This story was originally published by CalMatters. Sign up for their newsletters.
As Gavin Newsom makes his increasingly frequent appearances outside the state — seemingly preparing for a 2028 presidential campaign — one of his stock messages is that California’s economy is soaring.
“We dominate in every category,” Newsom bragged during a recent presentation to the Center for American Progress, a left-leaning think tank. “We are the center of the universe (and) America’s coming attraction.”
He cited the state’s $4-trillion-plus economic output that, were it a nation, would rank 4th or 5th largest in the world, and mentioned the ranks of Nobel Prize winners and vigorous venture capital investment in the state.
Moreover, he boasted, California has used that economic vigor to finance an array of social programs and services, such as universal health care, proving, he said, that such largesse can co-exist with capitalistic gains.
Subliminally, Newsom was pitching the notion that electing him as president could bring California-like prosperity and generosity to the nation as a whole. However, since Newsom is using the economy as a major talking point, it would be fair to provide key facts he fails to mention.
Yes, California has world-class economic output, but it is due largely to a very narrow sector, Silicon Valley’s high-tech industry, which has hugely benefited its entrepreneurs and capital investors.
However the industry is undergoing a shakeout due to the artificial intelligence phenomenon and it’s shedding thousands of jobs, thus concentrating wealth even more.
Meanwhile the state’s other world-famous sector, Southern California’s movie and TV industry, is hurting badly as production migrates to other states and nations — so badly that the state is offering subsidies in an effort to slow the hemorrhage.
Ever since the COVID-19 pandemic, California’s unemployment rate has routinely ranked among the nation’s highest, with a million members of its labor force lacking jobs.
Beacon Economics, a major consulting firm that closely charts California’s economic situation puts it this way: “On one hand, California’s economy is in good health. While the official figures for the last quarter are still being tallied, the state’s economic growth comfortably outpaced the national average of 2.5% in 2025, tracking toward an annual growth rate near 3%.
“At the same time, the job market is sagging. California now has the highest unemployment rate of all fifty states in the Union, stubbornly hovering at 5.5%, and its job market appears to be going in the wrong direction. The total number of jobs in California actually shrank by 0.6% since the beginning of this year, making it the 17th worst-performing state in the nation in terms of job creation.”
One result of these contradictory data is one of the nation’s highest levels of income disparity, as a recent report from the Public Policy Institute of California points out. Only eight other states have wider gaps.
“The gap between top and bottom incomes in California has increased substantially (by 57%) since 1980, when families at the top earned seven times more than those at the bottom,” the PPIC report says, reflecting 72% income growth for those in the top tenth in income but 19% growth for those in the bottom tenth.
The Census Bureau’s calculation of poverty that includes the state’s staggering living costs puts California’s rate at the highest, 17.7%, tied with Louisiana. A similar calculation by PPIC and the Stanford Center on Poverty and Inequality puts it at 16.9%, while another 17.9% of the population is “near-poor.”
About 15 million Californians are poor enough to qualify for healthcare under the state’s Medi-Cal program but, as Newsom failed to mention in his Center for American Progress presentation, his new budget reduces Medi-Cal eligibility for some Californians to shrink the state’s chronic budget deficit, which he also didn’t mention during his recitation of cherry-picked data.
