September 2011 Fall Issue

ARIZONA’S ECONOMY
ECONOMIC AND BUSINESS RESEARCH CENTER

Expectations Lowered for the Longer Term
By Marshall J. Vest, Forecasting Project Director

September 1, 2011

million in the year 2041. That will easily
put Arizona in the top ten largest states.
By 2041, nearly four million more people
will call Arizona home than live here today.
Projections for each 10-year interval for
selected aggregate measures are presented
in Exhibit 1.

•Arizona’s employment-to-population
ratio plunged during the current
recession and will remain well below its
peak established in 2000 (43.3%), and
after dipping below 37.2% last year,
finishes in 2041 at 41.2%. Arizona’s
ratio consistently runs 3-4 points lower
than nationwide (Exhibit 2).

Highlights of the 30year forecast include the
following:

I

n our annual update of 30-year
projections, we’ve lowered the forecast
significantly. That’s partly due to
decennial Census counts that found far
fewer residents than expected and new
estimates that show population growth
currently near zero, a phenomenon that
is likely to extend a few more years. Also,
there’s realization that fallout from the
financial crisis will take a long time –
perhaps a decade – to repair. Arizona
already has lost a decade of growth, or
more, in many industries (as measured by
employment). And we are in the midst
of losing an entire decade, or more, of
population growth, due to low mobility
rates. As a result, Arizona’s population will
barely top ten million 30 years from now.
The recent recession wiped out a decade’s
worth of progress, but Arizona’s growth
will eventually return and once again rank
amongst the fastest-growing states. In our
annual update of our 30-year projections,
we show Arizona’s population topping 10.2

•Over 1.8 million new jobs will be created
in Arizona over the next three decades,
boosting the total to 4.2 million.
•Per capita personal income relative to
the nation will continue its downward
slide from 87% today to nearer 83%
thirty years from now. This ratio peaked
at 95% in 1971. Per capita income is
an aggregate measure comprised of
demographics (age structure), wage
levels, industry mix, and labor force
participation rates. The projected
downward trend will keep Arizona
near the bottom of all states on this
measure.

•As the population continues to age, an
increasing share of personal income will
come from transfer payments, of which
social security is the largest component.
The share will rise from 21% today to
26.5% by 2040. Per capita transfers in
Arizona today are roughly equal to the
corresponding nationwide measure.
•Retail sales relative to income will
continue to fall, dropping below 18%
from nearly 45% in the early-1960s.
An aging population that spends more
on services (especially health care) and
a smaller portion on taxable goods
accounts for the drop. This has serious
implications for a tax system heavily
reliant on retail sales.
•Over the long term, migration flows will

Exhibit 1: Projections to 2041, Arizona
2001

2011

2021

2031

2041

Population (000s)

5,288

6,410

7,569

8,888

10,220

Nonfarm Jobs (000s)

2,265

2,398

3,168

3,676

4,206

143

233

416

681

1,089

55

79

136

198

285

Personal Income ($bil)
Retail Sales ($ bil)

IN THIS ISSUE
Expectations Lowered for the Longer Term. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 1
KIDS COUNT 2011: Tracking Child Well-Being. .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 4
Census Bureau Releases National Income, Poverty, and Health
Insurance Coverage Estimates. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 5

Forecast Tables. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 7
Arizona Economic Indicators. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 8

ARIZONA’S ECONOMY

Migration flows
will continue to account
for the lion’s share of
population growth.
On average, natural
increase (births minus
deaths) accounts for
one third while net
migration provides the
remainder.

continue to account for the lion’s share of
population growth. On average, natural
increase (births minus deaths) accounts
for one third while net migration
provides the remainder. The latter varies
significantly, of course, over the business
cycle. During the recession, with mobility
rates at a six-decade low, migration
flows swung deeply negative for the first
time in recorded history. By 2015 net
migration will again approach 100,000
annually. Natural increase moved
significantly lower during the recession
due to falling births, but will stabilize at
40,000 new residents annually (Exhibit
3).	
•Manufacturing, government, utilities, retail
trade and mining will represent smaller
shares of total jobs 30 years from now.
Manufacturing’s share will decline from
6.2% to 4.0%, government from 17.0% to
14.2%, utilities from 0.5% to 0.3%, and
retail trade from 12.3% to 12.0%. Mining
jobs will all but disappear.
•Sectors that will gain the largest shares are
professional and business services (from
14.3% to 16.7%), health care & social
assistance (from 12.6% to 14.7%), and
financial services (from 6.9% to 7.7%).

•In our “high” scenario, Arizona’s population
reaches 11.2 million in 2041. In the “low”
scenario, it is 9.8 million, compared to
10.2 million in the “most likely” scenario.
Michigan, the seventh largest state, today
has 9.9 million.	
•Today, Arizona’s 6.4 million population
ranks 16th, just ahead of Tennessee. In
thirty years, Arizona likely will overtake
Indiana, Massachusetts, Washington,
Virginia, New Jersey, North Carolina,
Georgia, and Michigan to become the
eighth largest state.
•The range for 2041 metro Phoenix
population is 6.7 to 8.0 million. Metro
Tucson’s range is 1.4 to 1.5 million
people. The “Sun Corridor” megapolitan
population (both metros -- three counties
combined) ranges from 8.1 to 9.5 million.
•By 2041, 71% of Arizona’s population
will reside in the Phoenix metro area
(Maricopa and Pinal counties). Metro
Tucson (Pima County) will account for
14.2%. Today, the shares are 65.8% and
15.3%, respectively.

Exhibit 2: Time to Put People Back to Work
Employment to Population Ratio, Arizona and U.S.
US

AZ

0.50
0.45
0.40
0.35
0.30
0.25

65 70 75 80 85 90 95 00 05 10 15 20 25 30 35 40
2

Economic and Business Center, Eller College of Management, The University of Arizona

0.20

September, 2011 Fall Issue

Arizona was the second-fastest growing
state over the past decade, even though
population growth disappeared during the
recession. Low mobility rates will limit
Arizona’s growth for a few more years, but
growth will return to more historical levels
by mid-decade.

Over the next 30 years, Arizona will add
3.6 million residents, or roughly half of the
numbers here today. We can only guess
what Arizona will be like, but it’s clear that a
great deal of change lies ahead.

A history of population growth and
components of change are shown in Exhibit
4. During the 1970s and 1980s Arizona’s
population swelled by nearly a million
persons each decade. During the 1990s,
a surge in migration pushed the gain to
nearly 1.5 million. That pace appeared to be
on track until the recession arrived in late
2007. The lack of jobs, accompanied by the
loss of mobility due to the fall in housing
prices and legislative action to restrict illegal
immigration, brought population growth to a
halt. So, for the decade just past, Arizona’s
population swelled by “only” one-anda-quarter million. Interestingly, almost
half (45%) of the gain was due to natural
increase. With mobility likely to remain at
low levels for at least a couple more years,
we expect population to increase by a little
over one million during the “teens”. Our
projections show net migration rising to 1.3
million per decade during the 20s and 30s.

Exhibit 3: Population Flows are (Very) Cyclical
Components of Population
annual change, Arizona

150

100

50

0

65 70 75 80 85 90 95 00 05 10 15 20 25 30 35 40

-50

Exhibit 4: Population Gain by Decade, Arizona, 1950-2040 (000s)
Population
(000s)
1950

Annual
Growth
Rate, %

Change
(000s)

Net
Migration
(000s)

Natural
Increase
(000s)

756.0

1960

1,321.0

5.7%

565.0

1970

1,794.9

3.1%

473.9

256.1

217.8

1980

2,737.8

4.3%

942.9

691.1

251.8

1990

3,684.1

3.0%

946.3

615.3

331.0

2000

5,175.6

3.5%

1,491.5

1,107.3

384.2

2010

6,401.6

2.1%

1,226.0

676.7

549.3

2020

7,436.7

1.5%

1,035.1

685.7

349.4

2030

8,755.8

1.6%

1,319.1

919.3

399.8

2040

10,085.1

1.4%

1,329.3

967.8

361.5

www.eller.arizona.edu

3

ARIZONA’S ECONOMY

KIDS COUNT 2011: Tracking Child WellBeing in the United States
By Valorie H. Rice
On August 17, 2011, the Annie E. Casey
Foundation released the 2011 edition of
the KIDS COUNT Data Book, which they
have published annually since 1990. KIDS
COUNT is intended to provide policymakers
and citizens with benchmarks of child
well-being for each state allowing for
comparisons to be made over time, as well
as, between states regarding the condition
of children. Ten key indicators are used
to rank the states: percent of low-birth
weight babies; infant mortality rate; child
death rate; teen death rate; teen birth rate;
percent of teens not in school and not
high school graduates; percent of teens
not attending school and not working;
percent of children living in families
where no parent has full-time, year-round
employment; percent of children in poverty;
and percent of children in single-parent
families. Data used in the 2011 report are
from 2007, 2008 or 2009.

New Hampshire ranked the highest in terms
of overall child well-being, and has held
the top place ten of the last eleven years
while Minnesota has ranked second, trading
places with New Hampshire once. On the
other end of the scale, Mississippi has been
at the bottom of the rankings that whole
time followed closely by Louisiana. Arizona
remains in the bottom third of states with
an overall rank of 37, which is a slight
improvement over recent years during
which the state ranked 39th and 40th. This
improvement in the ranking is thanks to
declines in the teen birthrate and in the
number of high school dropouts since 2000;
even so, Arizona still ranks near the bottom
of the states for these two indicators.
Arizona has also shown improvement in the
child death rate, going from 26 deaths per
100,000 children age 1-14 in 2000 to 21 in
2007. This is still higher than the national
rate of 19.

Table 1: Summary of Arizona’s Rankings Kids Count 2011
Key Indicators

4

1

Percent of low-birthweight babies

2

Infant mortality rate (deaths per 1,000 live births)

3

Child death rate (deaths per 100,000 children ages 1-14)

4

Teen death rate (deaths per 100,000 teens ages 15-19)

5

Teen birth rate (births per 1,000 females ages 15-19)

6

Percent of teens not in school and not high school graduates (ages 16-19)

7

Percent of teens not attending school and not working (ages 16-19)

8

Percent of children living in families where no parent has full-time,
year-round employment

9

Percent of children in poverty
(income below $21,756 for a family of two adults and two children in 2009)

10

Percent of children in single-parent families

Year

Arizona

U.S.

AZ Rank

2000
2008
2000
2007
2000
2007
2000
2007
2000
2008
2000
2009
2000
2009

7.0
7.1
6.7
6.9
26
21
79
80
68
56
18
8
N/A
11

7.6
8.2
6.9
6.8
22
19
67
62
48
41
11
6
N/A
9

2000

N/A

N/A

2009

34

31

2000

23

17

2009
2000
2009

23
33
37

20
31
34

Economic and Business Center, Eller College of Management, The University of Arizona

16
27
27
36
43
42
40

38
38
41

March, 2011 Spring Issue

Arizona has improved in three measures as
compared with 2000 (described above) while
the nation showed improvement in five of
the eight indicators which allow historical
comparison. As a state, Arizona does
relatively well in terms of percent of lowbirth weight babies, with 7.1 percent low
weight compared to 8.2 percent nationally.

That is the only measure in which Arizona
out performs the nation as a whole.
To find more data regarding the condition of
children in Arizona at state and local levels,
go to the Kids Count Data Center at: http://
datacenter.kidscount.org/AZ

Census Bureau Releases Income,
Poverty, and Health Insurance Coverage
Estimates
By Maile L. Nadelhoffer
On September 13th, 2011, the U.S. Census
Bureau released national income, poverty,
and health insurance coverage estimates
from the Annual Social and Economic
Supplement of the Current Population
Survey (or CPS). In 2010, median household
income in the U.S. was $49,445. This figure
represents a 2.3% real decline from the 2009
median income. Arizona’s median income of
$47,279 ranked 30th in the nation, coming
in just below Texas and just above Idaho,
and was 4.3% below the national number.
Both Arizona and the nation as a whole
have experienced two consecutive years of
declining median incomes. However, after
adjusting for inflation, Arizona’s median
income increased by 18.8% between 2001
and 2010, faster income growth than the
overall national increase of 17.7% during the
same timeframe. New Hampshire had the
highest median income in 2010, $66,707, and
Mississippi the lowest, $37,985.
The nation’s official poverty rate in 2010
was 15.1%, up from 14.3% in 2009, this
represents the third consecutive annual
increase in the poverty rate for the United
States as a whole. There were 46.2 million
people in poverty in 2010, largest number in
the 52 years for which poverty estimates have
been published. The poverty rate increased
for children younger than 18 (from 20.7 %

...after adjusting
for inflation, Arizona’s
median income increased

in 2009 to 22% in 2010). The 3 year average
(2008-2010) poverty rate for Arizona was
19.2%. This figure is the second highest among
the 50 states and the District of Columbia.
The only state with a higher poverty rate
than Arizona is Mississippi with 21.3% of
its population living in poverty. Arizona is
followed by New Mexico at 19.1%, and District
of Columbia with 18.8%. New Hampshire had
the lowest poverty rate of 7.1%.

by 18.8% between 2001
and 2010, faster income
growth than the overall
national increase of
17.7% during the same
timeframe.

In the United States the number of people
without health insurance coverage rose from
49.0 million in 2009 to 49.9 million in 2010.
However, the percentage without coverage,
16.3%, was not statistically different from the
rate in 2009. The percent of persons without
health coverage in the United States has
risen fairly steadily from 13.6% in 1999 to its
current rate. Arizona’s uninsured rate for 2010
was 18%, the 11th highest rate in the nation,
just behind Idaho at 19.2% and California
at 19.4%. Texas had the highest uninsured
rate in 2010 of 24.6%, and Massachusetts the
lowest at 5.6%, just below Hawaii’s rate of
7.7% (see Table 1 on following page). Arizona’s
uninsured rate was 19.4% in 1999, the rate
then dropped below 17% for the next 5 years
at which time it began to climb again to the
current rate.

www.eller.arizona.edu

5

June, 2011 Summer Issue

ARIZONA’S ECONOMY
ECONOMIC AND BUSINESS RESEARCH CENTER

McClelland Hall, Room 103
P.O. Box 210108
1130 E. Helen Street
Tucson, AZ, 85721-0108
Phone: 520-621-2155
Fax: 520-621-2150
E-mail:
ebrpublications@eller.arizona.edu
Marshall J. Vest
Director
(520) 621-4075
mvest@eller.arizona.edu
Alberta Charney, Ph.D.
Senior Research Economist
(520) 621-2291
acharney@eller.arizona.edu
Pia Montoya
Database Specialist
(520) 621-2523
pmontoya@eller.arizona.edu
Lora Mwaniki-Lyman
Research Economist
(520) 626-6439
loramwa@eller.arizona.edu
Maile L. Nadelhoffer
Senior Research
Economist & Webmaster
(520) 621-4050
mln@eller.arizona.edu
Vera Pavlakovich-Kochi, Ph.D.
Senior Regional Scientist
(520) 626-0520
vkp@eller.arizona.edu
Valorie Rice
Librarian & State Data Center
(520) 621-2109
vrice@eller.arizona.edu

To subscribe to Arizona’s Economy or other Economic and Business Research Publications, visit:
ebr.eller.arizona.edu/subscribe/
Arizona’s Economy, published quarterly by the Economic and Business Research
Center at the Eller College of Management, is provided as an educational service by
The University of Arizona. Correspondence should be addressed to EBR Publications,
McClelland Hall Room 103, PO Box 210108, Tucson, Arizona 85721-0108.
Arizona’s Economy is available online at: azeconomy.eller.arizona.edu
As part of The University of Arizona’s public mission to improve quality of life for the
people of Arizona and the nation, the Economic and Business Research Center is dedicated
to providing Arizona citizens and decision makers with high quality economic
data and objective forecasts and analyses.
Copyright 2011 by The University of Arizona. Information contained in this publication
may be copied or reprinted with credit to the Eller College of Management at
The University of Arizona.

>> Visit us online at ebr.eller.arizona.edu!

Thank you to our community sponsors for their ongoing support
of Economic and Business Research Center programs.
Arizona Electric Power Cooperative

Elliott D. Pollack and Company

Arizona Joint Legislative Budget Committee

Maricopa Association of Governments

Arizona Public Service Company

Maricopa County		

BBVA Compass

Pima Association of Governments

CB Richard Ellis

Pima County

JPMorgan Chase & Co.

Pinal County		

City of Phoenix

Salt River Project

City of Tempe		

Tucson Electric Power Company

Cox Communications
Special thanks to
for its ongoing support of
the Economic and Business Research Center website!
http://ebr.eller.arizona.edu/