California’s economy may be outperforming the nation in 2026, but those same results look subpar compared with the Golden State’s track record.
My trusty spreadsheet found out who’s growing and how fast by reviewing quarterly state-by-state gross domestic product data from the federal Bureau of Economic Research. GDP is a broad measurement of business output, adjusted for inflation.
California has by far the largest state economy in the nation by many measures. But what about its pace of expansion?
This GDP math shows California’s economy grew at an annual rate of 2.5% in the second quarter. That’s the 14th-best result among the states.
However, this same GDP gain is also slower than the Golden State’s 2.8% average growth rate over the past 20 years. Historically speaking, California had the seventh-best performance among the states.
So, if you think the economy’s acting a bit wobbly, this gap may confirm your anxieties.
Plus, it’s not just California running below normal. In 27 other states, the most recent GDP growth rates are trailing their 20-year average pace, too.
Nationally, GDP grew at a 2.2% pace for the second quarter. That’s behind California, but it’s on par with its 20-year average result.
What’s behind the mediocre results?
Across the state and the nation, businesses and consumers alike are growing more cautious with their spending as they juggle numerous uncertainties, from the war in Iran to inflation and who will control Congress after the midterm elections.
California’s edge is that its tech-heavy economy has a secret sauce in 2026: Huge business investment in artificial intelligence.
Elsewhere
The nation’s top-growth economies in the second quarter were New York, with 4% GDP, and South Carolina and Delaware, at 3.5%.
Meanwhile, six states had shrinking GDP, topped by West Virginia, down 2.3%, Wyoming, down 1.6% and Alaska, down 1.3%.
And what about California’s economic arch-rivals? Texas’s 2.2% GDP growth was the 19th-best, while Florida’s 3% growth was the seventh-best.
People power
How are “we the people” doing, according to the GDP math?
Swings in GDP don’t always align with how everyday folks are managing their budgets. One slice of the GDP calculation tracks personal income, which includes cash flows such as wages, self-employment proceeds, government payments, and investment income. This data is not adjusted for inflation.
This math shows that personal income in California grew at an annual rate of 4.9% in the second quarter. That’s the 18th-best result among the states.
Once again, California’s upswing trails history, though by a narrow margin. Statewide personal income has averaged 5% growth since 2006.
Across the nation, 28 states had below-average results. U.S. income growth of 4.7% for the quarter trailed the historical rate of 4.9%.
Remember, this stat is more than pay raises. However, since it covers a broad range of wealth, it can be heavily influenced by a state’s well-to-do residents.
Income extremes
Where did personal income expand the fastest in the second quarter?
Wisconsin was No. 1, up 6.4%, Delaware, up 6.3%, and New York, up 6%. Rivals Texas and Florida grew at 5.7%, the seventh-fastest.
The laggards were North Dakota, the lone dip, off 4.2%, followed by South Dakota, up 1.3%, and Oregon and Rhode Island, up 2%
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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