How has California's GDP growth trended over the last five years compared with the U.S. average?
Executive summary
California’s nominal GDP reached roughly $4.1 trillion in 2024, making it one of the world’s largest subnational economies, while recent reporting shows the state’s nominal GDP averaged 7.5% growth from 2021–2024 (Governor’s office) even as real growth slowed to lower single digits in earlier years (PPIC). Nationally, U.S. real GDP growth was about 2.5% in 2023 and swung higher in 2025 (BEA reports a 3.8% annualized gain in Q2 2025); sources differ on whether California has outpaced the U.S. over the last five years depending on whether you look at nominal vs. real figures and which exact years are compared [1] [2] [3] [4].
1. Why “nominal” vs. “real” matters: two apples, not one
Some statements about California’s recent outperformance use nominal GDP (current-dollar) growth — the Governor’s office cites an average nominal growth of 7.5% from 2021–2024, a strong pace that reflects price changes, sector value gains, and tech-driven revenue growth [1]. By contrast, analyses that emphasize inflation-adjusted (real) growth show a much more modest multi-year pace: the Public Policy Institute of California (PPIC) reports California averaged about 2.3% per year between 2020–2023 and notes that growth was slower in the most recent years compared with the prior four-year period [3] [5]. The discrepancy changes whether California “beat” the U.S. — nominal comparisons can enlarge tech-sector revenue gains and inflation effects, while real comparisons are better for measuring output volumes [1] [3].
2. How California actually trended, year by year (selected snapshots)
BEA and reporting cited by multiple outlets put California’s 2024/2025 size near $4.0–4.1 trillion in current dollars, undergirding claims it is among the world’s largest economies [1] [6] [7]. PPIC highlights that California’s real GDP growth was 2.3% annually from 2020–2023 and that the state’s growth slowed relative to the earlier four‑year span when U.S. averages were higher [3]. UCLA Anderson’s forecast and state-quarter reporting add nuance: California had a strong 2023 (about 3.7% compound annual rate) but showed mixed quarter-to-quarter performance in 2024 with some quarters below the U.S. growth rate [8]. These snapshots show a pattern of solid nominal expansion driven by high-value sectors even as real, inflation-adjusted gains fluctuated [1] [3] [8].
3. How the U.S. performed in the same period
Nationally, BEA reports show real GDP growth rebounding after the pandemic years: the U.S. increased real GDP by 2.5% in 2023 and posted stronger annualized gains in 2025 quarters (BEA’s Q2 2025 annualized +3.8%), with revisions and updates changing averages for multi-year spans [4] [9] [10]. BEA’s annual update summarized that real GDP rose at an average annual rate of 2.4% from 2019–2024 — a useful benchmark when comparing to California’s recent real rates [11]. Whether California outpaced the national average depends on which interval you choose: California’s 2.3% (2020–2023) sits just below some U.S. multi-year measures cited, while nominal-state metrics tell a different story [3] [11].
4. Regional drivers and why California’s mix changes the picture
California’s economy is concentrated in high‑value sectors — information/tech, professional services, real estate — which inflate nominal GDP when tech firms’ revenues and asset prices rise; PPIC and state releases both note information and professional services are major contributors [3] [1]. That sector mix produces volatility: large revenue swings and valuation gains can boost nominal growth even when real output growth is muted. Forecasts (UCLA Anderson, California forecast summaries) expect cycles tied to tech, residential investment, and AI-related demand to keep California’s growth diverging from the national pattern in coming years [8] [12].
5. Conflicting narratives and what to watch for
The Governor’s office promotes the 7.5% nominal average (2021–2024) to show strong performance and global standing [1]. Academic and policy analysts (PPIC, UCLA Anderson) provide counterpoints by focusing on real growth rates and quarter-by-quarter volatility, noting periods where California lagged the U.S. or showed sub‑par growth [3] [8]. Independent outlets and data aggregators (BEA tables, Statista, FRED) underpin both views with slightly different measures — readers should check whether sources report nominal vs. real GDP, annual vs. quarterly rates, and which years are averaged [13] [14] [15].
6. Bottom line for five‑year comparisons
If you measure by nominal GDP (current dollars) and the 2021–2024 window, California’s growth looks substantially stronger than average U.S. nominal growth and supports claims of rapid expansion [1]. If you measure by inflation‑adjusted, real GDP over 2020–2023 or comparable multi‑year spans, California’s growth is modest (around the low‑to-mid single digits) and in some years lagged or matched the U.S. [3] [11]. Which conclusion is “correct” depends on the metric and period chosen; available sources do not mention a single definitive five‑year comparison that resolves nominal vs. real and year selection across all analysts [1] [3] [11].