George W. Hammond, EBRC director and Eller research professor
State personal income growth ranked 20th in the nation in the first quarter
Before adjustment for inflation, Arizona total personal income rose 4.6% over the year in the first quarter of 2024, according to preliminary data released by the U.S. Bureau of Economic Analysis. That outpaced the nation at 4.4% over the year.
Net earnings from work in Arizona rose by 5.3% over the year in the first quarter (Exhibit 1). That was faster than the national rate of 4.7%. Net earnings from work includes wages and salaries; fringe benefits, and proprietors’ income. It is adjusted to account for commuting flows and contributions for social insurance.
Arizona income from dividends, interest, and rent rose 5.5% over the year in the first quarter. That was well above the national rate of 4.4%.
Finally, transfer receipts flowing to Arizona residents (Social Security, Medicare, Medicaid, welfare, etc.) rose 2.0% over the year, which was below the national rate of 3.6% in the first quarter.
Exhibit 1: Arizona and U.S. Personal Income Growth by Component, Over the Year, Percent
Compared to other states, Arizona’s personal income growth was relatively rapid in the first quarter, ranking 20th in the nation. Utah (6.4%), Nevada (6.1%), Virginia (5.7%), Washington (5.6%), and Hawaii (5.5%) were the fives states with the fastest gains. North Dakota (0.9%), Arkansas (1.6%), Iowa (2.2%), South Dakota (2.6%), and Nebraska (3.0%) were the five slowest growing states.
Arizona’s over-the-year growth in net earnings from work ranked 16th in the nation. State gains in dividends, interest, and rent ranked higher, at 4th in the nation, while state growth ranked near the bottom in transfer receipts (at 43rd).
Net earnings from work was by far the largest source of personal income for Arizona residents, accounting for 59.2% of the total in the first quarter. Transfer receipts accounted for 20.9% and dividends, interest, and rent accounted for the remaining 19.9%. Compared to the U.S., Arizona got a slightly larger share of income from transfer receipts (18.0% nationally) and a slightly smaller share from net earnings from work (62.0% nationally).
As Exhibit 2 shows, Arizona personal income has been on the rise even after adjustment for Phoenix inflation. In the first quarter of 2024, Arizona real personal income rose (over the year) for the fourth consecutive quarter. The pace of growth, however, was modest at 2.2%. Even so, that exceeded the U.S. rate of 1.3%.
Exhibit 2: Arizona Real Personal Income by Component, Billions of December 2001 Dollars
Across the major components of income, net earnings from work rose 2.9% over the year (after adjustment for Phoenix inflation), income from dividends, interest, and rent rose 3.1%, while transfer receipts fell by 0.4%.
