Spending on federal contracts now makes up 5.3 percent of Arizona‘s entire economy. The Arizona Capitol Times, working with a study from Arizona State’s Cronkite News Service, touted the contributions that federal contracts have made to the state in the last two decades. They discovered an impressive 491 percent increase in the dollar value of federal government contracts in Arizona from 1992 through 2012. Federal spending in that same period only increased 158 percent.
In 2012, Arizona received $14.2 billion in contracts. Some $12.9 billion of that sum was in defense contracts. The Arizona Commerce Authority reports that Arizona is home to 1,200 aerospace and defense companies, employing about 153,000. The average wage in the state’s aerospace and defense companies is $83,673.
The USAspending.gov site shows that in 2012, medical care contracts were the largest single element of the mix, at $3.0 billion in Arizona. Guided missiles added $2.7 billion to the total while rotary winged aircraft added an additional $1.5 billion. Those three areas represent half of the federal contract funds awarded in the state.
The Cronkite study quotes Dennis Hoffman, a professor of economics at Arizona State University’s W.P. Carey School of Business, on the importance of federal contracts to Arizona. He states federal contracting is “one of the most important drivers of the state’s economy.” He did recognize that prior performance in no guarantee of future success, pointing out that Arizona is a “net beneficiary” of government spending, but such spending is not sustainable over time.
Others quoted for the study seem more encouraging, noting that large aerospace and defense companies will have protected themselves from a downturn in federal spending and that defense spending generally enjoys bi-partisan support.