With the nation's growth rate not expected to accelerate until after the presidential election in November, California will ultimately experience a full year of subpar growth in 2024, according to the UCLA Anderson Forecast's latest analysis of the California and U.S. economies, released today.
California's 2023 GDP growth — which at a 3.7 % annual compound rate outpaced all but three states — slowed in the second quarter of 2024 to 2.8%, 0.2 percentage points lower than the U.S. growth rate overall. The subtrend growth is primarily the result of weaknesses in specific sectors of the economy, evidenced by the state's high unemployment rate, which reached to 5.3% in August, Forecast economists said.
And while the employment picture means a relatively weak forecast for California in 2024, the analysis suggests that much of the weakness should resolve by the end of 2025, with the state's economy potentially experiencing slightly faster growth than the nation's in 2025 and 2026, led by the technology and aerospace industries.
The U.S. economy overall faces some headwinds going into the fourth quarter of 2024 due to the convergence of several factors, including a strike by employees at Boeing and uncertainty over the presidential election and its aftermath, which has led firms to be more precautionary in their hiring and investment decisions as they adopt a wait-and-see approach. Additionally, as the report was being finalized, another strike, by dockworkers, was slated to commence Oct. 1, which could take a substantial toll on the economy, and Hurricane Helene was heading toward the Southeast, likely to cause economic damage.
Given that the election is currently a toss-up, with starkly different policy prescriptions depending on the outcome, the Forecast assumes that gridlock in Congress will continue regardless. Even so — and conditional on whether the labor actions are resolved smoothly by year's end — the economists expect that after somewhat tepid growth in the fourth quarter of 2024, both 2025 and 2026 will be banner years for U.S. GDP growth, driven in part by growth in residential investment.
Read the full UCLA Anderson Forecast news release.
