Newsom touts California’s economy amid reports of fiscal concerns

California is leading the nation’s economic growth, Gov. Gavin Newsom declared Monday in another counterpoint to reports of financial woes potentially on the horizon for the world’s fifth largest economy.

In addition to the state’s high global ranking, the governor’s office again highlighted successes — this time broken tourism-spending records, a population increase, thousands of new fast food jobs, the most companies on the Fortune 500 list and expanded businesses in San Francisco — as proof that since April commerce in the Golden State is on an upward trajectory.

“There’s only one state with a dream — the California Dream,” Newsom said in a statement. “Built on opportunity, promise, and ingenuity, California is the nation’s economic driver and the place people across the globe look to to see what’s possible. That’s why we continue to grow businesses, expand our economy, break records, and create thousands of jobs across the state.”

But according to a May 31 report in The Economist, California “faces three overlapping challenges: rising unemployment, growing fiscal strains and population outflows.”

Despite its status as a global juggernaut and arguably the nation’s most powerful state, California’s challenges include a $45 billion budget deficit, flattening tax revenue, sluggish job growth and a huge amount of unemployment insurance debt, according to published reports. In December the state Legislative Analyst’s Office projected a $68 billion deficit for the 2024-25 budget.

Newsom’s office, however, detailed the state’s recently reported positive indicators.

World’s fifth-largest economy

California is the fifth-largest economy in the world for the seventh year in a row, with a nominal GDP of nearly $3.9 trillion in 2023 and a 6.1% growth rate compared with the previous year, according to the U.S. Bureau of Economic Analysis. On a per capita basis, California is the second-largest among the world among large economies.

Highest level of tourism spending

California has the nation’s largest market share of tourism, according to the governor’s office. Travel spending in the state hit a record-high $150.4 billion in 2023, surpassing the $144.9 billion spent in 2019. Travel spending was 3.8% higher than 2019 and 5.6% higher than 2022. 

The new spending record generated $12.7 billion in state and local tax revenue by visitors in 2023, a 3% increase compared with 2019. The tourism sector added 64,900 jobs in 2023, raising total industry employment to 1.155 million.

Increasing population

California’s population increased by 67,000 people in 2023 to 39,128,162, according to the California Department of Finance. Officials attributed the population growth to an increase in legal immigration by foreign nationals and natural population increasing. This was the state’s first increase since 2020.

Thousands of fast food jobs

State and federal employment data shows that California’s fast food industry has added jobs each month this year, including approximately 10,600 new jobs since Newsom signed the fast food minimum wage bill into law in May.

Most companies on Fortune 500 list

For the first time since 2014, California is the base for the most Fortune 500 companies in the United States, “beating out Texas, Florida and all other states,” officials said. “From tech to finance to entertainment, the state’s diverse economy has 57 companies on the list, while Texas and New York are tied in second with 52 companies each.”

Expanding businesses

Last month, Visa opened up a new state-of-the-art headquarters in San Francisco. Visa is one of “countless” businesses to recently announce new investments in the state, officials said.

Newsom’s office also noted that Hamdi Ulukaya announced he is reestablishing Anchor Brewing, Nintendo is opening a second U.S. store in San Francisco and Disneyland in Anaheim is expanding its theme park with a $1.9 billion investment. 

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