California below national average in real GDP growth from 2019 Q1 to 2019 Q2

Statistics released today by the US Bureau of Economic Analysis shows that California lagged most of the rest of the country in real economic growth from the first quarter of 2019 to the second quarter of 2019. At a rate of 1.9%, California’s growth in real GDP falls below the national average of 2.0%.

Map of the change in real GDP by State from the first quarter of 2019 to the second quarter of 2019. Graphic courtesy of the US Bureau of Economic Analysis.

The national average of 2.0% is below President Trump’s announced target of 3% growth.

The question is why California is an economic slug.

Looking back a year ago, California growth peaked at 5.9% — how the mighty have fallen! By the end of 2018, growth had slowed to 3.0%, and continued to fall in the first quarter of 2019, to 2.8%.

Negative growth was seen in multiple segments of the State’s economy:

  • agriculture, forestry, fishing, and hunting;
  • durable goods manufacturing;
  • nondurable goods manufacturing;
  • wholesale trade;
  • transportation and warehousing.

The best performing economic segment was — surprise! — information, followed by (government-regulated) utilities.

Business has to weather three storms in California, all brought on by Sacramento and its allies: increasing minimum wage, increasing taxes (sales and gasoline), and uncertainty over employment law (independent contractors vs. employees).

Plus, local jurisdictions continue to fight an uphill battle against public employee pension costs.

It’s a miracle that the economic slug hasn’t been utterly flattened.