FACT BRIEF

Is California’s economy showing signs of strong recovery alongside lingering impacts from the coronavirus?

Tuesday, July 13, 2021

By Lisa Freedland

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YES

California’s economy is recovering from pandemic closures that were more severe than in many other states. In the calendar first quarter the state grew at 6.3%, only slightly off the national pace of 6.4%.

Travel restrictions hit the state hard; with international arrivals still restricted, recovery is expected to be lag in the leisure and hospitality sectors. In May 2021, the state’s unemployment rate, at 7.9%, was the third-highest in the U.S. The state legislature in May noted reports that up to 30% of the state’s restaurants closed permanently.

Offsetting that, the state benefited from the strength of its technology industry, with highly-paid workers largely able to continue working from home. In the four quarters ending March 31, “state wages and salaries were up 5.9%, the nation’s just 4%,” the state legislature analyst’s office reported. Healthy incomes and tax receipts have resulted in a windfall for the state government that the legislative analyst estimates at $38 billion.

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Sources

Bureau of Economic Analysis Q1 2021 gross domestic product by state

University of New Hampshire COVID-19 Economic Crisis: By State

California State Senate Briefing paper: Impacts and implications of the COVID-19 pandemic on the state’s restaurant industry

California Legislative Analyst’s Office Q1 2021 personal income report

California Legislative Analyst’s Office The 2021-22 budget (surplus estimate)

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