News

Jul 24, 2026

California's economy isn't just bigger than Texas and Florida — it's growing faster, too

What you need to know: A new analysis using federal data confirms what the scoreboard has shown for years: California's economy continues to outperform its biggest, and self-appointed "rivals."

SACRAMENTO – For years, politicians in Texas and Florida have built an entire political brand around attacking California. But when it comes to economic performance, the results keep telling a different story — confirming what we have known in California for years: California's economy has no peers.

A new analysis using U.S. Bureau of Economic Analysis data shows California posted one of the nation's strongest quarterly growth results, far outpacing Texas and Florida, while reinforcing its position as the world's fourth-largest economy and America's economic engine. California's economy grew at a 3.7% annualized pace in the first quarter of 2026 — its best quarterly growth ranking since 2013 and one of the fastest growth rates in the nation. Meanwhile, Texas grew just 0.9% and Florida 1.6% during the same period.

For years, we've heard the same fairytale — California's economic model doesn't work, and Texas or Florida are the future. The facts say otherwise. California is the world's fourth-largest economy, and we're growing faster because we choose to invest in innovation, talent, entrepreneurship, and working people. While Republican-led states ask working families to shoulder more of the tax burden, California continues to find ways to cut costs for families and provide more support for everyone to succeed.

Governor Gavin Newsom

California's competitors like to market themselves as low-tax success stories, but for millions of working Americans, the reality is very different. In 16 states — including Texas and Florida — the lowest-income residents pay a larger share of their income in total state and local taxes than California's wealthiest 1%.

World-leading economy

Since Governor Newsom took office, California's annual GDP has grown by more than $1.18 trillion, reaching $4.25 trillion in 2025. First-quarter 2026 economic output reached an annualized $4.4 trillion, following annual GDP gains exceeding $200 billion in each of the previous two years.

As the world's fourth largest economy, California continues to lead the nation where it matters most — creating new businesses, attracting venture capital, driving technological innovation, expanding advanced manufacturing, growing high-tech industries, and producing more than any other state. In fact, The Golden State continues to be: #1 state for new business starts, #1 state for manufacturing, #1 state for venture capital funding, #1 state for high-tech business, #1 state for agriculture

California also remains home to more businesses than Texas or Florida and continues to be America's start up capital — with more than 4.3 million small businesses employing 7.6 million Californians.

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When it comes to job creation during the first quarter, California added about 131,500 jobs over the previous year — the largest increase of any state. California's workforce posted a 4.2% productivity increase in 2025, making the Golden State the single largest contributor to national productivity growth and accounting for roughly 14% of total U.S. economic output.

"So-called rivals"

While California delivered its best quarterly growth ranking in 13 years, Texas tied for 36th nationally with 0.9% growth and Florida ranked 23rd at 1.6%. California also led the nation's four largest state economies in fourth-quarter 2025 dollar growth, adding $44.5 billion in economic output — more than New York, Texas, or Florida.

California's recipe for success

During Governor Newsom's leadership, California has grown into a world-leading economy expanding from $3 trillion to a $4.25 trillion GDP, attracting nearly two-thirds of all U.S. venture capital investment, building historic budget reserves — all while making record investments in Californians. Florida and Texas take some notes on some of the transformational investments California has made so far:

✅ Implemented first universal school meals program in the nation

✅ Expanded universal transitional kindergarten

✅ Increased childcare access

✅ Delivered record funding for public schools

✅ Boosted community schools and wraparound supports

✅ Helped more students graduate college debt-free

✅ Expanded healthcare coverage to historic levels

✅ Protected women's health services and reproductive freedoms

✅ Launched the nation's largest behavioral health transformation

✅ Made the largest infrastructure investment in modern state history

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✅ Accelerated clean energy deployment

✅ Strengthened renter protections

✅ Advanced paid family leave and paid sick leave (https://www.gov.ca.gov/2025/01/02/governor-newsom-announces-landmark-boost-to-paid-family-leave-benefits-for-2025/)

✅ Increased wages for millions of workers (https://www.gov.ca.gov/2025/09/01/happy-labor-day-california-is-1-for-workers-1-economy-in-the-nation/)

✅ Expanded career pathways and apprenticeships (https://www.gov.ca.gov/2025/04/02/governor-newsom-unveils-plan-to-create-high-paying-fulfilling-careers-for-more-californians-college-degree-or-not/)

✅ Honored veterans and armed services personnel and families (https://www.gov.ca.gov/2025/10/15/california-steps-up-to-help-military-veteran-families-while-the-federal-government-is-awol/)

✅ Invested billions in affordable housing and homelessness response (https://www.gov.ca.gov/2026/01/08/california-sees-drop-in-unsheltered-homelessness-bucking-national-trend-and-federal-headwinds/)

Press releases (https://www.gov.ca.gov/category/press-releases/), Recent news (https://www.gov.ca.gov/category/recent-news/), Top story (https://www.gov.ca.gov/category/top-story/)

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