July 2025: 4.18% (A+ grade)

Arizona inventionINDEX July 2025: 4.18% (A+ grade)

The inventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

Arizona inventionINDEX Scores – Last 12 months

Based on the historical data for the last 60 months, the Arizona inventionINDEX for July 2025 shows a significant and positive shift. With a score of 4.18% and an A+ rating, this month’s performance represents a strong recovery from the B rating of 2.24% in June. While the recent months have shown some volatility, with May 2025 also achieving an A+ rating at 3.77%, the current score stands out as a clear indicator of renewed momentum. This latest result not only surpasses the previous month but also marks one of the higher scores recorded in the past year, pointing to a recent and robust surge in inventive activity within the state.

When examining the long-term context of the past five years, the July 2025 score of 4.18% is notably above the 60-month average of 2.83%. The historical table reveals a wide range of scores, from a peak of 7.25% in January 2024 to a low of 1.44% in July 2023. This variation underscores the dynamic nature of the state’s innovation landscape. The current performance places Arizona firmly in the upper echelon of its historical ratings, suggesting a strong period of inventive output when compared to the overall trend and most individual months in the past.

A higher inventionINDEX score and its corresponding A- or A+ rating are typically associated with several positive economic outcomes. Such a result suggests a vibrant and healthy ecosystem for innovation, which can lead to the creation of new technologies, companies, and jobs. This robust inventive activity can serve as a magnet for skilled talent and capital, attracting further investment and strengthening the state’s long-term economic prospects. A sustained high score reflects a dynamic and forward-thinking environment that is conducive to growth and expansion across various sectors.

Conversely, a lower inventionINDEX score, such as the C+ ratings seen in July 2023 and October 2022, can be indicative of a period of economic stagnation or a slowdown in innovation. A decline in inventive output may signal challenges in attracting venture capital and can make it difficult for the state to compete with more dynamic regions. These lower scores may point to a need for policies and initiatives that foster a more supportive environment for entrepreneurs and researchers. Over time, a series of lower scores could impact the state’s reputation as a hub for innovation and potentially impede future economic development.

Discussion:

In July, the Arizona inventionINDEX scored a positive sentiment which was higher than the previous year’s average and outperformed the upward trend for the year. This is in contrast to the prior 12 months, which experienced a downward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s Arizona office provides R&D tax credit consulting and advisory services to Phoenix, Tucson, Mesa, Chandler, Glendale, Scottsdale, Gilbert, Tempe, Peoria and Surprise.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.

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