Executive Summary
California’s economy in 2025 presents a troubling paradox. While the state continues to rank among the largest economies in the world, the underlying data reveals an economy that is no longer delivering broad-based growth, opportunity, or stability. California may have risen to the 4th largest economy, but only because Japan’s economy has slowed and the dollar appreciated against the yen. Meanwhile, household economies throughout the state continue to be strained, as the cost of living and lack of upward economic mobility continue to directly impact the quality of life for countless residents.
The Center for Jobs and the Economy’s 2025 Economic Performance review includes measures of key economic activity and continues to benchmark economic indicators to identify trends that can quantify impacts of policy decisions and help inform future economic opportunities.
In addition, this report serves a critical role for the next governor, providing data to benchmark future economic plans, policies, and regulations that will have a direct impact on California’s economic performance.
Rather than expanding, California’s economy is increasingly defined by stagnation in job creation, erosion in its private sector base, and mounting structural challenges tied to affordability and competitiveness. Many of the state’s headline strengths—particularly in technology—are masking deeper weaknesses across the broader economy.
The data shows an economy that has largely stalled since the pandemic recovery, with employment barely returning to pre-2020 levels, private sector job losses accelerating, and consumer activity weakening in real terms. At the same time, high costs of living and doing business continue to push workers, companies, and investment out of the state.
These trends are not isolated or temporary. They point to a growing disconnect between California’s economic potential and its actual performance—and raise serious warning signs about the state’s long-term economic trajectory.