Arizona incomes grew 3 percent in 2015, slightly off national pace

Personal income in Arizona rose 3 percent from 2014 to 2015, to an average of $39,156 – slower than the national 3.7 percent growth rate and below the U.S. average of $48,112. (Photo by Hamed Al-Raisi/Creative Commons)

WASHINGTON – Personal income grew 3 percent last year in Arizona, mirroring a national increase of 3.7 percent that year as the nation continued to rebound from the recession, new government data shows.

The report last week by the Bureau of Economic Analysis said average income in the state grew to $39,156 – compared to $48,112 for the nation – with growth in every county but Greenlee, which saw a slight dip. Yuma County, meanwhile, posted one of the biggest gains in the nation for a metropolitan area, with a 7.9 percent jump.

One economist said Arizona typically bounces out of recessions faster than the nation, but built-in problems in the state – with education, job participation and wages – held it back in 2015.

“2015 is the midst of an economic expansion – you expect everyone would be showing gains,” said Tom Rex, associate director of the Center for Competitive and Prosperity Research at Arizona State University’s W.P Carey School of Business.

Rex said the fact that Arizona is lagging in “this economic expansion is unusual.”

But at least one area of the state was welcoming the news. Yuma County Chamber of Commerce Executive Director John Courtis thinks the personal income growth seen there last year is just a sign of things to come.

“We are starting to really have a really diverse base in Yuma,” Courtis said, pointing to the area’s agricultural base as well as recent drone testing by the border patrol.

The drone jobs, in particular, “are high-tech and high paying jobs,” he said.

The local area personal income report compiles data from different agencies including the Bureau of Labor Statistics, the Department of Agriculture and tax returns, among others, said David Lenze, a BEA economist. The bureau aggregates income by county then divides the total by the county’s population to get the average, he said.

Lenze said the bureau works hard to “make sure the data is comprehensive,” which is why it incorporates several different sources of income in its calculations.

Ultimately, he said, personal income growth data helps “provide a framework as basis of decision-making.”

Gary Burtless, an economist for the Brookings Institution, says per capita income is a “very worthwhile number,” because it shows how fast Arizona and other states recover from a recession.

Burtless said BEA numbers have limitations because they only break down the numbers by location, but “nonetheless it is getting us a picture whether prosperity” is returning.

The latest report showed that average personal income nationally grew from $46,414 in 2014 to $48,112 in 2015, a 3.7 percent increase. The changes ranged from a drop of 30.3 percent in Sully County, South Dakota, to a 35 percent increase for the 95 residents of tiny Loving County, Texas.

In Arizona, the changes were much more moderate. While Greenlee County incomes fell 0.4 percent, to $37,240, Yuma County’s 7.9 percent increase, to $31,574, was second-largest among metro areas in the nation. It trailed only Carson City, Nevada, and its 8.9 percent increase.

Rex called the Yuma increase “a one-time thing, it doesn’t mean anything for the future” unless there are steady gains over a number of years.

But Courtis said he expects to see that steady growth.

He said new agricultural research, an increase in border patrol staff and expansion of Yuma’s hospital have been “really terrific” for Yuma County.

“As we continue to expand and diversify our economy here in Yuma, I think we are going to get much better at employment and personal income growth,” Courtis said.

Despite the growth, Rex said Arizona continues to be held back by low wages, poor education, and lack of work force participation. “We are literally below average in every component,” he said.

But Rex said the personal income numbers are still an important barometer for the state’s progress in the recovery.

“The ultimate goal is economic prosperity and to increase the prosperity,” he said.