California’s economic growth hit its fastest pace in a little more than two years – but on a national scale, it was just a middle-of-the-pack performance.
My trusty spreadsheet reviewed the third quarter report from the Bureau of Economic Analysis on state gross domestic product – a broad yardstick of business output. It’s an inflation-adjusted measurement of the value of goods and services produced. Annual growth rates are a benchmark for comparing the progress of various economies.
In the three months ended in September, California’s GDP grew at a 4.5% annualized pace. That was California’s fastest growth since 2023’s second quarter.
Nationally, GDP growth was 4.4%, the fastest pace since the fourth quarter of 2023.
Now, the Golden State’s No. 25 ranking among the states is nothing to brag about, especially for an economy that often boasts about its size and performance.
But California outpaced its two main economic rivals: Texas, with 4.2% growth, ranked No. 32, and Florida, at 3.5% growth, ranked No. 42.
The best performers for the third quarter were in the middle of the nation: Kansas at 6.5%, South Dakota at 6.3%, and Arkansas at 5.8%.
The worst states for GDP growth were a mixed group: North Dakota at 0.4%, the District of Columbia at 1.3%, and Minnesota at 2.7%.
So why might you be reading about this economic expansion and think, “But my checkbook doesn’t feel this growth?”
Remember, GDP is like most business barometers. It measures the economy’s typical temperature, though much of life is far from the statistical midpoint.
And your financial angst isn’t rare. For example, California’s consumer confidence index hit a five-year low in January.
Noteworthy improvement
The third quarter saw a notable jump in GDP from previous growth patterns.
California’s GDP only averaged 2.9% growth over the two years through the second quarter of 2025. Still, that was the 15th-best performance among the states and topped the nation’s 2.6% pace.
Those two years were good times for California’s rivals. The Texas economy averaged 3.6% growth (No. 4), and Florida was up 3.4% (No. 5).
The best performers were South Carolina at 4.3%, Washington at 4%, and Idaho at 3.7%.
Worst? Wyoming at 0.3%, the District of Columbia at 1.1%, and Nebraska at 1.2%.
Swing states
Contemplate the varied pace as measured by percentage-point change – 2025’s third-quarter output vs. the aveage pace of the previous two years.
California’s growth surged by 1.6 points by this math. But that ranked a lowly 32nd among the states and trailed the nationwide 1.8-point improvement.
Rivals did worse: Texas, up 0.6 points, ranked No. 42, while Florida’s 0.1-point increase was No. 48.
What states improved the most? Kansas was up 5 points, South Dakota up 4.9 points, and Connecticut and New Hampshire grew by 3.9 points.
Worst? Three had declining growth: North Dakota, off by 1.1 points; Washington, off by 0.6 points; and South Carolina, off by 0.1 points. Florida’s growth was up a mere 0.1 point.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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