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

Tuesday, July 13, 2021
By Lisa Freedland

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.

This fact brief is responsive to conversations such as this one.
Bureau of Economic Analysis Q1 2021 gross domestic product by state
University of New Hampshire COVID-19 Economic Crisis: By State
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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