January, 2013 Winter Issue

ARIZONA’S ECONOMY
ECONOMIC AND BUSINESS RESEARCH CENTER

Arizona Growth: Better, But Not Very Good
By George W. Hammond, Ph.D., EBR Associate Director and Research Professor

The Global Context: Grinding
Out Growth in a Risky
Environment
The U.S. economy continues to grow,
but not fast enough to satisfy anyone
and certainly not fast enough to erase
the massive output gap generated by
the Great Recession. Thus, the U.S.
unemployment rate remains high (and
labor force participation low) and
capacity utilization remains below prerecession levels.

T

he Arizona economy is growing,
with jobs, income, retail sales, and
population on the rise. Even the
unemployment rate has begun to descend.
However, growth remains slow compared
to historical averages and the housing
sector remains a major concern.
The forecast calls for the state to
gradually pick up speed, with growth
accelerating in 2012 and 2013. By
mid-decade, most major indicators of
the economy are expected to return to
something close to trend growth.
Growth during 2012-2013 is likely to
be relatively slow, in part because of
uncertainty related to the resolution of
the U.S. fiscal cliff and the prospects
for major financial market disruptions
originating in the Eurozone. In addition,
the state housing sector is expected to
continue its recovery, but it will likely be
mid-decade before activity gets back to
anything like normal.

The forecast calls for the U.S. economy
to continue to struggle to pick up steam.
Real GDP growth is expected to be 2.1%
in 2012 and 1.8% in 2013, well below
average growth during the past 50 years
of about 3.0% per year. Consumption
spending remains sluggish, as households
continue to consolidate balance sheets,
deal with low house prices and modest
job growth, and remain concerned about
the long-run fiscal outlook.
Nationally, the housing market is
expected to continue to improve, with
rising investment in residential structures
(finally!) and housing starts expected to
hit 1.0 million in 2013.
Inflation is expected to remain subdued,
with the CPI-U rising by 2.0% in 2012
and just 1.3% in 2013. Combined with the
relatively high unemployment rate, this
gives the Federal Reserve plenty of room
to keep the federal funds rate within the
0.0%-0.25% range until mid-2015, in line
with its guidance. This translates into low

December 1, 2012

long-term interest rates as well. Indeed,
the AAA corporate rate is expected to be
just 4.0% in 2013.
So, the baseline U.S. outlook calls
for continued slow growth. However,
that forecast faces significant risks.
In particular, the looming fiscal cliff
presents particularly acute concerns.
While it is unlikely that we will suffer the
full brunt of running off the cliff, there
will be significant uncertainty about how
a deal will play out. This will undermine
consumer confidence and entrepreneurial
risk taking into 2013.
Further, the crisis in Europe is not over
and major concerns will blast to the
surface periodically during the next year,
creating additional uncertainty that will
sap growth.
Overall, these concerns suggest that U.S.
growth will be modest through 2013,
with stronger growth waiting around the
corner in 2014 and 2015.

Arizona Gradually Picks Up
Speed
Arizona job growth has accelerated nicely
during 2012, with current seasonally
adjusted data showing annualized growth
of 3.6%, 1.7%, and 2.9% in the first
three quarters of the year. As Exhibit 1
shows, the state added jobs at a sluggish
1.0% rate in 2011, but growth on a
four-quarter-moving-average basis has
accelerated to 1.8% through the third
quarter of 2012. As this suggests, we
expect Arizona job growth to hit 2.0% in

IN THIS ISSUE
Arizona Growth: Better, But Not Very Good. . . . . . . . . . . . . . . . 1
Poverty Measures Rank Arizona Poorly. . . . . . . . . . . . . . . . . . . . 5
Can Tax Cuts Pay For Themselves by Stimulating Growth? . . . . 7

Local Area Personal Income Data for 2011 . . . . . . . . . . . . . . . . 14
Forecast Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Arizona Economic Indicators. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARIZONA’S ECONOMY

Exhibit 1: Arizona Emerging Trends In 2012

Most Recent
Data

Calendar Year
Percent Change
2010-2011

4 Qtr. Moving Average
Percent Change from
Prior 4 Qtr. Moving
Average

Nonfarm Employment (CES)

2012q3

1.0

1.8

Real Personal Income

2012q2

2.0

1.1

Arizona Statewide

Nationally, the

Real Retail Sales

2012q2

6.1

3.7

Construction Jobs (CES)

2012q3

0.2

5.4

expected to continue to

Total Residential Permits

2012q3

6.4

49.4

improve...and inflation

Real FHFA House Price
Approx.

2012q2

-13.6

-7.6

housing market is

is expected to remain
subdued....

Level
Unemployment Rate

2012q3

2012 and stay there in 2013. Even though
a rough doubling in job growth is certainly
welcome, it leaves us well below average
annual job growth during the 1976-2011
period of 3.4%.
The state unemployment rate has posted a
significant decline from 9.5% on a calendar
year average during 2011 to 8.6% on a
four-quarter-average ending in the third
quarter of 2012. However, the news on this
score is not as good as we would hope, since
the declining unemployment rate was driven
by a shrinking state labor force. In other
words, the unemployment rate declined in
large part because unemployed residents
dropped out of the labor force, not

2011

Avg. Most Recent 4 Qtr.

9.5

8.6

because large numbers of residents found
employment. We expect the unemployment
rate decline to continue, with the rate
dropping to 8.3% for 2012 and again to
8.0% in 2013, but for labor force growth to
be negative or modestly positive. Overall,
the labor market is likely to remain anemic
through 2013.
Real personal income growth was sluggish
during the first half of 2012, with the
four-quarter moving average ending in
June hitting just 1.1%, compared to 2.0%
from 2010 to 2011 on a calendar year
basis. We expect growth to rebound during
the second half of the year, with annual
personal income growth on a calendar year

Exhibit 2: Continued House Price Appreciation in Phoenix and Tucson
House Price

$360,000
$320,000

Index

Phoenix and Tucson House Price Trends

240

PHX MSA Home Price Index (Case-Shiller), NSA

220

$280,000
$240,000

200
TUS MSA Median House Price (MLS), SA

$200,000

160

$160,000

140

$120,000

120

$80,000
$0

100

PHX MSA Median House Price (MLS), SA

$40,000

2

180

96

98

00

02

04

06

08

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

80
10

12

60

January, 2013 Winter Issue

Exhibit 3: The Arizona Economy is Headed Upward
Forecast
2011

2012

2013

Nonfarm Employment

1.0

2.0

2.0

Real Personal Income

2.0

2.7

2.8

Real Retail Sales

6.1

3.6

3.2

Population

0.6

0.7

0.9

9.5

8.3

8.0

13,310

20,345

24,833

Growth Rate

Level
Unemployment Rate
Housing Permits

basis at 2.7% in 2012 and 2.8% in 2013.
Even with that acceleration, real income
growth is expected to remain well below
the 4.1% average experienced during the
1976-2011 period.
Real retail sales growth, broadly defined,
is also running at a modest rate through
the second quarter of 2012, with growth in
the four-quarter-moving average at 3.7%
through the second quarter of 2012. That’s
slower than the year-to-year growth rate in
2011 of 6.1%, but in the range of its central
tendency (between the mean and the
median growth rate) during the 1976-2011
period. We expect real retail sales growth to
come in at 3.6% in 2012 and 3.2% in 2013.
The housing sector continues to improve,
but remains in an “altered state.” Residential
permits are up by nearly 50% comparing
the past four quarters to the previous fourquarter average. That’s much faster than
the 6.4 percent increase posted in calendar
year 2011 and well above the long–term
average.
Housing prices, measured by the FHFA
through the second quarter of the year,
remain weak on a four quarter moving
average basis, but are up 2.8% on a yearover-year basis from the second quarter of
2011 to the same quarter 2012. Monthly
data for Phoenix and Tucson suggest
continued house price appreciation through
September, as Exhibit 2 shows. After hitting
bottom in May 2011, the Phoenix median
house price increased by 3.68% through
September 2012. This increase is reflected
in the Case-Shiller index for Phoenix, which

The housing sector
continues to improve, but
remains in an “altered
state”...

is up 18.8% from May 2011 to August 2012
(most recent month). Tucson experienced a
more modest median house price increase
of 16.6%.
However, residential real estate markets
face significant headwinds. Mortgage
foreclosures have fallen but delinquencies
remain high and a significant amount of
recent demand is from investors and realestate investment funds. This is not likely to
be a stable source of demand in the longerterm. Further, with house prices still far
below pre-crisis levels, many homeowners
find themselves holding mortgages that
are under water. This continues to impede
residential mobility.
Housing absorption remains the critical
concern, but the recent data is scarce and
based on surveys with very small sample
sizes. According to data from the Census
Bureau for the third quarter of 2012, rental
vacancy rates for the state hit 11.1%, down
slightly from the second quarter. Likewise,
homeowner vacancy rates fell in the third
quarter to 2.0%, from 2.8% in the second.
Even with recent declines, these vacancy
rates remain above pre-crisis levels. We
expect continued improvement in housing
activity in 2012 and 2013, but it is likely to
be the middle of the decade before housing
activity sheds its “altered state.”

Residential permits
are up by nearly 50%
comparing the past
four quarters to the

Arizona Outlook and Risks

previous four-quarter

As Exhibit 3 shows, the Arizona economy
is headed upward. The forecast calls for
a gradual acceleration in job, income,
and population growth during the next

average.

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ARIZONA’S ECONOMY

two years, with retail sales growth in the
neighborhood of income gains. Further, the
unemployment rate gradually trends down
and the housing sector picks up steam,
particularly after 2013.
Even though the forecast calls for the state
to continue growing, gains are likely to
be well below long-term average growth
until 2014-2015. In part, this is due to the
relative weakness of the U.S. economy, as
uncertainty regarding the U.S. fiscal cliff
and the Eurozone crisis weigh on growth.
The baseline (most probable) scenario
assumes that the fiscal cliff is largely
avoided with little damage to consumer and
business confidence and that the European
recession turns out to be relatively modest.
However, this may not be how events play
out. In order to assess the impact of these
assumptions, we explore two alternative
scenarios, one more pessimistic than the
baseline and one more optimistic than the
baseline.

confidence and more severe European
recession in turn generates much slower
U.S. growth in late 2012 and an outright
contraction during the first half of 2013.
Exhibit 4 suggests that this scenario would
stop Arizona job growth in its tracks,
leaving jobs flat-lined until 2014.
Exhibit 4 also shows the impact on Arizona
of an optimistic scenario for the national
economy. In this case, the fiscal cliff is
handled smoothly before 2013 and the
European Union avoids a financial crisis (no
countries exit the Eurozone). In addition,
residential construction is assumed to
bounce back much faster than under
baseline assumptions. As we might expect,
Arizona job growth leaps ahead in 2012 and
2013 under these assumptions.

The pessimistic scenario assumes that the
U.S. sails off the fiscal cliff, with no tax
and spending deal reached until early 2013.
This generates a significant and extended
drop in consumer and business confidence.
Meanwhile the European debt crisis spirals
out of control and into a financial crisis.
The decline in demand created by the lost

Exhibit 4: Forecast Scenarios Compared

Arizona Non-Farm Employment, Alternative Scenarios

2,900

Optimistic

2,800
2,700
2,600
2,500
Pessimistic

05

4

06

07

08

09

10

11

12

13

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

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15

2,400
2,300

January, 2013 Winter Issue

Poverty Measures Rank Arizona Poorly
by Marshall J. Vest
Recent releases from the U.S. Census
Bureau show that Arizona tied with
Alabama with the 6th worst poverty rate
in the nation. The percentage of people
living below the poverty level in 2011 was
19.0%, representing over 1.2 million Arizona
residents, according to the American
Community Survey’s 1-year estimates.
Poverty was highest in Mississippi at 22.6%,
followed by New Mexico (21.5%), Louisiana
(20.4%), Arkansas (19.5%), Georgia and
Kentucky (both 19.1%), and Alabama and
Arizona (both 19.0%). Nationwide, 15.9%
of the population was living in poverty.
Poverty rates rose over the past decade,
increased significantly during the recession,
and continued climbing through 2011.
Nationwide, poverty increased by 3.5
percentage points over the past 11 years,
from 12.4% in 2000 to 15.9%. In Arizona,
the increase measured 5.1 points, rising
from 13.9% to 19.0%.
Data for metro areas and counties also
are included in the tabulations. Local
headlines declared that Tucson was
“Among the Nation’s Poorest Regions,” and
“Tucson Sixth Poorest in the Nation.” The
misleading headlines failed to reveal that
metro Tucson ranked 6th among metro
areas with more than 500,000 population.
The rankings of the largest metros showed
McAllen-Edinburg-Mission, Texas with the
worst concentration of poverty at 37.7%.
The top 10 worst are shown in Exhibit 1.
If the entire collection of the nation’s
548 micro and metro areas are included,
Pima County (metro Tucson) ranks 105th.
Moreover, Pima County is not the worst
in Arizona. The Show Low micropolitan
area is the third worst in the nation, with
33% residing in poverty. Exhibit 2 shows
Arizona’s micro and metro areas (each
defined as an entire county or as two
counties for Metro Phoenix) and their
national ranking among some 548 areas
that were included in the rankings.

Exhibit 1: Large Metro Areas with the Highest Poverty Rates in 2011
1. McAllen-Edinburg-Mission, Texas

37.70%

2. Fresno, CA

25.80%

3. El Paso, TX

24.70%

4. Bakersfield-Delano, CA

24.50%

5.

Modesto, CA

23.80%

6. Tucson, AZ

20.40%

7. Albuquerque, NM

20.40%

8. Toledo, OH

20.20%

9. New Orleans-Metairie-Kenner, LA

19.50%

10. Lakeland-Winter Haven, FL

19.40%

Source: 2011 American Community Survey 1-Year Estimates

Poverty in Arizona is high due to the
large portions of the population that are
American Indian or Hispanic. Statewide,
some 5.2% of the population is American
Indian, representing some 22 tribes and 21
reservations. Poverty and unemployment
on reservations are chronically high. Data
for the period 2006-2010 (ACS 5-year
estimates) shows poverty rates for some
of Arizona’s reservations to be 39.4% for
the Pascua Pueblo Yaqui Reservation and
41.2% for the Tohono O’odham Nation
Reservation (both in Pima County), Fort
Apache Reservation 46.7%, Gila River Indian
Reservation 47.8%, Havasupai Reservation
36.6%, Hopi Reservation 35.2%, Hualapai
Indian Reservation 41.2, Maricopa (Ak
Chin) Indian Reservation 42.4%, San Carlos
Exhibit 2: Poverty in Arizona’s Micro and Metro Areas
National Rank			

Percent

3 Show Low Micro

33.00%

67

Flagstaff Metro

72 Yuma Metro
73

21.90%
21.80%

Lake Havasu City-Kingman Micro

21.70%

105

Tucson Metro

20.40%

138

Sierra Vista- Douglas Micro

19.40%

154 Prescott Metro

19.00%

Source: 2011 American Community Survey 1-Year Estimates

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ARIZONA’S ECONOMY

Reservation 46.0%, and Yavapai-Apache
Nation Reservation 42.4%. The Hispanic
population represents 30% of Arizona’s 6.4
million residents and 29.6% live in poverty.
Rates that net out the effects of these
two groups significantly lower overall
poverty rates. For example, without
American Indians in the computation, we
estimate that poverty rates would be a full
percentage point lower statewide and over
10 percentage points in Show Low. Arizona
would rank 15th rather than 6th. Metro
Tucson would rank around 130 rather than
105. If Hispanics are excluded, Arizona’s
rates would be 14.4% and its ranking 29th.
The rate for metro Tucson would be 15.5%
and its ranking 315th.
So, high poverty rates among American
Indians and Hispanics combine to boost
poverty rates and exacerbate Arizona’s
rankings to other states. Programs
targeting those populations are the best
way to reduce poverty in Arizona.
Other often-cited reasons for high poverty
in Arizona are low wage levels across
many occupations, high unemployment,

6

lack of jobs relative to the supply of
labor, mediocre job skills, and poor public
education results.
Measures of poverty are collected by the
Census Bureau through several major
household surveys and programs. The
Current Population Survey Annual Social
and Economic Supplement (CPS ASEC), a
survey of some 100,000 addresses across
the nation is the source of official national
poverty estimates and includes measures
of income and health insurance coverage
as well. The American Community Survey
(ACS) provides estimates for smaller areas
such as cities and metro areas. Quoting
from the latter, “poverty status is
determined by comparing annual income
to a set of dollar values called poverty
thresholds that vary by family size, number
of children, and age of householder …
Poverty thresholds are updated annually
to allow for changes in the cost of living …
They do not vary geographically.”
For current and historical thresholds, visit:
http://www.census.gov/hhes/www/poverty/
data/threshld/index.html.

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

January, 2013 Winter Issue

Can Tax Cuts Pay For Themselves by
Stimulating Growth?
by Alberta H. Charney, Ph.D.

T

he phrases “cutting taxes will grow
the economy out of the recession”
and “cutting taxes pay for themselves
because the economy will grow enough to
make up the lost revenue” are commonly
used arguments for reducing tax rates
because they imply there will be no
reduction in public expenditures or public
services when cuts are made. The following
discussion begins by using simple numerical
examples of various tax cuts to determine
the size of the multipliers needed for a
tax cut to grow the economy sufficiently
to recoup the lost revenue for a tax cut.
Those same calculations are then applied
to Arizona and it’s two major taxes -individual income and sales tax.

Hypothetical Examples
Simple numerical examples are used in
the following discussion to demonstrate
whether a tax cut is likely to provide
sufficient stimulus to make up for the lost
revenues of the tax cut.
Suppose there is a Tax Base of $1,000,000.
This can be the income tax base (taxable
income) or it can be the sales tax base
(taxable sales) or any other tax base.
Suppose there is an initial 10% tax on
this tax base, so the tax generates total
revenues of $100,000.
Suppose, in an attempt to “stimulate” the
economy, the tax rate is cut to 5% and
revenues initially fall to $50,000 and the
remaining $50,000 is returned to taxpayers.
This $50,000 will be spent in the state and
will provide a stimulative effect, but will it
be enough to recoup the lost $50,000 in
revenues?
In order to address this question, we address
a different but related question: How much
stimulus is required in order to recoup the
lost revenues of the tax cut and how big

does the economic multiplier have to be
in order to create enough stimulus? With
the lower 5% tax rate, a total Tax Base of
$2,000,000 is required in order to generate
$100,000 in revenue. The amount of money
that was injected back into the economy
through the tax cut is the $50,000 that is
retained by taxpayers and this money must
generate an additional $1,000,000 of tax
base. In other words, the money given back
to taxpayers, when it is spent, must have
a multiplier effect of 20 in order to make
up the lost revenue ($1,000,000 required
additional tax base / $50,000 retained by
taxpayers) (Table X).
Table X contains other examples of
different tax rates and tax cuts and
computes the multiplier necessary to
restore revenues to their previous levels.
Consider the same $1,000,000 tax base
but the initial tax is 8%, which generates
$80,000 per year in revenues. If that rate
is reduced to 6%, then revenues fall to
$60,000 and $20,000 is retained by the
taxpayer. In this example, the tax base
has to grow to $1,333,333 in order for the
lower 6% tax rate to generate the original
$80,000 and the necessary multiplier has to
be 16.7 ($333,333 additional base / $20,000
retained by taxpayers).

”Cutting taxes will
grow the economy out of
recession”
is a commonly used
argument for reducing tax
rates. It implies there will
be no reduction in
public expenditures or
public services when
cuts are made....What
mulitpliers are needed for
this to be true?

Several other numerical examples are in
Table X. Note that the size of the multiplier
required to recoup all the revenues from
a rate reduction decreases as the initial
tax rates increase. Comparing Column
4 and Column 6 shows that a 25% rate
reduction (i.e., 20% tax rate reduced to
15% in Column 4 and a 40% tax rate
reduced to 30% in Column 6), shows that
when the initial rate is comparatively lower,
the multiplier must be larger to generate
the same revenues as before the tax cut.
A relatively small reduction in a tax rate
requires smaller multipliers to make up

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ARIZONA’S ECONOMY

Table X: Hypothetical Tax Bases, Tax Rates, Tax Cuts and the Required Multiplier When the Tax Base is the Whole Economy
Column 1

Column 2

Column 3

Column 4

Column 5

Column 6

Column 7

Column 8

A

Initial Size of
the Economy

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

B

Initial Tax Base

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

C

Initial Tax Rate

10%

10%

5%

20%

20%

40%

40%

40%

D=B*C

Initial Revenue

$100,000

$100,000

$50,000

$200,000

$200,000

$400,000

$400,000

$400,000

E

New Tax Rate

5%

9%

4%

15%

18%

30%

20%

38%

F=E*B

New Revenue

$50,000

$90,000

$40,000

$150,000

$180,000

$300,000

$200,000

$380,000

G=D-F

Returned
to Taxpayer
(stimulus)

$50,000

$10,000

$10,000

$50,000

$20,000

$100,000

$200,000

$20,000

H=D/E

Tax Base
Required to
Restore Initial
Revenue

$2,000,000

$1,111,111

$1,250,000

$1,333,333

$1,111,111

$1,333,333

$2,000,000

$1,052,632

I=H-B

Required
Change in Tax
Base

$1,000,000

$111,111

$250,000

$333,333

$111,111

$333,333

$1,000,000

$52,632

J=I/G

Required
Multiplier

20.0

11.1

25.0

6.7

5.6

3.3

5.0

2.6

lost revenues than a larger cut in the tax
rate (pairwise compare Columns 1 and 2,
Columns 4 and 5, and Columns 6, 7 and 8),
a non-surprising result. In this hypothetical
example, the required multipliers range
from 2.6 to 25, meaning that the stimulus
must multiply the tax base by 2.6 fold to
25 fold in order for the tax cuts to pay for
themselves.

primarily on the purchases of goods (usually
not services) so only a portion of total
purchases is contained in the tax base, i.e.,
taxable sales. Because tax bases are subsets
of the total economy, the stimulative
effect of the tax cut has to be large enough
to grow the whole economy by substantially
more than the necessary increase in the tax
base.

Tax Bases are Subsets of the
Overall Economy

In Table Y, the computations in Table X
are repeated under the assumption that
the hypothetical tax base of $1,000,000 is
one-half the size of the overall economy.
In this case, the total economy must be
$2,000,000 in order for the hypothetical
tax base to be $1,000,000. When the tax
base is half the size of the economy as a
whole, then the amount of money returned
to taxpayers must grow (stimulate) the
overall economy by twice as much as in
Table X in order to create the same change
in the tax base as in Table X. As a result,
all of the computed required multipliers

All of the required multipliers computed in
the examples in Table X are considerably
lower than they actually have to be because
tax bases typically only represent a portion
of an overall economy. Taxable income,
for example, is only a subset of total state
income because of numerous exemptions,
deductions and special treatment of certain
types of income (e.g., capital gains, social
security). Similarly, the sales tax is imposed
8

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

January, 2013 Winter Issue

Table Y: Hypothetical Tax Bases, Tax Rates, Tax Cuts and the Required Multiplier When the Tax Base is One-Half of the Economy
Column 1

Column 2

Column 3

Column 4

Column 5

Column 6

Column 7

Column 8

A

Initial Size of
the Economy

$2,000,000

$2,000,000

$2,000,000

$2,000,000

$2,000,000

$2,000,000

$2,000,000

$2,000,000

B

Initial Tax Base

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

C

Initial Tax Rate

10%

10%

5%

20%

20%

40%

40%

40%

D=B*C

Initial Revenue

$100,000

$100,000

$50,000

$200,000

$200,000

$400,000

$400,000

$400,000

E

New Tax Rate

5%

9%

4%

15%

18%

30%

20%

38%

F=E*B

New Revenue

$50,000

$90,000

$40,000

$150,000

$180,000

$300,000

$200,000

$380,000

G=D-F

Returned
to Taxpayer
(stimulus)

$50,000

$10,000

$10,000

$50,000

$20,000

$100,000

$200,000

$20,000

H=D/E

Tax Base
Required to
Restore Initial
Revenue

$2,000,000

$1,111,111

$1,250,000

$1,333,333

$1,111,111

$1,333,333

$2,000,000

$1,052,632

I=H-B

Required
Change in Tax
Base

$1,000,000

$111,111

$250,000

$333,333

$111,111

$333,333

$1,000,000

$52,632

J=I*A/B Required
Change in the
Economy

$2,000,000

$222,222

$500,000

$666,667

$222,222

$666,667

$2,000,000

$105,263

40.0

22.2

50.0

13.3

11.1

6.7

10.0

5.3

I=J/G

Required
Multiplier

in Table Y are double those in Table X,
ranging from 5.6 to 50. If a tax base is only
one-third of the overall economy, then the
required multipliers would have to be three
times the size of those in Table X.
From the hypothetical examples, the
multiplier necessary to recoup a cut in a tax
rate is larger when a) the tax rate is large to
start with, b) the tax cut is proportionally
large and c) the tax base is a relatively small
share of the economy.

Calculations for Arizona
Before any attempt can be made to
compute potential required multipliers for
tax rate changes in Arizona, the “size” of
the state of Arizona must be determined.
Two different measures are typically used
to measure the size of a state: personal

income and gross state product. Although
there is considerable overlap between
these two measures, specifically labor
and proprietor’s income, there are some
differences, as well. For the purposes of
these calculations, personal income will be
used simply because it is the smaller of the
two, thereby resulting in smaller required
multipliers.
Table Z provides a few years of data
for Arizona’s gross state product and
personal income. Taxable sales (excluding
the severance and use tax sales) were
approximately $85 million in 2011, which
was approximately 38% of total state
personal income. In 2007, just before the
beginning of the massive recession, taxable
sales were strong, representing 49% of
total state personal income. The sales tax
ebr.eller.arizona.edu

9

ARIZONA’S ECONOMY

Table Z: Numerical Examples for Arizona
2011

2010

2009

2008

2007

Gross State Product (millions of current dollars)

$258,447

$249,824

$245,664

$261,128

$259,157

State Personal Income

$227,287

$216,590

$212,873

$226,465

$218,588

$85,492

$80,558

$82,969

$98,220

$107,040

(all dollar figures are in $millions)

Taxable Sales in Arizona (sales tax base)1
Share of State Personal Income

0.38

0.37

0.39

0.43

0.49

State & Local Sales Tax Rate, percent

9.10

8.60

8.10

8.10

8.10

$81,633

$88,548

0.36

0.41

3.29

3.38

2

Taxable Income in Arizona (income tax base)3
Share of State Personal Income
Individual Income Tax Rate (average), percent

4

Reduce State Sales Tax Rate by 1 percent
Original Collections
New Sales Tax Rate After Rate Reduction
Collections After Sales Tax Rate Reduction
Amount Retained by Taxpayers
Sales Tax Base Required to Generate Previous Revenues
State Personal Income Required to Generate Higher Sales
Required Change in State Personal Income
Required Multiplier

$7,780

$6,928

$6,720

$7,956

$8,670

8.10

7.60

7.10

7.10

7.10

$6,925

$6,122

$5,891

$6,974

$7,600

$855

$806

$830

$982

$1,070

$96,046

$91,158

$94,655

$112,054

$122,116

$255,347

$245,089

$242,855

$258,361

$249,374

$28,060

$28,499

$29,982

$31,896

$30,787

33

35

36

32

29

$2,689

$2,989

Reduce Income Tax Rate by 1 percent
Original Collections

2.29

2.38

$1,872

$2,103

$816

$885

Taxable income required to generate previous revenues

$117,225

$125,829

State Personal Income Required to Generate Higher Taxable Income

$325,201

$310,619

$98,736

$92,032

121

104

New Income Tax Rate After Rate Reduction
Collections After Income Tax Rate Reduction
Amount Retained by Taxpayers

Required Change in State Personal Income
Required Multiplier
Excludes the Mining and Timbering Severance Tax base and the Use Tax base from these totals.

1

Assumes the ongoing 5.6% state tax, the 1% temporary tax, a common 2% local tax and 0.5% transportation tax that applies in
Arizona’s largest two metropolitan areas. The temporary tax began in mid-2010 and will end in mid-2013.
2

Obtained from the 2008 Individual Income Tax Statistics from the Arizona Department of Revenue, the most recent report
available.
3

4

Arizona has an increasing block rate structure so the rate varies by taxable income. This is an average “effective” rate computed

10

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

January, 2013 Winter Issue

rate is assumed to be 9.1% in 2011, 8.6%
in 2010 and 8.1% in 2009 and before. This
combined rate 9.1% rate consists of the
5.6% state sales tax rate, a common 2%
local sales tax rate, a ½% transportation
sales tax rate that is imposed in the two
major metropolitan areas, and the 1%
temporary sales tax rate that began in mid2010 and will end in mid-2013. The 8.1%
rates are prior to the temporary tax rate
and the 8.6% is an average of the 9.1% and
8.1% since the temporary tax started near
the middle of the year.
Taxable income, the tax base for the
Individual Income Tax, was $81,633 million
in 2008 and $88, 548 million in 2007, which
was 36% and 41% of total personal income
in the state for the two years, respectively.
The tax rates shown, 3.29% and 3.38% are
the average tax rates for 2008 and 2007,
computed by dividing total tax liability by
total taxable income for those two years.
The lower portion of Table Z shows the
Arizona computations for the multiplier
necessary for a tax cut to pay for itself, i.e.,
for the tax cut to stimulate the economy
sufficiently to restore total tax revenues to
their previous levels before the tax cut. A
cut in the sales tax rate by 1%, from 9.1%
to 8.1% in 2011 would reduce collections
by $855 million, an amount that would
be retained by taxpayers, which would be
spent locally. In order for the lower 8.1%
sales tax to generate the original amount
of revenues ($7,780 million), the sales tax
base would have to grow from the original
$85,492 million to $96,046 million. Since
the sales tax base comprises approximately
38% of the total state economy, the total
state economy (personal income) would
have to grow from $227,287 million to
$255,347 million to generate that higher
level of the sales tax base. This additional
$28,060 million in state personal income
is the required amount of growth that
must be created by the original tax cut
of $855 million in order for the tax cut
to pay for itself by growing the economy.
The multiplier necessary to generate this
amount of economic change is 33. Similar
computations for 2007 through 2010
indicate that the multipliers necessary for

cuts in sales taxes to pay for themselves
range from 29 to 36. These vary mostly
due to the share of the total economy
represented by the tax base, although the
level of the original tax rate and the relative
size of the tax cut also play a role.
The bottom portion of Table Z computes
the necessary multipliers for a 1% decrease
in the income tax rate, from 3.29% to
2.29% in 2008 and from 3.38% to 2.38%
in 2007. Using the 2008 cut in the tax
rate, collections fall from $2,689 million
to $1,872 million, returning $816 million
to taxpayers. Tax bases have to grow
substantially to make up the lost revenue
associated from this rate reduction, mainly
because the cut represents almost a third
of the initial total tax rate. The 2008
income tax base of $81,633 million has to
grow to $117,225 million in order to recoup
the revenue losses from the tax cut and
personal income must grow from $226,465
million to $325,201 million to generate that
change in the tax base. In order for the
original tax cut of $816 million (the dollar
amount returned to tax payers) to stimulate
a change in personal income of $98,736
million, the economic multiplier must be a
staggering 121. That the required multiplier
for this income tax example is much higher
than the required multiplier for the sales tax
example is primarily due to the fact that the
1% cut in the income tax is proportionally a
much larger cut than is the sales tax cut.

Multipliers
The calculations in Tables Z represent what
the multipliers have to be in Arizona for tax
cuts to be self-financing, i.e., to grow the
economy sufficiently to offset the loss of
revenues due to a reduction in a tax rate.
But how large are the relevant multipliers
in Arizona? Using an Input-Output model
for Arizona developed by IMPLAN, income
multipliers for a variety of sectors were
computed. Averaging income multipliers
across categories of spending most likely
to be affected by an increase in taxpayer
spending yielded a 1.86 multiplier. These
categories of spending include construction,
retailing, amusements, private education,
medical and repair and personal services.
ebr.eller.arizona.edu

11

ARIZONA’S ECONOMY

Table W: Arizona Calculations if the Multipliers were 2.0
2011

2010

2009

$227,287

$216,590

$212,873

2008

2007

Reduce State Sales Tax Rate by 1.0%
Original State Personal Income

$218,588
$226,465

Original Sales Tax Base
Original Sales Tax Collections
New Sales Tax Rate After Rate Reduction
Collections After Sales Tax Rate Reduction
Amount Retained by Taxpayers

$85,492

$80,558

$82,969

$98,220

$107,040

$7,780

$6,928

$6,720

$7,956

$8,670

8.10

7.60

7.10

7.10

7.10

$6,925

$6,122

$5,891

$6,974

$7,600

$855

$806

$830

$982

$1,070

Change in Personal Income with Multiplier of 2.0

$1,710

$1,611

$1,659

$1,964

$2,141

State Personal Income After Tax Cut with Change
Added

$228,997

$218,201

$214,532

$228,429

$220,728

$86,135

$81,158

$83,616

$99,072

$108,089

$6,977

$6,168

$5,937

$7,034

$7,674

$52

$46

$46

$60

$74

$6,977

$6,168

$5,937

$7,034

$7,674

$227,287

$216,590

$212,873

$226,465

$218,588

$81,633

$88,548

$2,689

$2,989

Sales Tax Base After Tax Cut
Sales Tax Revenue After Tax Cut
Additional Revenue Due to "Stimulus of the Tax Cut"
Final Sales Tax Revenue After Tax Cut
Reduce Income Tax Rate by 1.0%
Original State Personal Income
Original Taxable Income (Income Tax Base)
Original Income Tax Collections
New Income Tax Rate After Rate Reduction
Collections After Income Tax Rate Reduction
Amount Retained by Taxpayers

2.38
$2,103

$816

$885

Change in Personal Income with Multiplier of 2.0

$1,633

$1,771

State Personal Income After Tax Cut with Change
Added

$228,098

$220,358

$82,222

$89,265

$1,886

$2,120

$13

$17

$1,886

$2,120

Taxable Income After Tax Cut
Income Tax Revenue After Tax Cut
Additional Revenue Due to "Stimulus of the Tax Cut"
Final Income Tax Revenue After Tax Cut

Income multipliers are not the appropriate
multipliers to use for an analysis of an
increase in taxpayer spending because they
implicitly assume that a person is working
in a particular industry (the direct industry)
earning $X. Income multipliers therefore
also include $Y in income in industries that
sell to that direct industry (the indirect
industries) as well as the effects of when
($X+$Y) is spent locally (the induced
income $Z). The total income multiplier
is then ($X + $Y + $Z)/$X. The average
income multiplier of 1.86 is not an accurate
measure of assessing the effects of an
increase in local spending because it should
12

2.29
$1,872

really only consider the effects of the initial
income $X on induced income $Z. One way
of assessing that is to use just the induced
component, relative to direct and indirect
income, i.e., ($X + $Y + $Z)/($X+$Y), which
falls in the 1.46-1.47 multiplier range. Even
these aren’t perfect measures of an increase
in local spending because substantial
federal taxes (federal income and payroll
taxes) are removed from the impacts of
the income before it is initially spent in the
model but, in the present example, these
taxes have already been paid on the money
taxpayers would get back from a state tax
cut so the initial impact of $X in spending is

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

January, 2013 Winter Issue

larger than the initial impact of $X income.
Without knowing precisely in which sectors
this additional spending will occur and for
the purposes of this article, it is assumed
that the multiplier is approximately 2.
Table W contains calculations of revenues
created due to the stimulating effect of
the tax cut and the final revenue after the
tax cut. For the sales tax rate cut from
9.1% to 8.1% in 2011, the additional money
retained by taxpayers is doubled in the
economy (assuming all of it is spent locally)
and the $1,710 million added to personal
income generates approximately $52 million
more in revenues. Therefore, the cut in
the sales tax rate from 9.1% to 8.2% does
not reduce revenues from $7,780 million
to $6,925 million as was initially estimated;
rather revenues are only reduced from
$7,780 million to $6,977 million due to the
small stimulus of the additional taxpayer
spending.
Again, assuming the multiplier is 2, the
1% reduction in the state income tax rate
returns $816 million to taxpayers, which is
doubled in the economy to add $1,633 to
income in the state (2008 example). The
additional income tax revenues generated
from the change in income is approximately
13 million. Thus, instead of income tax
revenues falling from $2,689 million to
$1,872 million, the stimulative effect of
the cut restores only 13 million and tax
revenues are reduced from $2,689 million
to $1,886 million.

Conclusion

It is important to note that all of the
calculations in Tables X, Y, Z and W assume
that there are zero negative impacts of
state spending cuts associated with the tax
rate cuts. If the negative effects of cuts in
state spending are considered, they would
likely offset or more than offset the small
stimulative effect of the tax cut. If the
effect of government expenditures exactly
offsets the small stimulative effect, then
revenues fall by the full amount of the tax
cut. If the economic effects of government
expenditures are larger than the stimulative
effect of the tax cut, then revenues will fall
by more than then initial amount.

It is simply not reasonable to
believe that tax rate cuts will not
reduce the amount
of revenue collected by the state.
Instead, tax rate cuts will reduce
revenues by almost the
full amount implied
by the rate cut.

Under the assumption of a reasonable
multiplier of 2, tax cuts result in reductions
in revenues that are slightly less than what
would otherwise be expected as a result of
a small stimulative effect of the tax cut.
The multipliers necessary for tax cuts to
pay for themselves are extraordinarily high
and substantially out of the range of any
multipliers computed for the type of sectors
in which consumers spend. It is simply not
reasonable to believe that tax rate cuts will
not reduce the amount of revenue collected
by the state. Instead, tax rate cuts will
reduce revenues by almost the full amount
implied by the rate cut.
ebr.eller.arizona.edu

13

ARIZONA’S ECONOMY

Local Area Personal Income Data for 2011

by Valorie Rice

Local area personal income data for 2011 were released
by the Bureau of Economic Analysis on November 26th.
Personal income grew by 4.9 percent in Arizona between
2010 and 2011 while the U.S. as a whole saw income
growth of 5.2 percent. Most Arizona counties experienced
a better than 3 percent growth over the year, with only
Apache County falling below that mark. The one-year
change for Arizona was in line with the 4.75 percent
compound annual growth over the decade (Table 1).
Arizona’s per capita personal income for 2011 was
$35,062. Maricopa county enoys the highest per capita
personal income among Arizona counties with $38,071.
The only other county to best the state figure for 2011
is Cochise with $35, 738, which puts it in second place,
above Pima at $34,961. Historically, Pima has consistently
been right behind Maricopa in per capita income, but
there are a number of changes in the rankings when
looking at the last ten years. Despite having the largest
growth over the decade, both in income and population,
Pinal now has the smallest per capita personal income
in the state. It is an interesting contrast in that the
two counties forming the Phoenix-Mesa-Glendale
Metropolitan Statistical Area should be at opposite ends
of the income spectrum (Table 2).

Table 1: Personal Income - Arizona & Counties
% Change
2011 2010-2011

($000s)
Arizona

Annual Growth
2001-2011

227,286,519

4.94

4.75

Apache, AZ

1,868,915

2.32

5.39

Cochise, AZ

4,763,499

5.01

6.32

Coconino, AZ

4,620,811

3.91

4.78

Gila, AZ

1,692,440

3.90

4.88

Graham, AZ

936,660

3.68

6.37

Greenlee, AZ

269,655

8.18

4.73

La Paz, AZ

593,229

9.72

5.56

Maricopa, AZ

147,724,392

5.25

4.37

Mohave, AZ

5,290,530

4.30

5.16

Navajo, AZ

2,744,408

3.19

5.63

Pima, AZ

34,596,360

3.96

4.67

Pinal, AZ

9,301,723

6.40

9.90

Santa Cruz, AZ

1,193,646

3.61

5.20

Yavapai, AZ

6,248,490

3.88

5.06

Yuma, AZ

5,441,761

4.92

6.10

Table 2: 2011 Rankings by Per Capita Income and Change Over Time
Ranked by 2011 Per Capita
Personal Income
Arizona

14

How County Rankings Have Changed

35,062

2001

2007

2011

1

Maricopa, AZ

38,071

Maricopa, AZ

Maricopa, AZ

Maricopa, AZ

2

Cochise, AZ

35,738

Pima, AZ

Pima, AZ

Cochise, AZ

3

Pima, AZ

34,961

Coconino, AZ

Coconino, AZ

Pima, AZ

4

Coconino, AZ

34,353

Yavapai, AZ

Cochise, AZ

Coconino, AZ

5

Gila, AZ

31,846

Cochise, AZ

Greenlee, AZ

Gila, AZ

6

Greenlee, AZ

31,333

Gila, AZ

Yavapai, AZ

Greenlee, AZ

7

Yavapai, AZ

29,490

Greenlee, AZ

Gila, AZ

Yavapai, AZ

8

La Paz, AZ

29,053

Mohave, AZ

Mohave, AZ

La Paz, AZ

9

Yuma, AZ

27,091

Pinal, AZ

Yuma, AZ

Yuma, AZ

10

Mohave, AZ

26,145

Yuma, AZ

La Paz, AZ

Mohave, AZ

11

Apache, AZ

25,813

Santa Cruz, AZ Santa Cruz, AZ Apache, AZ

12

Navajo, AZ

25,554

La Paz, AZ

Pinal, AZ

Navajo, AZ

13

Graham, AZ

25,215

Apache, AZ

Graham, AZ

Graham, AZ

14

Santa Cruz, AZ

25,037

Navajo, AZ

Navajo, AZ

Santa Cruz, AZ

15

Pinal, AZ

24,287

Graham, AZ

Apache, AZ

Pinal, AZ

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

January, 2013 Winter Issue

Forecast and Indicator Tables
Forecast Tables..................................................................16
Arizona Indicators
Arizona and US...........................................................17
Metropolitan Statistical Areas...............................18
Counties........................................................................20

TABLES: SOURCES AND ABBREVIATIONS
ADHS: Arizona Department of Health Services
ADOA: Arizona Department of Administration, Office of Employment and Population Statistics
ADOR: Arizona Department of Revenue
ADOT: Arizona Department of Transportation
ARMLS: Arizona Regional Multiple Listing Service
ASPB: Arizona State Parks Board
BEA: Bureau of Economic Analysis, U.S. Department of Commerce
BLS: Bureau of Labor Statistics, U.S. Department of Labor
Census C-40: U.S. Census Bureau, U.S. Department of Commerce
Micropolitan SA: Micropolitan Statistical Area must have
at least one urban cluster of at least 10,000, but less than
50,000 inhabitants.

EBR: The Economic and Business Research Center, The University
of Arizona.
MSA: Metropolitan Statistical Area must have at least one core
urbanized area of 50,000 or more inhabitants.
PSHIA: Phoenix Sky Harbor International Airport
SAAR: Seasonally adjusted at annual rates
TAR: Tucson Association of Realtors
U.S. Bankruptcy Court: District of Arizona
USCBP: U.S. Customs and Border Protection, U.S. Department
of Homeland Security

* All Aggregate Retail Sales figures reported by EBR include retail, food, restaurant & bars and gasoline sales.
Source: Economic and Business Research Center, Eller College of Management, The University of Arizona.

>>Need More?
Do you need more detailed and comprehensive forecast data and analysis? Learn about the benefits of becoming a
Forecasting Project sponsor. Forecasting Project sponsorship allows your company or organization to access an in-depth
menu of economic forecasting and consulting services, as well as, quarterly forecast update meetings. Contact Marshall
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producing quarterly economic forecasts for Arizona and its metro areas. These forecasts are recognized as among the
most accurate in the Western states.

ebr.eller.arizona.edu

15

ARIZONA’S ECONOMY

Forecast Tables
Arizona
Personal Income ($mill)
% change
Retail Sales ($mill)
% change
Non Farm Employment (000s)
% change
Population (000s)
% change
Residential Permits (units)
% change

2011

2012

2013

2014

2015

227,287

237,590

247,936

262,633

280,550

4.9

4.5

4.4

5.9

6.8

77,388

81,627

85,513

90,686

96,190

9.1

5.5

4.8

6.0

6.1

2,405.5

2,453.6

2,501.7

2,571.5

2,673.4

1.0

2.0

2.0

2.8

4.0

6,438.2

6,481.8

6,540.0

6,625.6

6,743.2

0.6

0.7

0.9

1.3

1.8

13,310

20,345

24,833

35,843

48,552

6.4

52.9

22.1

44.3

35.5

Phoenix-Mesa MSA

2011

2012

2013

2014

2015

Personal Income ($mill)

159,127

166,387

174,228

184,853

197,229

% change
Retail Sales ($mill)
% change
Non Farm Employment (000s)
% change
Population (000s)
% change
Residential Permits (units)
% change

Tucson MSA
Personal Income ($mill)
% change
Retail Sales ($mill)
% change
Non Farm Employment (000s)
% change
Population (000s)
% change
Residential Permits (units)
% change

16

4.9

4.6

4.7

6.1

6.7

53,463

56,158

59,117

62,617

66,662

9.9

5.0

5.3

5.9

6.5

1,712.8

1,756.2

1,793.9

1,850.2

1,922.4

1.4

2.5

2.1

3.1

3.9

4,227.6

4,266.4

4,313.5

4,374.2

4,452.8

0.6

0.9

1.1

1.4

1.8

9,081

15,501

18,198

23,790

32,870

9.4

70.7

17.4

30.7

38.2

2011

2012

2013

2014

2015

35,921

37,220

38,860

40,952

43,299

4.5

3.6

4.4

5.4

5.7

11,498

12,201

12,619

13,056

13,488

7.6

6.1

3.4

3.5

3.3

354.6

357.3

362.1

368.9

378.1

0.1

0.8

1.3

1.9

2.5

986.1

991.3

1,000.1

1,011.5

1,025.8

0.5

0.5

0.9

1.1

1.4

2,242

2,899

3,814

4,580

5,806

15.7

29.3

31.6

20.1

26.8

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

January, 2013 Winter Issue

Arizona Economic Indicators
Arizona Summary - Monthly

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

Civilian Labor Force (seas. adj.), BLS

3,005,601

3,003,137

3,006,831

3,011,092

3,013,031

Unemployment Rate (seas. adj.), BLS
Total Nonfarm Employment (000s, Seas. Adj.), BLS
Private
Government
Aggregate Retail Sales ($000), EBR
New Residential Permits (units), Census C-40

8.3

8.3

8.2

8.1

7.8

2,460

2,462.50

2,467.20

2,464.10

2,476.80

2,033.50

2,043.90

2,047.60

2,058

2,079.80

362.4

400.7

424.7

426.4

427.3

6,186,712.51

6,419,041.49

1,996

2,199

6,588,229
1,626

1,758

1,479

Arizona Summary - Quarterly

2011 Q3

2011 Q4

2012 Q1

2012 Q2

2012 Q3

Population* (seas. adj.), ADOA & EBR

6,444,142

6,455,550

6,465,992

6,476,384

6,488,762

0.59%

0.63%

0.65%

0.66%

0.69%

11,278

9,660

8,481

8,633

11,391

   % Chg from Year Ago
Natural Increase, ADHS/EBR

14

13.3

12.7

12.5

14

649

1,230

1,512

2,158

2,571

227,350

229,168

232,019

235,121

240,350

4.50%

4.58%

2.85%

3.56%

5.72%

Per Capita Pers. Inc. ($ mil, SAAR), BEA & EBR

35,280

35,499

35,883

36,304

37,041

Civilian Nonag Wage Rate, ($, SAAR), BEA

47,333

47,671

47,872

48,170

49,025

Birth Rate (per 1,000), ADHS & EBR
Net Migration, ADHS & EBR
Total Personal Income ($, SAAR), BEA
% Chg from Year Ago

All Transactions House Price Index, FHFA
% Chg from Year Ago

235.43

240.33

238.27

241

249.93

-11.61%

-7.39%

-2.61%

3.52%

6.16%

*Population numbers are based on ADOA annual estimates through July 2011, EBR then makes quarterly middle of quarter estimates and projections.
SAAR: seasonally adjusted annual rate

Inflation and Prices

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

228.723

230.102

231.414

231.751

231.025

1.42%

1.70%

2.00%

2.18%

1.77%

231.893

233.001

234.083

234.966

233.206

1.79%

2.09%

2.15%

2.52%

1.94%

200.1

202.6

204.5

203.5

201.8

-2.20%

-0.30%

0.39%

1.19%

0.20%

U.S. Consumer Price Indices (seas. adj.), BLS
All Urban Consumers: All Items
% Chg from Year Ago
Western States - All Urban Consumers: All items
% Chg from Year Ago
U.S. Producer Price Index: All Commodities (seas. adj.),
BLS
% Chg from Year Ago

ebr.eller.arizona.edu

17

ARIZONA’S ECONOMY

Arizona Economic Indicators - Metropolitan Statistical Areas
Phoenix-Mesa-Glendale, MSA, Summary - Monthly

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

Civilian Labor Force, BLS

2,017,988

2,030,028

2,037,343

2,039,856

2,045,476

Unemployment Rate, BLS
Total Nonfarm Employment (000s), BLS
Private
Government
Average Hourly Earnings, Total Private, $, BLS

7.5

7.4

6.9

6.9

6.5

1,714.20

1,747.70

1,767.30

1,778.30

1,796.90

1,513.50

1,522.80

1,526.50

1,535.60

1,553.70

200.7

224.9

240.8

242.7

243.2

23.14

23.4

23.3

23.2

23.26

4,397,233.81

Aggregate Retail Sales ($000s), EBR & ADOR

4,495,713.51

Total New Residential Permits (units), Census C-40

1,473

1,707

1,031

1,159

1,021

Phoenix-Mesa-Glendale MSA, Summary - Annual

2008

2009

2010

2011

2012

4,167,019

4,186,131

4,200,427

4,227,601

4,273,897

1.95%

0.46%

0.34%

0.65%

1.10%

156,755,410 146,163,794 149,093,883

157,026,115

Population, ADOA*
% Chg from Year Ago
Total Personal Income ($000), BEA
% Chg from Year Ago
Average Wage per Job, $, BEA
% Chg from Year Ago
Consumer Price Index (Phx-Mesa-Glndle MSA)
All Urban Consumers: All items, BLS

2.41%

-6.76%

2.00%

5.32%

45,455

45,753

46,311

47,599

1.72%

0.66%

1.22%

2.78%

119.264

117.568

118.227

121.483

3.45%
-1.42%
0.56%
2.75%
% Chg from Year Ago
*Population counts as of July 1st of each year. ADOA population estimates differ from the official Census Bureau estimates.

Tucson MSA, Summary - Monthly
Civilian Labor Force, BLS
Unemployment Rate
Total Nonfarm Employment (000s), BLS
Private
Government
Average Hourly Earnings, Total Private, $, BLS
Aggregate Retail Sales ($000), EBR & ADOR
Total New Residential Permits (units), Census C-40

Tucson MSA, Summary - Annual
Population, ADOA*
% Chg from Year Ago
Total Personal Income ($000), BEA
% Chg from Year Ago
Average Wage per Job, $, BEA

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

447,320

452,897

456,749

456,121

455,429

7.7

7.6

7

7.1

6.6

342.8

352.4

357.7

359.4

361.9

277

278.1

278.9

280.3

282.2

65.8

74.3

78.8

79.1

79.7

22.27

22.17

22.41

22.51

22.52

944,293.77

968,076.72

954,870.81

985,427.87

291

255

325

328

273

2008

2009

2010

2011

2012

984,032

984,274

981,168

986,081

990,380

0.69%

0.02%

-0.32%

0.50%

0.44%

35,067,808

32,977,680

33,277,952

34,596,360

6.04%

-5.96%

0.91%

3.96%

40,646

40,748

41,304

42,398

3.51%
0.25%
1.36%
2.65%
% Chg from Year Ago
*Population counts as of July 1st of each year. ADOA population estimates differ from the official Census Bureau estimates.

18

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

January, 2013 Winter Issue

Arizona Economic IndicatorsIndicators Metropolitan Statistical Areas
Flagstaff MSA (Coconino County), Summary - Monthly
Civilian Labor Force, ADOA

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

70,745

70,439

70,688

70,771

70,959

8.4

8.4

8.2

8.2

7.9

60.7

61.1

62.7

62.4

61.6

Private

42.1

42.1

42.4

42

41.5

Government

18.6

19

20.3

20.4

20.1
16.8

Unemployment Rate
Total Nonfarm Employment (000s), ADOA

Average Hourly Earnings, Total Private, $, BLS
Gross Retail Sales ($000), EBR & ADOR
Total New Residential Permits (units), Census C-40
Flagstaff MSA (Coconino County), Summary - Annual
Population, ADOA*
% Chg from Year Ago
Total Personal Income ($000), BEA
% Chg from Year Ago
Average Wage per Job, $, BEA

16.04

16.17

15.93

16.22

222,122.65

228,291.10

223,317.17

206,645.34

34

19

65

31

7

2008

2009

2010

2011

2012

132,864

133,626

134,679

134,162

134,313

0.27%

0.57%

0.79%

-0.38%

0.11%

4,539,992

4,448,866

4,446,722

4,620,811

7.14%

-2.01%

-0.05%

3.91%

35,866

36,512

37,186

37,927

1.63%
1.80%
1.85%
1.99%
% Chg from Year Ago
*Population counts as of July 1st of each year. ADOA population estimates differ from the official Census Bureau estimates.
Lake Havasu City - Kingman MSA (Mohave County)
Summary - Monthly
Civilian Labor Force, ADOA
Unemployment Rate
Total Nonfarm Employment, (000s), ADOA
Private
Government
Average Hourly Earnings, Total Private, $, BLS
Gross Taxable Sales ($000), EBR & ADOR
Total New Residential Permits (units), Census C-40
Prescott MSA (Yavapai County), Summary - Monthly
Civilian Labor Force, ADOA
Unemployment Rate
Total Nonfarm Employment (000s), ADOA
Private
Government
Average Hourly Earnings, Total Private, $, BLS
Gross Taxable Sales ($000), EBR & ADOR
Total New Residential Permits (units), Census C-40
Yuma MSA (Yuma County), Summary - Monthly Data
Civilian Labor Force, BLS
Unemployment Rate
Total Nonfarm Employment (000s), ADOA
Private
Government
Average Hourly Earnings, Total Private, $, BLS
Gross Taxable Sales ($000s), EBR & ADOR
New Residential Permits (units), Census C-40

Jun 2012
85,367

Jul 2012
85,398

Aug 2012
85,400

Sep 2012
85,317

Oct 2012
85,316

9.8

9.7

9.7

9.4

9.3

45.9

45.6

45.9

45.9

45.6

37.9

37.8

37.7

37.4

37

8

7.8

8.2

8.5

8.6
16.96

16.65

16.77

16.63

16.87

200,453.54

194,735.87

199,577.52

199,302.99

25

19

45

29

38

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

90,403

90,085

89,694

89,600

89,661

8.8

8.8

8.6

8.5

8.3

53.1

54.4

54.2

54.6

55.1

43.5

44.1

43.5

43.8

44.3

9.6

10.3

10.7

10.8

10.8
17.44

16.99

16.57

17.03

17.39

234,644.30

244,511.11

242,961.84

238,287.59

44

47

35

35

38

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

95,190

92,722

91,357

92,406

90,038

31.4

30.2

29.7

29.8

27.5

47.3

48.4

49

49.4

50.1

33.3

33.3

33.2

33.4

34

14

15.1

15.8

16

16.1
21

21.07

21.14

21.05

20.9

181,791.98

201,197.06

183,806.90

182,837.88

35

42

42

111

49

ebr.eller.arizona.edu

19

ARIZONA’S ECONOMY

Arizona Economic Indicators - Counties
Apache County, Summary - Monthly Data
Civilian Labor Force, ADOA
Unemployment Rate
Total Nonfarm Employment (000s), ADOA

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

23,069

22,888

22,371

22,096

21,688

20.1

19

17.7

18.7

17.9

19,225

19,725

19,600

19,175

19,050

Total Private

7,700

7,700

7,675

7,625

7,575

Government

11,525

12,025

11,925

11,550

11,475

Gross Taxable Sales ($000s), EBR & ADOR

27,377.99

17,158.75

32,088.11

31,519.10

Cochise County (Sierra Vista - Douglas Micropolitan SA) Summary - Monthly Data

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

59,917
8.2
35,900

59,821
8.2
36,625

59,588
7.7
36,825

59,506
7.8
36,900

59,457
7.4
37,200

Total Private

23,875

23,875

23,925

24,000

24,350

Government

12,025

12,750

12,900

12,900

12,850

151,705.44

154,827.21

157,912.99

162,868.39

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

14,318

14,392

14,574

14,342

14,179

Total Civilian Labor Force, ADOA
Unemployment Rate
Total Nonfarm Employment, ADOA

Gross Taxable Sales ($000), EBR & ADOR

Graham County Summary - Monthly Data
Total Civilian Labor Force, ADOA
Unemployment Rate
Total Nonfarm Employment, ADOA

9.7

9.5

8.8

8.7

8.4

8,025

8,300

8,700

8,500

8,475

Total Private

5,475

5,475

5,475

5,475

5,475

Government

2,550

2,825

3,225

3,025

3,000

Gross Retail Sales ($000), EBR & ADOR

26,198.35

26,420.02

24,886.73

27,623.49

Greenlee County Summary - Monthly Data

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

3,966

3,986

4,055

4,021

3,944

Total Civilian Labor Force, ADOA

6.3

6.1

5.7

6.4

5.4

3,650

3,750

3,725

3,775

3,725

Total Private

3,125

3,150

3,125

3,150

3,100

Government

525

600

600

625

625

Gross Taxable Sales ($000), EBR & ADOR

35,539.84

36,379.11

33,454.26

36,581.74

La Paz County, Summary - Monthly Data

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

7,595

7,391

7,235

7,201

7,202

Unemployment Rate
Total Nonfarm Employment, ADOA

Civilian Labor Force, ADOA
Unemployment Rate
Total Nonfarm Employment, ADOA

9.8

9.3

9.5

8.8

4,700

4,700

4,675

4,750

Total Private

2,700

2,700

2,725

2,700

2,775

Government

2,000

2,000

1,975

1,975

1,975

20,983.41

19,510.26

19,560.96

18,381.76

Gross Taxable Sales (000$), EBR & ADOR

20

9.6
4,700

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

January, 2013 Winter Issue

Arizona Economic Indicators - Counties
Navajo County (Show Low Micropolitan SA)
Summary - Monthly Data
Total Civilian Labor Force, ADOA
Unemployment Rate
Total Nonfarm Employment, ADOA
Total Private
Government
Gross Taxable Sales ($000), EBR & ADOR

Santa Cruz County, Summary - Monthly Data
Total Civilian Labor Force, ADOA
Unemployment Rate
Total Nonfarm Employment, ADOA
Private
Government
Gross Taxable Sales ($000), EBR & ADOR

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

41,069

40,884

40,377

39,821

39,367

15.5

14.9

13.8

14.4

13.9

27,600

28,200

28,375

27,900

27,900

18,100

18,100

18,000

17,575

17,575
10,325

9,500

10,100

10,375

10,325

122,388.36

111,491.95

112,527.17

107,367.66

Jul 2012

Aug 2012

Sep 2012

Oct 2012

Nov 2012

18,352
18.3
12,625

18,482
18.5
12,950

18,247
17.7
12,975

18,594
18.3
13,225

18,588
16.3
13,600

8,800

8,750

8,775

9,025

9,400
4,200

3,825

4,200

4,200

4,200

40,996.36

39,876.43

42,132.85

42,109.21

ebr.eller.arizona.edu

21

January, 2013 Winter Issue

ARIZONA’S ECONOMY
ECONOMIC AND BUSINESS RESEARCH CENTER
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