UCLA Anderson Forecast: Below-average growth for California in 2024, followed by peak years for the state and US

With the nation's growth rate not expected to accelerate until after November's presidential election, California will ultimately experience a full year of subpar growth in 2024, according to the latest analysis of the California and U.S. economies from UCLA Anderson Forecast released today.

California's GDP growth in 2023 – which beat all but three states at a compound annual rate of 3.7% – slowed to 2.8% in the second quarter of 2024, 0.2 percentage points below the overall U.S. growth rate . The subtrend growth is primarily the result of weaknesses in certain sectors of the economy, as evidenced by the state's high unemployment rate, which reached 5.3% in August, forecast economists said.

And while the jobs picture means a relatively weak forecast for California in 2024, the analysis suggests that much of the weakness should be resolved by the end of 2025, with the state's economy potentially growing slightly faster in 2025 and 2026 that of the country, led by the technology and aerospace industries.

The U.S. economy is facing some headwinds as it enters the fourth quarter of 2024 due to a confluence of several factors, including an employee strike at Boeing and uncertainty over the presidential election and its aftermath, which has caused companies to slow down in hiring of employees approaching more cautiously and making investment decisions as they adopt a wait-and-see attitude. Additionally, while the report was being completed, another longshoremen's strike was set to begin on October 1, which could take a significant toll on the economy, and Hurricane Helene was moving southeast, likely causing economic damage.

Given that the election is currently a back-and-forth affair and that there are completely different policies depending on the outcome, the forecast assumes that the gridlock in Congress will continue regardless. Nevertheless – on the condition that the employment complaints are resolved smoothly end of year – Economists expect that after somewhat subdued 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 press release.