California Economy Up 3.7%, Just Below Washington State +4.5%

The California economy is up 3.7% annualized real Gross Domestic Product (GDP) growth, coming in second to Washington State, which led the nation with +4.5% annualized real GDP growth in Quarter 1 2026, according to the Bureau of Economic Analysis.

“The Seattle area is home to major money-spinners in the tech industry, such as Microsoft and Amazon, that are making enormous investments in AI infrastructure,” the Fairbanks Daily News Miner reports. “Amazon and Microsoft are projected to collectively spend about $390 billion this year on AI.”

“A few large expenditures, such as data center projects, can have a major influence on quarterly GDP data.”

This was part of a broader picture where real GDP grew in 46 states and Washington D.C. in Q1 2026. This is the Trump economy more than anything. The national average was +2.1%.

The value of the final goods and services produced in the United States is the gross domestic product. “The percentage that GDP grew (or shrank) from one period to another is an important way for Americans to gauge how their economy is doing. The United States’ GDP is also watched around the world as an economic barometer,” the BEA explains.

“GDP is the signature piece of BEA’s National Income and Product Accounts, which measure the value and makeup of the nation’s output, the types of income generated, and how that income is used.”

California and Washington significantly outperformed the U.S. as a whole. 

While Governor Gavin Newsom frequently takes full credit for California’s economic output, it is primarily due to the Silicon Valley’s high-tech industry.

Just imagine how the California economy would be burgeoning if Gov. Newsom had cut taxes on individuals and corporations, lifted CARB’s business killing regulations, cut the size of state government, funded Proposition 36, eradicated the zombie drug addicts and homeless, deported illegal aliens thus removing millions from Medi-Cal, cut all DEI in government and public education, and let Pacific Palisades rebuild?

Context is needed on annual and prior data for 2025.

Real GDP growth (inflation-adjusted): California 2.5%, Washington 2.2%. Notably, California ranked around 7th–11th depending on the source.

Nominal GDP: According to Gov. Newsom, California reported stronger figures – 5% growth to a record $4.25–4.3 trillion, or 14% of the entire U.S. economy.

Washington’s economy is much smaller overall – $717–895 billion range in recent tallies. 

This grandstanding is from the governor’s April announcement:

Nice try, losers*

California’s economic output dwarfed that of every other state. As Texas and Florida attempt to make headlines by joining with NINE other states* to artificially boost their numbers, California stands on its own as the leader nationwide. In addition to year-over-year gains, California also stood atop the four largest state economies in the 4th quarter of last year, posting the largest dollar increase at $44.5 billion, more than New York, Texas, and Florida.

*Bless your heart, Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee and Texas.

Because California remains by far the largest state economy, roughly 4–5x Washington’s size, with strengths in tech, entertainment, real estate, and more, the numbers are higher.

Also quite notable, Washington punches above its weight in per-capita terms and tech/AI momentum.

Quarterly figures can be volatile – big tech and AI capex can boost one period.

One year ago the Globe reported:

California Gov. Gavin Newsom is bragging that California owns the 4th largest economy in the world. But he leaves out some important details, like poverty, homelessness, crime, taxes, gas prices, housing costs, illegal aliens, welfare recipients, and a $1.3 trillion total budget deficit, just for starters. And, California is the #1 most regulated state in the U.S.

California reached this position not because of Newsom’s great leadership or brilliant economic policy, but because Japan’s economy is faltering.

“California’s nominal GDP grew by 6.0%. Japan’s fell by 4.4%.”

“While California enjoys a high GDP, it dissipates the effective purchasing power through high and increasing costs of living,” the California Center for Jobs and the Economy reported. “Using the most current US Bureau of Economic Analysis Regional Price Parities to adjust California’s current GDP to an equivalent statistic, California barely edged ahead of Italy from 12th to 11th highest when GDP is measured by IMF’s purchasing power parity series. This shift in rank is a stark illustration of the extent to which the costs of living sap the economic reach of the state’s households.”

Full-year 2026 data will come later.