percent Change from 2022Q3 to 2022Q4, Seasonally Adjusted, Annual Rate
For Arizona, income growth in the fourth quarter of 2022 was driven by net earnings from work (which contributed 4.2 percentage points to the 7.9% gain), followed by transfer receipts (1.9 percentage points), and dividends, interest, and rent (1.8 percentage points).
Over the year, Arizona personal income growth hit 6.0% in the fourth quarter, similar to the third quarter growth rate of 6.1%. Net earnings from work rose 6.8% over the year, dividends, interest, and rent was up 7.3%, and transfer receipts was up 2.9% (Exhibit 2). Phoenix inflation during the period was 10.8%.
Net earnings from work include wages and salaries, employer-paid fringe benefits, proprietors’ income, and an adjustment for commuting, net of contributions for social insurance. Transfer receipts include Social Security, Medicare, Medicaid, welfare payments, unemployment insurance payments, disability, and federal income support payments related to the pandemic.
Exhibit 2: Arizona Personal Income Growth by Component, Over-the-Year, Percent
With the release of the fourth quarter data, we now have a preliminary estimate for growth in 2022 as a whole. The data suggest that state personal income rose by 3.3% in 2022. That was faster than the national rate of 2.4% and ranked the state 15th in the nation. It was, however, well below the rate of inflation in the Phoenix MSA of 11.5%. Among states, Idaho posted the fastest growth last year at 6.2% while Louisiana posted the slowest at 0.0%.
On a per capita basis, the Bureau of Economic Analysis (BEA) reported that Arizona income rose by 1.3% in 2022, faster than the national average of 0.4%. The population base for the BEA data was the U.S. Census Bureau estimate. Arizona per capita personal income growth ranked 8th in the nation. Florida posted the fastest growth (1.9%) and New York posted the slowest (-0.9%). Finally, at $56,667, Arizona per capita personal income was 86.6% of the nation ($65,423). That ranked Arizona 39th in the nation in 2022.
