Arizona’s job growth has fallen behind national trends over the past year, with the state recording a net loss of jobs and rising unemployment, according to a new report from Republicans on the Joint Economic Committee.
The February employment update for Arizona found the state added approximately 11,000 jobs month-over-month, but posted a net loss of about 300 jobs over the previous 12 months.
The report ranked Arizona 24th in the nation for job growth during that period.
Arizona’s unemployment rate rose to 4.6 percent, up from 4.2 percent one year earlier, while the state’s labor force participation rate declined to 61.7 percent, down 0.4 percentage points year-over-year.
Nationally, the labor market continued to expand, with U.S. payrolls increasing by roughly 178,000 jobs in March, while the national unemployment rate remained lower at approximately 4.3 percent.
The report indicates Arizona’s recent performance has lagged the national pace on several key labor metrics, including year-over-year job growth and unemployment trends.
At the same time, the data shows continued monthly job gains in Arizona, reflecting ongoing hiring activity despite weaker longer-term growth.
Other analyses have also pointed to slowing job growth in the state. A December 2025 update from the Common Sense Institute found Arizona’s job growth had moderated significantly compared to earlier post-pandemic years.
Separately, the Arizona Chamber Foundation reported that job growth in 2025 was minimal following revisions to earlier employment data.
Conversely, state officials have highlighted other economic indicators in recent months. Governor Katie Hobbs’ office cited a report ranking Arizona second nationally in overall economic performance, which includes measures such as population growth, domestic migration, and gross domestic product.
The Joint Economic Committee report focuses specifically on labor market conditions, including employment levels, unemployment, and workforce participation.
Congressman Abraham Hamadeh (R-AZ-08) announced his letter to Secretary of Veterans Affairs Doug Collins to adopt common-sense reforms to the VA Home Loan Guarantee Program.
The goal is to eliminate outdated bureaucratic hurdles, reduce unnecessary costs, and better align the program with today’s competitive housing market so more young veterans can achieve the American Dream of homeownership.
In a formal letter to Secretary Collins, Congressman Hamadeh highlighted the Trump administration’s strong progress in refocusing the Department of Veterans Affairs on its core mission: delivering timely benefits, expanding access to quality care, slashing the claims backlog, and eliminating waste. Building on that momentum, Hamadeh expressed confidence that practical improvements to the home loan program will receive serious consideration.
“As my fellow veteran and Committee member, Congressman Van Orden said in our hearing on the subject, we must find ways to eliminate the unnecessary administrative costs of the VA Home Loan program and better align it with other Federal housing programs,” said Congressman Hamadeh. “My family is in real estate. I am very familiar with housing, and I know the unintended consequences of bureaucratic policies that have little to no protective value and ignore the realities of the marketplace.”
Congressman Hamadeh’s recommendations focus on four key areas where the VA Home Loan program lags behind other federal housing programs, such as FHA and USDA loans:
Ending Origination Fee Stacking: VA rules cap lender origination and administrative fees at 1% of the loan amount, intended to cover all lender labor and overhead. However, veterans report lenders charging the full 1% while adding separate itemized fees for processing, underwriting, and other services. This practice amounts to an unfair cash grab that increases costs for veterans and should be strictly enforced.
Modernizing Underwriting Process: The VA continues to rely heavily on manual underwriting, resulting in average closing times of about 10 business days. In contrast, the FHA has implemented semi-automated systems that can approve straightforward loans in as little as 2 to 7 days. The Mortgage Bankers Association has testified that automated underwriting would accelerate the process and help reduce the perception that VA loans are slower and more cumbersome.
Raising the Seller Concessions Cap: The VA currently limits seller concessions to 4% of the home’s reasonable value. Both FHA and USDA programs allow up to 6%. In competitive markets, this 2-percentage point difference can mean the difference between a veteran’s offer being accepted or denied.
Addressing Appraiser Shortages Through Reasonable Certification Requirements: The VA has identified 436 counties in 31 states facing appraiser shortages that delay loans and drive up costs. A major contributor is the VA’s stringent experience requirement of 3 to 5 years for certification, compared to just 12 to 18 months for FHA and USDA programs. Aligning standards would increase the pool of qualified appraisers, shortening waiting times and lowering fees.
These targeted reforms would remove barriers without compromising program integrity, helping young veterans secure homes more efficiently and affordably. By modernizing the program, VA can better fulfill its promise to those men and women who have sacrificed for our country.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
With Arizona’s legislative session scheduled to close this week, small business owners are still left in a lurch over a lack of tax conformity.
Twice this year Gov. Katie Hobbs has vetoed legislation that would have provided full conformity in the tax code with the One Big Beautiful Bill Act passed last summer. The governor maintains that the best path forward would not be full conformity, but rather partial.
Gov. Hobbs wanted the Republican-led legislature to get on board with the Democratic minority’s Middle Class Tax Cuts Package.
The Arizona Free Enterprise Club, a free market policy organization, said Hobbs’ preferred conformity package would require Arizonans to file taxes twice and increase taxes by $200 million.
File your taxes twice. Pay more. Welcome to Katie Hobbs’ Arizona.
After vetoing two full conformity bills, Hobbs helped turn what should have been a routine tax update into a full-blown mess in the middle of filing season. Her administration issued forms based on full… pic.twitter.com/eS5n6tiWfm
That threat of double-filing, per Senate President Warren Petersen (R-LD14), has been mitigated because the tax forms sent out by the state aligned with what the Republicans brought to the table (and Hobbs rejected).
Prior to the first veto, the Arizona Department of Revenue issued its advice on filing under the new changes to federal tax law.
Republican leadership in the legislature urged Arizonans to file their taxes, promising to not support any conformity package that would effectively “punish Arizona taxpayers” and require refiling.
“For tax year 2025 we will not support anything that forces Arizonans to refile,” said Petersen.
“Any outcome that requires you to amend your return or pay more is a nonstarter,” said House Speaker Steve Montenegro (R-LD29).
Gov. Hobbs justified her vetoes under the claim that Trump’s One Big Beautiful Bill would require poorer Arizonans to shoulder more of the tax burden.
“We should not hold tax cuts for over 88 percent of Arizonans hostage in order to force through tax breaks for special interests,” said Hobbs. “Other questions of tax conformity must be decided through budget negotiations, following the precedent set by Governor Ducey.”
Sen. Petersen rejected Hobbs’ view of the federal tax changes.
Petersen dismissed Hobbs’ claim as “a nice talking point” that ignored what he says is the reality of how the federal legislation impacts an overwhelming majority of the state’s business transactions.
“That’s just not true,” said Petersen. “We’re talking about tax on tips, we’re talking about tax on car interest loans, we’re talking about no overtime. These are not rich people. These are small business owners. 90 percent of business transactions are small business owners.”
“It’s a nice talking point, but it’s really not true.”
Arizona Senate President Warren Petersen joined @AZMorningNews to push back on Gov. Katie Hobbs after she vetoed Arizona tax conformity and tax-cut bills tied to federal changes.
Chad Heinrich, Arizona director of the National Federation of Independent Business (NFIB), toldThe Phoenix Business Journal that the lack of conformity will cause increased taxes on over 700,000 small businesses in Arizona. Heinrich blamed Hobbs.
“Not conforming with the key business provisions is, in practical effect, a tax increase on the Arizonans who can least absorb it — those who own and operate Arizona’s small businesses,” said Heinrich. “The Legislature has done its part. Governor Hobbs should finish the job, now, before one more small business owner has to guess about their future.”
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The National Federation of Independent Business (NFIB) released a new report detailing the significant economic benefits and tax savings Arizona’s 706,640 small businesses will realize now that the 20% Small Business Tax Deduction has been made permanent.
The report also outlines additional federal tax relief measures signed into law that will support small business growth across the state.
According to the report, making the deduction permanent is projected to generate 26,000 new jobs annually in Arizona over the next 10 years, along with an annual increase in state GDP of $1.4 billion during the first decade. After 2035, the benefits grow even larger, with an expected $2.9 billion annual increase in state GDP and 49,000 new jobs created each year.
Nationally, the permanent deduction is expected to add 1.2 million jobs and $75 billion to U.S. GDP each year for the first 10 years, rising to 2.4 million jobs and $150 billion in annual GDP growth beyond 2035.
“Making the 20% Small Business Deduction permanent was a landmark win for Main Street — and Arizona small businesses are already seeing that benefit,” stated NFIB State Director Chad Heinrich. “But the conformity fight isn’t over, and every provision Arizona fails to adopt is a tax increase on hardworking small business owners.”
Since 2017, the Small Business Tax Deduction has allowed pass-through businesses to deduct up to 20% of their qualified business income. This relief has enabled small businesses to expand operations, hire more workers, invest in employees, and strengthen their communities. The deduction was originally scheduled to expire at the end of 2025, which would have resulted in a significant tax increase on nine out of ten small businesses.
On July 4, 2025, President Trump signed legislation making the 20% Small Business Tax Deduction permanent. This action provides long-term certainty for small business owners, allowing them to retain more of their earnings to reinvest in their operations rather than sending additional funds to federal and state governments. It also helps level the competitive playing field against larger corporations.
In addition to the 20% deduction, the legislation includes several other key provisions. The Section 179 small-business expense deduction was doubled from $1.25 million to $2.5 million and will now be indexed for inflation, allowing businesses to immediately deduct the full cost of qualifying equipment and property.
The 100% bonus depreciation under Section 168(k) was permanently restored, enabling businesses to fully deduct the cost of qualified property in the year it is placed in service rather than spreading depreciation over many years.
Lastly, the estate tax exemption was permanently increased to $15 million for individuals and $30 million for married couples filing jointly, with inflation adjustments. This change helps family-owned small businesses avoid being forced to sell or liquidate assets to pay taxes upon the owner’s death.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
Small business optimism weakened in March as a sharp drop in reported profit trends and softening expectations for business conditions weighed on the outlook, according to the latest survey from the National Federation of Independent Business (NFIB).
The NFIB Small Business Optimism Index fell 3 points to 95.8, slipping below its 52-year historical average of 98 for the first time since April 2025. At the same time, the Uncertainty Index rose 4 points to 92, significantly above its long-term average of 68.
“The 20% Small Business Deduction and other supportive small business tax provisions in the Working Families Tax Cut Act have had many positives for small business owners,” stated NFIB Chief Economist Bill Dunkelberg. “However, the dramatic spike in oil prices has spooked consumers and owners alike. Small business owners are having to absorb those higher input costs and pass them along to their customers.”
Key Declines Drive the Drop in Optimism
The decline in the Optimism Index was driven primarily by two key components: the frequency of reports of positive profit trends, which plunged 11 points to a net negative 25%—the largest contributor to the overall drop—and the net percentage of owners expecting better business conditions, which fell 7 points to a net 11%, marking the third consecutive monthly decline and the lowest reading since October 2024.
Other notable movements included:
Employment Index – Fell from 103.5 to 101.6. While still above the 2025 average (101.2) and historical average (100), the 1.9-point decline signals moderation in labor market conditions.
Capital outlays – Only 16% of owners plan capital investments in the next six months, down 2 points and the lowest level since November 2009.
Sales – A net negative 5% reported higher nominal sales in the past three months (down 6 points), ending four months of improvement. Expectations for higher real sales volumes over the next quarter eased to a net 7%.
Inventory – Plans for inventory investment turned more cautious, reaching a net negative 5%, the lowest since May 2024.
Labor Market and Compensation Trends
Hiring activity showed signs of cooling. A seasonally adjusted 32% of owners reported job openings they could not fill (down 1 point), though this remains well above the historical average of 24%. Skilled worker openings stood at 27%, while unskilled openings rose slightly to 12%.
A net 12% of owners plan to create new jobs in the coming three months, unchanged from February and near the long-term average. Compensation pressures eased modestly: a net 33% reported raising compensation; plans to raise compensation in the next three months fell 4 points to a net 18%—the lowest since July 2025. Despite the declines, both actual and planned compensation remain above historical averages.
Pricing, Supply Chains, and Business Health
Actual price increases ticked up, with a net 25% of owners raising average selling prices (up 1 point and well above the historical average). Planned price hikes, however, declined 4 points to a net 24%. Supply chain disruptions affected 62% of owners to some degree (up 3 points), with most reporting only mild or moderate impacts.
When rating the overall health of their businesses, 13% called it “excellent” (up 1 point), 51% “good” (down 4 points), 30% “fair” (up 4 points), and 4% “poor” (down 1 point).
Top Business Problems and Credit Conditions
Taxes remained the single most important problem for 19% of owners (unchanged and still ranked #1), followed by labor quality at 15% (#2), and inflation at 14% (#3).
Credit conditions stayed relatively stable but tight. The net percent expecting easier credit held at negative 5%, while the average interest rate on short-term loans edged down to 7.9%. Only 24% of owners reported borrowing regularly, a historically low level. Just 11% viewed it as a good time to expand (down 4 points and below the historical average).
“Small business owners are certainly keeping a close eye on the price of oil,” added NFIB State Director Chad Heinrich. “As those cost pressures grow and Arizona’s officeholders dawdle on tax conformity, small businesses are doing everything they can to minimize price increases for their consumers and stay competitive. It’s essential that state policymakers give our small businesses certainty and fully conform with the provisions of the Working Families Tax Cut Act.”
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
Earlier this week, the Joint Economic Committee released its Monthly Fiscal Update, revealing that the federal government recorded a deficit of $164.10 billion in March 2026.
For the first half of FY26, cumulative deficits reached $1.169 trillion, meaning 32.01% of outlays were unfunded by revenues, with the government spending $1.47 for every dollar received in revenue.
The year-to-date deficit for FY26 is 10.60% lower than the $1.307 trillion recorded in the same period of FY25. Full-year deficits in FY25 totaled $1.776 trillion.
According to the most recent 10-year budget projections from the Congressional Budget Office (CBO), federal deficits are expected to total $1.853 trillion in FY26, $1.887 trillion in FY27, and $2.080 trillion in FY28.
In March, total federal net outlays amounted to $548.96 billion. Cumulative net outlays from the start of the fiscal year through March stood at $3.651 trillion.
This represents a 2.35% increase compared to the $3.567 trillion in net outlays for the same period in FY25. Full-year net outlays in FY2025 totaled $7.010 trillion. The CBO projects net outlays will reach $7.772 trillion in FY27 and $8.151 trillion in FY28.
Total federal net receipts in March were $384.86 billion, bringing year-to-date net receipts to $2.483 trillion. This marks a 9.84% increase from the $2.260 trillion in net receipts recorded in the comparable period of FY25. Full-year net receipts in FY25 were $5.235 trillion. The CBO forecasts net receipts of $5.596 trillion in FY2026, $5.885 trillion in FY27, and $6.071 trillion in FY28.
Key figures for March 2026 show net outlays of $548.96 billion, net receipts of $384.86 billion, and a deficit of $164.10 billion. For FY26 year-to-date through March, net outlays totaled $3.651 trillion, net receipts totaled $2.483 trillion, making the deficit $1.169 trillion.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
