The Center for Jobs and the Economy has released our full analysis of the December Employment Report from the California Employment Development Department. For additional information and data about the California economy visit www.centerforjobs.org/ca. 

In a somewhat different format, our Full Jobs Report for December provides an overview of California’s economic performance in 2024. The data is presented in two series:  (1) outcomes in the last 12 months (or 4 quarters where applicable) for California and (2) longer term results beginning with the pre-pandemic year of 2019. Each chart indicates the time period covered by the indicator, with complete 2024 data available in some instances and partial year results or even only 2023 results available in particular for some of the broader economic measures such as state GDP. In cases where the December monthly data used, the 2024 results are preliminary.

To provide a comparison base, the state results are shown in relation to the national results for each indicator.  Wherever possible, these are shown comparing California to the aggregate total for the other 49 states (plus DC) to avoid the influence California has on the national averages due to its size. In some cases, however, only comparisons to the US total are possible due to the nature of the data.

Overall, the data shows that California’s economy continues to slow relative to the rest of the country. These conditions are reflected in the Department of Finance economic projections undergirding the budget’s revenue numbers. Comparing the projections over the past five budget cycles, the earlier more optimistic projections underlying the rapid expansion in state spending have been replaced by progressively more moderate expectations. These projections are completed each November in preparation for the Proposed Budget in January. They are then updated every April for use in the May Revise.

In the latest edition (Nov 24), the Proposed Budget expects jobs growth of only 0.8% in 2025, slowing to an average annual rate of 0.7% in the following three years.

Employment is expected to grow even slower, at 0.4% in 2025 and an average of 0.6% in the following three years. At this rate, the number of employed workers in the state’s economy would not return to pre-pandemic levels until Q2 2028.

Similarly, high levels of unemployment are expected to persist, remaining above 1 million and dipping only 0.4% in 2025, but improving at an annual rate of 3.0% in the following three years.

In contrast, projections for total Personal Income have increased, although largely reflecting previously unexpected inflation and the state budget’s continuing overreliance on Tech industry compensation levels. Personal Income is expected to grow 4.2% in 2025 and at an average of 4.7% in the following three years. Inflation, projected at an average annual rate of 2.6% in this period as measured by the California CPI, makes up a substantial portion of that growth. In addition, these projections were made prior to several recent events. The Los Angeles fires will have some but more likely temporary effect on Personal Income, unless the affected high-income households react to this event by increasing migration from the state. The recent DeepSeek-driven uncertainty in Tech stock prices will have a more immediate budget effect due to its impact on both budget-critical capital gains and withholding on equity-based compensation in this industry.

While the component indicators such as nonfarm jobs illustrate the extent to which the state’s economy is slowing particularly in relation to the rest of the US, some of the broader indicators such as Real GDP are more positive. For example, between Q3 2018 and Q3 2024, California’s Real GDP expanded by 17.8% compared to total US growth that was somewhat lower at 15.4%. However, this outcome relies solely on California’s share of High Tech industries.  The two sectors containing most of the High Tech activity (NAICS 45 Information and NAICS 60 Professional, Scientific & Technical Services) produced 61.4% of total California growth in this period while covering only 39.8% for the US as a whole. California is overly dependent on a single industry. Growth in the rest of the US is more diversified and produces a broader range of jobs and wage levels. 

Much of this difference is also continually eroded by the state’s high and growing costs. Again using GDP as the example, California remained the 5th largest economy in 2023 based on GDP measured in nominal. Using the cost-estimated series, California dipped to only 12th largest behind Italy.