Phoenix Economy: Cost of Living, Jobs, and Industries

See also: Arizona economy

The Phoenix metro area — formally Phoenix-Mesa-Chandler — is one of the fastest-growing large metros in the United States. It has been near the top of the country for population growth for more than a decade, and its economy has shifted noticeably from a real-estate-and-tourism story to a far more diversified mix that now includes semiconductors, finance, healthcare, and aerospace alongside its long-standing construction and hospitality sectors.

This is a plain-English tour of how the Phoenix metro economy works. For the country-level view, see The State of the U.S. Economy and the broader Economy hub and city cluster.

How big is the Phoenix metro economy?

For example, recent metro GDP for Phoenix-Mesa-Chandler has run around $370 billion, according to the Bureau of Economic Analysis. Metro population is roughly 5.1 million, per the U.S. Census Bureau. That makes Phoenix the largest metro in the Southwest outside of Los Angeles, Houston, and Dallas.

The biggest industries

A few sectors do most of the work in the Phoenix metro economy:

• Semiconductors and advanced manufacturing — Intel and TSMC have built major chip-fabrication plants in the metro, anchored in Chandler and north Phoenix. The supply chain around them — equipment, gases, services — has grown quickly.
• Healthcare — Banner Health, HonorHealth, Mayo Clinic Arizona, and Dignity Health together employ huge numbers of workers across the metro.
• Finance and insurance — major back-office operations for banks, insurers, and financial-services firms cluster in Tempe, Chandler, and downtown Phoenix.
• Construction and real estate — the metro's fast population growth keeps residential and commercial construction unusually busy compared to most U.S. metros.
• Aerospace and defense — Honeywell, Boeing, and Raytheon all have large metro operations.
• Tourism and hospitality — winter and shoulder-season visitors, spring training baseball, and a year-round resort and golf industry drive a major travel sector.
• Logistics — the metro's location and large warehousing footprint make it a regional distribution hub for the Southwest.

Jobs and wages

Metro labor data is published by the Bureau of Labor Statistics West region. For example, the Phoenix metro unemployment rate has typically run at or below the national average over the past several years, helped by steady in-migration and growth in tech, finance, and healthcare hiring.

Arizona's statewide minimum wage is set by a voter-approved formula that adjusts each year for inflation, well above the federal floor of $7.25. The City of Flagstaff sets a higher local minimum, but Phoenix and most other Arizona cities use the state rate. The latest figures are at the Industrial Commission of Arizona.

Cost of living

Phoenix's cost of living used to run well below the national average, but housing costs have risen sharply since 2020 along with the metro's population. For example, recent HUD Fair Market Rent for a two-bedroom in the metro has run around $1,700 a month, with central Phoenix and Scottsdale higher and the West Valley lower. Current county-level numbers are at HUD User.

The federal government tracks region-specific inflation data through the BLS West region. Phoenix CPI has at times run above the national average, partly because of fast rent growth.

Taxes in Phoenix

Arizona has a flat state income tax, one of the lower flat rates in the country. Combined sales tax in the City of Phoenix is around 8.6%, made up of the state's 5.6% base plus county and city pieces. Property taxes are moderate by U.S. standards. Statewide tax rules live at the Arizona Department of Revenue, and you can read more about how sales tax works in our glossary.

How the Phoenix metro fits into the national picture

Phoenix is one of the clearest examples of the long-running U.S. shift toward the Sun Belt. People and companies have been moving to the metro from California, the Midwest, and the Northeast for years, drawn by lower housing costs, no state estate tax, and a business-friendly climate. The arrival of large semiconductor plants has pulled the metro further into national supply-chain conversations: when policy on domestic chip manufacturing changes in Washington, Phoenix often gets named in the next paragraph. Federal data on chip-industry investment lives at the U.S. Department of Commerce.

Population growth and the housing market

Phoenix has consistently been one of the fastest-growing large metros in the country. The U.S. Census Bureau tracks the year-by-year change. Faster growth means more housing demand, more school enrollment, and more pressure on roads and water systems — all of which Phoenix is still building out.

A note on the numbers

Numbers in this article change every quarter — always check the latest from BEA, BLS, and HUD User for the most current data on the Phoenix metro.