Arizona’s rising retail sales and household incomes are supporting business activity, but growing debt and thinner savings are raising questions about how long consumers can sustain that spending. National Bank of Arizona’s Fall 2026 Economic Briefing finds an economy still benefiting from consumer demand, alongside signs that more households are borrowing to cover everyday expenses.
Prepared by Applied Analysis, the briefing brings together spending, employment, income and credit indicators that help explain the tension. Arizona retail sales increased 7.9% year over year in June, slightly ahead of the comparable national increase of 7.4%. Yet debt per person in Arizona reached approximately $72,700 in the second quarter, about 15% above the national average.
“Arizona’s economy continues to demonstrate resilience, supported by steady income growth, business activity and consumer spending,” says Mark Stebbings, chief executive officer at National Bank of Arizona. “At the same time, many households are working harder to manage higher costs, rising debt obligations and ongoing affordability challenges.”
The distinction between spending more and buying more is central to the report. National personal consumption expenditures reached $22.3 trillion in August, up 6.1% from a year earlier. After adjusting for inflation, however, spending increased 2.6%. Higher prices therefore accounted for a substantial portion of the increase. For businesses assessing demand, rising revenue alone may give an incomplete picture of changes in the volume of goods and services customers purchase.
Consumers have continued making discretionary purchases despite those pressures. The briefing cites Deloitte’s ConsumerSignals Survey, which found that 72% of U.S. consumers made at least one splurge purchase in August, unchanged from a year earlier, even as 75% expressed concern about rising prices for everyday purchases. That combination suggests consumers remain willing to spend selectively, while facing difficult choices elsewhere in their budgets.
Arizona’s income gains provide some support. Annualized personal income reached $543.7 billion in the second quarter, up 4.6% from a year earlier. Average weekly wages increased 5.5% to $1,264 in August. Phoenix-area inflation was 2.5% that month, below the national rate of 3.4%, although slower inflation still means prices are increasing.
Employment presents a more uneven picture. Arizona had approximately 3.25 million jobs in August, up 0.5% year over year, while unemployment increased to 5.6% from 4.9%. Construction employment grew 3.1%, education and health services expanded 2.3%, and professional and business services increased 2.0%. Leisure and hospitality employment declined 2.8%, while financial activities fell 2.3%. Those differences matter for businesses whose customers or employees are concentrated in particular industries.
The household balance sheet offers clearer signs of strain. Nationally, the personal saving rate fell to 4.1% in August from 5.2% a year earlier. In Arizona, debt per person has increased 26.5% since the first quarter of 2021, compared with 19.9% nationally. The share of Arizona debt balances at least 90 days delinquent rose from 2.8% to 3.4% over the past year, slightly above the national rate of 3.3%.
Borrowing is also extending further into routine household spending. The briefing reports that everyday bills accounted for 8.7% of personal loan requests in Arizona. Nationally, the share was 8.2%, more than double the 3.4% reported in 2023. These figures suggest that some borrowing is helping households meet recurring obligations, leaving future income committed to repayment.
Buy now, pay later financing adds another dimension. Among users earning less than $50,000, 29% used the service for groceries or food delivery, compared with 9% of those earning at least $100,000. The briefing also notes that 31% of adults unable to cover a $100 emergency expense with savings used buy now, pay later, compared with 8% of those able to cover an expense of $2,000 or more.
Lower-income households have less room to absorb additional costs. Food, shelter, utilities and gasoline account for more than half of their spending, compared with just over one-third among the highest-income households. A Financial Health Network study cited in the briefing found that 49% of low-income households reported paying all their bills on time, down from 54% a year earlier.
Housing activity offers a separate source of business demand. Arizona permitted 4,266 residential units in August, up 69.1% from the same month a year earlier. That increase reflects one month’s activity rather than a full-year growth rate. Meanwhile, the national 30-year fixed mortgage rate reached 7.0% in September, underscoring the financing costs still confronting buyers.
For Arizona businesses, the report suggests a need to assess sales growth alongside customers’ ability to keep spending. Income gains and continued purchases support demand, while rising delinquencies and borrowing for essentials point to pressure that aggregate sales figures can obscure.
“As we look ahead, the strength of consumer finances will play an increasingly important role in shaping Arizona’s economic outlook,” Stebbings says.
