Getting your
Trinity Audioplayer ready...The state’s economy started 2026 as the nation’s No. 2 performer – its highest ranking among U.S. states for business growth in just over a dozen years.
That bit of Golden State economic sparkle was discovered by my trusty spreadsheet in its review of state-by-state gross domestic product figures for the first quarter from the U.S. Bureau of Economic Analysis. This measure tracks swings in a broad collection of business output of goods and services, adjusted for inflation.
This math says California’s overall economy grew at a 3.7% annual pace in the quarter. Only Washington state had a faster rate of expansion at 4.5%. North Carolina was No. 3 at 3.2%
While California has the nation’s largest GDP – $4.4 trillion in the first quarter – it’s rarely near the top of the charts for growth rates. The last time California ranked this high on this economic growth scorecard was in the fourth quarter of 2013. What’s the secret sauce?
California’s information industry, driven by rapid advances in artificial intelligence, powered the early 2026 economic pop. Manufacturing had a surprisingly steep rebound, as did the “professional, scientific and technical services” group, which covers white-collar industries with high-paying jobs.
Contrast California’s expansion with the nation’s 2.1% GDP growth to start 2026, which included shrinking business output in three states: South Dakota, off 1.6%; Nebraska, off 0.9%; and Iowa, off 0.1%.
And California’s economic arch-rivals? Texas’ 0.9% growth was No. 36 while Florida’s 1.6% ranked 23rd.
This isn’t the only business metric in which California ranked highly at the start of 2026.
Consider job creation. Statewide employment in the first quarter was 131,500 higher than a year earlier. That was the largest increase among the states at a time when the rest of the nation collectively added only 14,500 workers.
Production perspective
Early 2026’s swift economic start in California marked a notable improvement over recent GDP performance.
The state’s economy grew at an average annual rate of 2.7% in 2024-25, 12th-best among the states and outpacing the 2.2% growth seen nationally.
Tops were South Carolina and Arizona at 3.3% per year. The worst? The District of Columbia, off 0.1% a year.
And the rivals? Texas’ 2.74% growth was No. 9 while Florida’s 2.8% ranked No. 8.
Next, look back two decades, and 2026 looks impressive so far, too.
It tops California’s average annual GDP growth of 2.7% since 2006, which is the seventh-fastest among the states and well above the nation’s 2.1% pace.
The top growth over 20 years was in North Dakota at 4.2% per year. The laggard? Louisiana at 0.6%.
Texas outpaced California, up 3.5% annually, ranking No. 4 among the states. Florida trailed the Golden State with 2.5% annual growth, ranking No. 11.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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