HomeMy WebLinkAboutBeacon Outlook CA Winter 20251 | TH
E
B
E
A
C
O
N
O
U
T
L
O
O
K
-
C
A
L
I
F
O
R
N
I
A
Winter 2025
Niree Kodaverdian, PhD, Research Manager
CALIFORNIATHE BEACON OUTLOOK
CALIFORNIA’S ECONOMY SHOWING RESILIENCE, BUT CHALLENGES LOOM
As the year comes to a close, it’s time to take stock of California’s current standing with Beacon Economics’ last state outlook for 2024. California continues to maintain its foothold as one of the nation’s economic powerhouses. With high real incomes, high economic output, and globally significant industries—not to mention enviable weather—the state remains the world’s fifth-largest economy, contributing 14% to the nation’s GDP.
Real median household income in California continues to exceed the national average, with the latest figures showing nearly $90,000—around 11% higher than the national median, which stands just slightly above $80,000.1 The state’s economic growth however appears to be aligning with broader national rates. Real GDP in California grew at 2.8% between the first and second quarters of 2024, whereas real GDP in the nation grew at an annualized rate of 3%. Regionally, California is outperforming the rest of the Far West (Alaska, Hawaii, Nevada, Oregon, and Washington), whose real GDP grew at an annualized rate of 2.2%.2 Yet, as the Economist magazine recently (and aptly) pointed out, time and again, California continues to be the favored punching bag for the right.3
But, for all the flak the state gets for being “too progressive,” last month’s elections told a different story. Voters rejected worrisome propositions like expanding rent control and raising the minimum wage to $18 per hour—measures Beacon Economics wrote about in the last California outlook—while approving permanent Medi-Cal funding through Proposition 35. The rejection of Propositions 32 and 33 marks a pivotal moment for California, as it hints at a possible rightward shift in the state’s political climate. And this trend doesn’t appear to be limited to the Golden State—Massachusetts voters also rejected a minimum wage measure last month. The losses in both California and Massachusetts mark the first time since 1996 that minimum wage ballot measures have been rejected by voters,4 revealing a broader shift in public sentiment on these issues. California may be the nation’s trendsetter, but it seems even here, the tides of political and economic change are rolling in.
1 U.S. Census Bureau, Real Median Household Income in California and in the United States.
2 U.S. Bureau of Economic Analysis
3 https://www.economist.com/united-states/2024/03/31/california-is-gripped-by-interlocking-economic-problems-with-no-easy-solution
4 https://ballotpedia.org/Results_for_minimum_wage_and_labor-related_ballot_measures%2C_2024?utm_source=chatgpt.com
2 | TH
E
B
E
A
C
O
N
O
U
T
L
O
O
K
-
C
A
L
I
F
O
R
N
I
A
BUDGET AND BUBBLE
Earlier this year, California was projected to have a pretty staggering budget deficit for 2024-2025 ($38
billion according to Governor Gavin Newsom and $73 billion according to the Legislative Analyst’s Office)
and by summer had a roughly $47 billion budget deficit.5 By the end of the fiscal year, the state’s budget
had been balanced—albeit through a patchwork of measures, including spending cuts, internal borrowing,
fund shifts, withdrawals from reserves, funding delays, and deferrals.
Fast forward to the 2025-2026 fiscal year, and California’s budget story has taken a slightly different turn.
Unlike the usual budget drama, the state is months ahead of the fiscal year’s end with a budget for next
year deemed balanced by the Legislative Analyst’s Office—though calling a $2 billion deficit “balanced”
might be a stretch.6 But this wasn’t really due to careful planning; the balance came as a surprise to almost
everyone. Since April, corporate tax revenues have surpassed expectations by nearly $2 billion, thanks
to a small group of tech giants like Nvidia.7 Saved by the… tech bubble? Perhaps. Any celebration may be
premature though. Starting in 2026-2027, annual deficits are projected to balloon to between $20 billion and
$30 billion, highlighting the risks of California’s heavy reliance on tech wealth and high-income taxpayers.
While the current budget may appear stable, the state’s fiscal future remains uncertain—especially if the
tech sector takes a hit.
Nvidia is just one of the key players in California’s tech ecosystem, which played a part in the stock market
rally following Donald Trump’s election as the 47th president. Among the “Magnificent Seven” tech giants
that fueled this surge, four—Apple, Alphabet, Nvidia, and Meta—are headquartered in California. This
dominance is a double-edged sword. On one hand, it drives California’s economy with high-paying jobs
and substantial revenue streams from income taxes, stock-options withholdings, and corporate taxes. For
instance, revenue from stock-options withholdings at major tech firms has surged from just 0.2% of total
income tax withholding in 20098 to an estimated 10% in 2024.9 On the other hand, this dependency on tech
wealth leaves the state vulnerable to shocks within the sector.
Beyond the stock market rally, Trump’s election could have major ripple effects on California’s economy
in the near future—assuming the policies he’s floating actually come to pass. From international moves
such as tightening immigration and imposing tariffs, to domestic shifts like eliminating EV tax credits, the
impacts could be far-reaching. Let’s dive in.
5 https://calbudgetcenter.org/resources/the-2024-25-california-state-budget-explained/
6 Source: https://lao.ca.gov/Publications/Report/4939
7 Source: https://calmatters.org/economy/technology/2024/10/ca-corporate-tax-revenue-surge/
8 Source: https://calmatters.org/economy/2024/01/ca-tech-tax-withholding/
9 Source: https://lao.ca.gov/LAOEconTax/article/Detail/815
3 | TH
E
B
E
A
C
O
N
O
U
T
L
O
O
K
-
C
A
L
I
F
O
R
N
I
A
LABOR AND IMMIGRATION
While the U.S. unemployment rate held steady at 4.1% in October, California’s job market is showing clear
signs of strain, as highlighted in Beacon Economics’ latest employment report. The state’s unemployment
rate ticked up from 5.3% in September to 5.4% in October 2024—0.3% higher than October 2023 and a full
percentage point above pre-pandemic levels. In contrast, the national unemployment rate is just 0.5%
above pre-pandemic levels, and without
California, the U.S. rate drops to 3.98%.
Moreover, the increase in California isn’t driven
by more people entering the labor force; since
February 2020, the state’s labor force has
actually shrunk by 1%.
In September, California had nearly two
unemployed individuals for every job opening,
a ratio of 1.9—this has doubled over the past
two years.10 This figure was 1.6 in July, as noted
in Beacon Economics’ last outlook, and above
the state’s ten-year average of 1.4. For context,
the U.S. ratio remains significantly lower at 0.9,
indicating that California’s challenges may stem
as much from a shortage of job openings as
from a constrained labor force.
10 U.S. Bureau of Labor Statistics (BLS) Job Openings and Labor Turnover Survey (JOLTS)
FIGURE 1: UNEMPLOYMENT RATES IN ALL OTHER STATES AND CALIFORNIA: 2022 TO 2024
Source: U.S. Bureau of Labor Statistics, Unemployment Rate, retrieved from FRED,
Federal Reserve Bank of St. Louis Analysis by Beacon Economics.
3
4
5
6
Oct-24Jun-24Feb-24Oct-23Jun-23Feb-23Oct-22
U.S. Excluding California California
0
100,000
200,000
300,000
400,000
500,000
600,000
Flo
r
i
d
a
Flo
r
i
d
a
Te
x
a
s
Te
x
a
s
Ca
l
i
f
o
r
n
i
a
Ca
l
i
f
o
r
n
i
a
No
r
t
h
C
a
r
o
l
i
n
a
No
r
t
h
C
a
r
o
l
i
n
a
Ge
o
r
g
i
a
Ge
o
r
g
i
a
Ne
w
Y
o
r
k
Ne
w
Y
o
r
k
Vir
g
i
n
i
a
Vir
g
i
n
i
a
Ar
i
z
o
n
a
Ar
i
z
o
n
a
Pe
n
n
s
y
l
v
a
n
i
a
Pe
n
n
s
y
l
v
a
n
i
a
Co
l
o
r
a
d
o
Co
l
o
r
a
d
o
Wa
s
h
i
n
g
t
o
n
Wa
s
h
i
n
g
t
o
n
Il
l
i
n
o
i
s
Il
l
i
n
o
i
s
So
u
t
h
C
a
r
o
l
i
n
a
So
u
t
h
C
a
r
o
l
i
n
a
Te
n
n
e
s
s
e
e
Te
n
n
e
s
s
e
e
Oh
i
o
Oh
i
o
Ma
r
y
l
a
n
d
Ma
r
y
l
a
n
d
Ne
w
J
e
r
s
e
y
Ne
w
J
e
r
s
e
y
In
d
i
a
n
a
In
d
i
a
n
a
Ma
s
s
a
c
h
u
s
e
t
t
s
Ma
s
s
a
c
h
u
s
e
t
t
s
Mis
s
o
u
r
i
Mis
s
o
u
r
i
Mic
h
i
g
a
n
Mic
h
i
g
a
n
Or
e
g
o
n
Or
e
g
o
n
Ne
v
a
d
a
Ne
v
a
d
a
Ala
b
a
m
a
Ala
b
a
m
a
Wi
s
c
o
n
s
i
n
Wi
s
c
o
n
s
i
n
Ok
l
a
h
o
m
a
Ok
l
a
h
o
m
a
Ke
n
t
u
c
k
y
Ke
n
t
u
c
k
y
Min
n
e
s
o
t
a
Min
n
e
s
o
t
a
Co
n
n
e
c
t
i
c
u
t
Co
n
n
e
c
t
i
c
u
t
Ut
a
h
Ut
a
h
Id
a
h
o
Id
a
h
o
Ka
n
s
a
s
Ka
n
s
a
s
Io
w
a
Io
w
a
Ar
k
a
n
s
a
s
Ar
k
a
n
s
a
s
Lo
u
i
s
i
a
n
a
Lo
u
i
s
i
a
n
a
Ne
w
M
e
x
i
c
o
Ne
w
M
e
x
i
c
o
Mis
s
i
s
s
i
p
p
i
Mis
s
i
s
s
i
p
p
i
Ha
w
a
i
i
Ha
w
a
i
i
Dis
t
r
i
c
t
o
f
C
o
l
u
m
b
i
a
Dis
t
r
i
c
t
o
f
C
o
l
u
m
b
i
a
Ne
b
r
a
s
k
a
Ne
b
r
a
s
k
a
We
s
t
V
i
r
g
i
n
i
a
We
s
t
V
i
r
g
i
n
i
a
Ne
w
H
a
m
p
s
h
i
r
e
Ne
w
H
a
m
p
s
h
i
r
e
De
l
a
w
a
r
e
De
l
a
w
a
r
e
Ma
i
n
e
Ma
i
n
e
Mo
n
t
a
n
a
Mo
n
t
a
n
a
No
r
t
h
D
a
k
o
t
a
No
r
t
h
D
a
k
o
t
a
Rh
o
d
e
I
s
l
a
n
d
Rh
o
d
e
I
s
l
a
n
d
Ala
s
k
a
Ala
s
k
a
So
u
t
h
D
a
k
o
t
a
So
u
t
h
D
a
k
o
t
a
Ve
r
m
o
n
t
Ve
r
m
o
n
t
Wy
o
m
i
n
g
Wy
o
m
i
n
g
FIGURE 2: DOMESTIC MIGRATION INTO STATES
Source: U.S. Census Bureau State-to-State Migration Flows: 2023 American Community Survey 1-Year Estimates. Analysis by Beacon Economics.
0%
3%
6%
9%
4 | TH
E
B
E
A
C
O
N
O
U
T
L
O
O
K
-
C
A
L
I
F
O
R
N
I
A
Total nonfarm employment in the state fell to approximately 18.1 million on a seasonally adjusted basis
in October, a decline of 5,500 positions. These losses were largely concentrated in the public sector, while
the private sector added 2,000 jobs. California has faced three months of job declines this year, with the
first drop in service-sector employment occurring last month. Meanwhile, California’s household and
payroll surveys continue to diverge: Payroll employment has risen 1.8% over the past two years, while
household employment has remained nearly flat. A downward correction in payroll numbers may be on
the horizon in March, when the annual revision rolls around. Given where the job market is right now, it’s a
good thing that Proposition 32, which sought to raise the state’s minimum wage, didn’t pass in November.
While the debate over fair wages is important, implementing such a measure at this time could have placed
additional pressure on the state’s labor market.
-60,000
-50,000
-40,000
-30,000
-20,000
-10,000
0
10,000
Te
x
a
s
Ar
i
z
o
n
a
Flo
r
i
d
a
Ne
v
a
d
a
Te
n
n
e
s
s
e
e
Id
a
h
o
No
r
t
h
C
a
r
o
l
i
n
a
Or
e
g
o
n
Co
l
o
r
a
d
o
Ge
o
r
g
i
a
Wa
s
h
i
n
g
t
o
n
Ok
l
a
h
o
m
a
Vir
g
i
n
i
a
Mo
n
t
a
n
a
Ut
a
h
Oh
i
o
Ar
k
a
n
s
a
s
Wi
s
c
o
n
s
i
n
Ke
n
t
u
c
k
y
Ala
s
k
a
Ne
w
M
e
x
i
c
o
In
d
i
a
n
a
Ha
w
a
i
i
Pe
n
n
s
y
l
v
a
n
i
a
Ala
b
a
m
a
So
u
t
h
D
a
k
o
t
a
Ma
s
s
a
c
h
u
s
e
t
t
s
Co
n
n
e
c
t
i
c
u
t
Min
n
e
s
o
t
a
So
u
t
h
C
a
r
o
l
i
n
a
Mis
s
o
u
r
i
No
r
t
h
D
a
k
o
t
a
Rh
o
d
e
I
s
l
a
n
d
Ma
i
n
e
Ne
w
H
a
m
p
s
h
i
r
e
Io
w
a
Wy
o
m
i
n
g
Ka
n
s
a
s
Ma
r
y
l
a
n
d
Ve
r
m
o
n
t
Mis
s
i
s
s
i
p
p
i
De
l
a
w
a
r
e
We
s
t
V
i
r
g
i
n
i
a
Ne
b
r
a
s
k
a
Di
s
t
r
i
c
t
o
f
C
o
l
u
m
b
i
a
Lo
u
i
s
i
a
n
a
Mic
h
i
g
a
n
Ne
w
J
e
r
s
e
y
Ne
w
Y
o
r
k
Il
l
i
n
o
i
s
FIGURE 4: NET DOMESTIC MIGRATION INTO CALIFORNIA
Source: U.S. Census Bureau State-to-State Migration Flows: 2023 American Community Survey 1-Year Estimates. Analysis by Beacon Economics.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Te
x
a
s
Ne
w
Y
o
r
k
Wa
s
h
i
n
g
t
o
n
Ne
v
a
d
a
Or
e
g
o
n
Il
l
i
n
o
i
s
Ar
i
z
o
n
a
Flo
r
i
d
a
Vir
g
i
n
i
a
Co
l
o
r
a
d
o
Ne
w
J
e
r
s
e
y
Mic
h
i
g
a
n
Ge
o
r
g
i
a
Ut
a
h
Ma
r
y
l
a
n
d
Ma
s
s
a
c
h
u
s
e
t
t
s
No
r
t
h
C
a
r
o
l
i
n
a
Pe
n
n
s
y
l
v
a
n
i
a
Ha
w
a
i
i
Oh
i
o
Mis
s
o
u
r
i
So
u
t
h
C
a
r
o
l
i
n
a
Te
n
n
e
s
s
e
e
Ne
w
M
e
x
i
c
o
Dis
t
r
i
c
t
o
f
C
o
l
u
m
b
i
a
In
d
i
a
n
a
Lo
u
i
s
i
a
n
a
Io
w
a
Ka
n
s
a
s
Mis
s
i
s
s
i
p
p
i
Co
n
n
e
c
t
i
c
u
t
Min
n
e
s
o
t
a
Id
a
h
o
Wi
s
c
o
n
s
i
n
Ne
b
r
a
s
k
a
Ok
l
a
h
o
m
a
Ke
n
t
u
c
k
y
Ala
b
a
m
a
Ar
k
a
n
s
a
s
Ala
s
k
a
Ne
w
H
a
m
p
s
h
i
r
e
Wy
o
m
i
n
g
We
s
t
V
i
r
g
i
n
i
a
Rh
o
d
e
I
s
l
a
n
d
Ve
r
m
o
n
t
Ma
i
n
e
De
l
a
w
a
r
e
Mo
n
t
a
n
a
So
u
t
h
D
a
k
o
t
a
No
r
t
h
D
a
k
o
t
a
FIGURE 3: PRIOR RESIDENCE OF DOMESTIC CALIFORNIA MIGRANTS
Source: U.S. Census Bureau State-to-State Migration Flows: 2023 American Community Survey 1-Year Estimates. Analysis by Beacon Economics.
5 | TH
E
B
E
A
C
O
N
O
U
T
L
O
O
K
-
C
A
L
I
F
O
R
N
I
A
California’s migration patterns play an
important part in the labor market. The state
ranks last nationally in domestic migration
percentages—just 1% of Californians in 2023 had
moved here from a different state, compared
to the 2-4% range seen in most states and
Washington, D.C.’s standout 8%.11 However,
California remains a heavyweight in absolute
numbers, welcoming 422k people from other
states in 2023, trailing only Texas and Florida.
This gain was offset by the 690k people who
left the state for other places. International
migration helped close the gap, with over 313k
individuals moving to California from abroad.
This is a clear reminder that foreign migration
isn’t just a statistic—it’s important for keeping
California’s economy moving forward.
International migrants strengthen the state’s
workforce and drive economic growth through
their contributions and spending. In this
context, President Elect Trump’s proposals to
tighten immigration policies risk worsening
the state’s existing challenges and placing
additional pressure on an economy reliant on
migration. Supporting robust legal pathways
to international migration remains essential
for California’s economic health and the
communities it serves.
11 U.S. Census Bureau State-to-State Migration Flows: 2023 American
Community Survey 1-Year Estimates.
FIGURE 5: FOREIGN MIGRATION INTO U.S. STATES
Source: U.S. Bureau of Labor Statistics, Unemployment Rate, retrieved from FRED,
Federal Reserve Bank of St. Louis Analysis by Beacon Economics.
0 100,000 200,000 300,000 400,000
Vermont
South Dakota
WyomingMontana
West Virginia
Maine
Alaska
New Hampshire
Delaware
North Dakota
Arkansas
Rhode Island
Idaho
Mississippi
District of Columbia
New Mexico
Hawaii
Nebraska
Oklahoma
Iowa
Alabama
Wisconsin
Kansas
Louisiana
Missouri
Oregon
South Carolina
Tennessee
Connecticut
Nevada
Utah
Kentucky
Indiana
Minnesota
Colorado
Maryland
Virginia
Ohio
Michigan
Arizona
Georgia
North Carolina
Washington
Massachusetts
Pennsylvania
New Jersey
Illinois
New York
Texas
Florida
California
6 | TH
E
B
E
A
C
O
N
O
U
T
L
O
O
K
-
C
A
L
I
F
O
R
N
I
A
TRADE AND TARIFFS
As you’ve likely heard, the President-Elect
is also pushing for new tariffs on imported
goods, particularly targeting Mexico and China.
Initially, he floated the idea of a 60% tariff
on Chinese products and 20% on all other
imports.12 However, the proposal has since
shifted to a blanket 25% tariff on all goods
coming from Mexico and China.13 So, how might
these tariffs play out for Californian consumers
and producers?
There’s an inverse relationship between
disposable personal income—what’s left in
your pocket after taxes and transfers—and
personal consumption expenditures on goods.
In other words, the more money people earn,
the smaller the share they typically spend
on goods. Given California’s relatively higher
income levels, a tariff on goods might not hit
12 See: https://www.pbs.org/newshour/economy/trump-favors-huge-new-tariffs-how-do-they-work
13 See: https://www.brookings.edu/articles/assessing-trumps-proposed-25-tariff-on-imports-from-mexico-and-canada/
FIGURE 6: CALIFORNIA'S IMPORT PARTNERS: 2017 TO 2023
United States California
Florida
New York
Texas
United States CaliforniaFloridaNew YorkTexas 0.06
0.08
0.1
0.12
0.14
0.16
0.18
0.2
0.22
0.24
0.26
0.28
0.3
0.32
0.34
0.36
0.38
45,000 50,000 55,000 60,000 65,000 70,000 75,000 80,000
Du
r
a
b
l
e
G
o
o
d
s
S
h
a
r
e
o
f
P
e
r
s
o
n
a
l
E
x
p
e
n
d
i
t
u
r
e
s
,
2
0
2
3
Al
l
G
o
o
d
s
S
h
a
r
e
o
f
P
e
r
s
o
n
a
l
E
x
p
e
n
d
i
t
u
r
e
s
,
2
0
2
3
Per Capita Disposable Personal Income, 2023 ($)
All Goods Durable Goods Linear (All Goods)Linear (Durable Goods)
Source: U.S. Bureau of Economic Analysis. Analysis by Beacon Economics.
FIGURE 7: DISPOSABLE PERSONAL INCOME AND CONSUMPTION OF GOODS, BY STATE
0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
FIGURE 6: CA’S IMPORT PARTNERS: 2017 TO 2023
40%
45%
50%
2017 2018 2019 2020 2021 2022 2023
Source: Oice of Trade & Economic Analysis, International Trade Administration of U.S. Department of Commerce. Analysis by Beacon Economics.
China Mexico Taiwan Vietnam Japan
All Other Share of Imports from Mexico and China
7 | TH
E
B
E
A
C
O
N
O
U
T
L
O
O
K
-
C
A
L
I
F
O
R
N
I
A
Californians as hard as it would residents of states with lower incomes.14 On the flip side, California is a
major importer of goods from Mexico and China, both in volume and dollar value. However, data from the
U.S. Department of Commerce’s Office of Trade and Economic Analysis shows that the share of California’s
imports coming from these two countries has actually been trending downward, from nearly 47% in 2017
to just over 40% today. And yes, part of that decline is likely a result of Trump’s first round of tariffs on
China. Ironically, those earlier tariffs may have helped California diversify its import sources, offering some
insulation against these new proposed tariffs.
But let’s not forget the fundamental mechanics of tariffs. First, it’s importers here in the U.S. who foot
the bill for tariffs, not foreign producers (foreign producers “pay” in the sense that their products become
more expensive and so, less likely to be purchased). Second, domestic consumers face higher prices as
importers pass on that added cost. And third, domestic producers who rely on these imports for their
supply chains also get hit with higher costs. So, even though California’s relatively higher income levels and
shrinking dependency on Mexican and Chinese imports might soften the blow, the state likely won’t escape
unscathed. Prices are almost certain to tick upward—a concerning prospect when we’re still recovering
from the last wave of inflation.
CLIMATE AND ENERGY
President-Elect Trump’s policies could reshape
California’s energy landscape as well. His plan to
eliminate federal EV tax credits poses a potential
setback for the state’s clean energy progress.
However, Governor Newsom has assured Californians
that the state will maintain its EV incentives—a
critical move, considering the transformative impact
electric vehicles have had on reducing greenhouse
gas emissions. Data from the California Air Resources
Board (CARB) highlights this shift: The number of
battery electric vehicles (BEVs) has surged from just
2,000 in 2000 to nearly 650,000 in 2022, contributing
to a drop in passenger vehicle fossil gasoline
emissions from 125 million metric tons (MMT) of
carbon dioxide equivalent (C02e) in 2000 to 101 MMT
in 2022. While advancements in fuel efficiency have
helped, the widespread adoption of BEVs has been a
key driver of this reduction.
14 Californians spend a lower share of their expenditures on goods compared to the typical state, though the exception is clothing and footwear, where they spend rela-
tively more. Source: Bureau of Economic Analysis, Personal Consumption Expenditures by State and Personal Disposable Income by State, 2023.
Ba
t
t
e
r
y
E
l
e
c
t
r
i
c
V
e
h
i
c
l
e
P
o
p
u
l
a
t
i
o
n
(
i
n
T
h
o
u
s
a
n
d
s
)
P
a
s
s
e
n
g
e
r
V
e
h
i
c
l
e
F
o
s
s
i
l
G
a
s
o
l
i
n
e
E
m
i
s
s
i
o
n
s
(
Y
e
a
r
2
0
0
0
=
1
0
0
)
FIGURE 8: BATTERY ELECTRIC VEHICLES AND PASSENGERCAR GAS EMISSIONS IN CA: 2000 TO 2022
Source: California Air Resources Board (CARB) Analysis of Battery Electric Vehicle Data Retrieved from the State of California Department of Motor Vehicles and CARB "Current
California GHG Emission Inventory Data 2000–2022.” Analysis by Beacon Economics.
202220002011
0
200
400
600
800
60
120
105
90
75
Vehicle Population Emissions
8 | TH
E
B
E
A
C
O
N
O
U
T
L
O
O
K
-
C
A
L
I
F
O
R
N
I
A
Yet, California’s energy challenges remain
daunting. Rising average temperatures over
nearly two centuries emphasize the urgency
of accelerating clean energy adoption.15 The
looming 2030 closure of Diablo Canyon, the
state’s last nuclear power plant, raises concerns
about losing a reliable source of clean energy.16
Meanwhile, overgeneration of solar power
has led to significant energy waste,17 exposing
the need for improved storage solutions and
market mechanisms to balance supply and
demand. The transition to renewables is
essential but must be approached with care.
Overproduction and inefficiencies make it clear
that innovative policymaking, investment in
energy storage technologies, and collaboration
across industries are crucial to sustaining
California’s clean energy momentum.
CONCLUSION
Ultimately, California’s outlook for the next quarter hinges on the performance of its tech giants and the
domestic and international policies set forth by the incoming President. As January approaches and the
new administration takes office, several key factors remain at play. The state’s reliance on legal immigration
to sustain and grow its workforce cannot be overstated, while proposed tariffs threaten to raise prices for
consumers and cut into profits for domestic producers relying on imported inputs. EV tax credits may
persist, but with the responsibility shifting from the federal government to the state, California faces yet
another financial strain. In this context, the tax revenue generated by the state’s tech industry becomes
even more critical to maintaining fiscal stability. So, as we look ahead, California finds itself walking a
tightrope—balancing innovation, policy, and economic resilience—all while hoping the tech sector doesn’t
sneeze and send the entire state into a fiscal cold.
15 https://oehha.ca.gov/climate-change/epic-2022/changes-climate/air-temperatures
16 See: https://www.latimes.com/environment/story/2023-12-14/california-energy-officials-vote-to-extend-diablo-canyon-operations
`
FIGURE 9: AVERAGE TEMPERATURE IN CA: 1895 TO 2023
Source: California Oice of Environmental Health Hazard Assessment. Analysis by Beacon Economics.
54
56
58
60
62
2023200319831963194319231903
11 Running Year Mean Average Temperature (Fº)
9 | TH
E
B
E
A
C
O
N
O
U
T
L
O
O
K
-
C
A
L
I
F
O
R
N
I
A
CALIFORNIA FORECAST - KEY INDICATORS
Nonfarm Payrolls (000s, SA)
Unemployment Rate (%, SA)
Real GDP (Millions 2012$, SAAR)
Home Prices ($, SA)
Nonfarm Payrolls (000s, SA)
Unemployment Rate (%, SA)
Real GDP (Millions 2012$, SAAR)
Home Prices ($, SA)
18,026.0
5.2
3,354,963.0
725,981.8
Current
Q2-24
18,087.6
5.3
3,413,081.5
724,092.2
18,271.4
5.1
3,506,552.0
722,413.7
18,167.9
5.3
3,455,778.0
717,472.1
18,221.3
5.3
3,482,073.0
720,296.2
18,334.3
5.1
3,556,621.0
729,713.6
18,117.2
5.3
3,429,993.0
717,649.8
18,319.1
5.1
3,531,970.0
725,935.5
18,377.1
5.0
3,583,823.0
735,638.9
18,407.3
4.9
3,609,327.0
742,596.4
Forecast
Forecast
Q4-24F
Q4-25F
Q3-24F
Q3-25F
Q1-25F Q2-25F
Q1-26F Q2-26F Q3-26F
Source: U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, CoreLogic; Forecast by Beacon Economics
CALIFORNIA FORECAST