But he won’t be alone. Difficult times are ahead for all Californians.
According to Indian government data, that country’s GDP has reached $4.18 trillion in U.S. dollars. By 2030, India’s GDP is projected to be $7.3 trillion. The most recent numbers from the International Monetary Fund, posted in April 2025, has California at $4.1 trillion.
The UCLA Anderson School of Management forecast is not optimistic about early 2026, however. The state might not be able to catch India.
Like the nation overall, California is in “a situation with two economic trends currently working in opposition,” says the forecast. Artificial intelligence, the aerospace industry “and other high-productivity sectors” will “continue to expand,” but “construction, non-durable goods, leisure and hospitality, and government-funded services face significant headwinds.”
Unemployment is expected to remain steady at 5.5% – at 5.6% California had the highest jobless rate in the country outside of the District of Columbia in the Bureau of Labor Statistics final jobs report of last year – while real personal economic growth is anticipated to drop from 1.8% in 2025 to 1.1% this year.
Predicting an unemployment rate of 5.5% seems overly confident, given the state minimum wage grew 40 cents to $16.90 an hour on Jan. 1, and several cities, including San Diego and Oakland, also hiked their minimum wages.
Just as presidents are often held accountable for the national economy’s performance during their terms, governors are blamed when their states stall.
It goes with the job.
Not to overlook the harmful legislation he supported and signed over nearly two terms, but it’s a fact that California’s 2026 economy is the product of more than just seven years of Newsom. Layers of taxes and regulations over the decades have turned the state into a Euro sclerotic dud.
The Tax Foundation’s State Tax Competitiveness Index continues to rank California low – 48th in its last report – due to its high income, corporate, sales and gasoline tax rates and a tax code that “threatens to get worse is increasingly driving jobs to other states.” Overregulation has been strangling small businesses, “a vital growth engine for the economy,” for more than a decade, while big businesses have become fed up with the state’s regulatory web and fled.
Defenders of the blue-state way such as Newsom will argue that California is fine and point to its growth sectors. But another way to look at it is the industries and businesses that are flourishing would be even more dynamic if the state and its biggest cities and counties were less meddlesome in economic matters.
Rather than having to dodge questions about the state’s economy, Newsom could have instead talked about the state’s robust job growth and widespread wealth creation. If only he had chosen a growth agenda rather than a continuation of the policies have been hurting the state.
Kerry Jackson is the William Clement Fellow in California Reform at the Pacific Research Institute and co-author of The California Left Coast Survivor’s Guide.
