ARIZONA ECONOMIC OUTLOOK
Q2 2025 Market Analysis & Business Strategy Insights
EXECUTIVE SUMMARY
Arizona’s economy continues to demonstrate resilience amid national economic headwinds, with key sectors showing promising growth trajectories despite inflationary pressures and ongoing market volatility. This quarter’s analysis reveals opportunities for small and medium-sized businesses to position themselves strategically as the state navigates changing economic currents.
ARIZONA’S ECONOMIC LANDSCAPE: A SNAPSHOT
Arizona’s economic foundation remains robust in early 2025, outpacing national growth rates in several key metrics. The state’s GDP growth reached 3.2% in Q1 2025, compared to the national average of 2.7%, continuing a trend of steady expansion despite broader economic uncertainties.
Housing markets have begun to stabilize after the volatility of recent years, with median home prices in Phoenix showing a modest 2.1% increase year-over-year—a welcome sign of sustainable growth after the previous boom-bust cycles. The rental market has similarly found equilibrium, with average rents increasing by just 1.8% statewide.
Population growth continues to be a defining characteristic of Arizona’s economic story, with the state welcoming approximately 92,000 new residents in the past year. This influx continues to fuel consumer spending, housing demand, and workforce expansion, providing a strong foundation for continued economic development.
SECTOR PERFORMANCE ANALYSIS
Technology
Population growth continues to be a defining characteristic of Arizona’s economic story, with the state welcoming approximately 92,000 new residents in the past year. This influx continues to fuel consumer spending, housing demand, and workforce expansion, providing a strong foundation for continued economic development.
SECTOR PERFORMANCE ANALYSIS
Technology
Arizona’s technology sector has emerged as a standout performer, with the “Silicon Desert” continuing to expand its footprint. Tech employment grew by 5.7% year-over-year, adding approximately 8,300 new jobs to the state economy. Notable developments include:
- Semiconductor manufacturing investments exceeding $3.2 billion in the past 18 months
- A 23% increase in technology startup formations compared to 2024
- Median tech salaries reaching $98,500, up 4.2% from previous year
The state’s lower cost of living relative to California and Washing