Governor Gavin Newsom points to new economic figures showing California outpaced Texas and Florida in first quarter growth

Sacramento, California – California officials are pointing to new federal economic data as evidence that the state’s economy continues to outperform two of its biggest rivals, Texas and Florida, despite years of political criticism from leaders in those states.

According to a new analysis based on figures from the U.S. Bureau of Economic Analysis, California recorded a 3.7% annualized economic growth rate during the first quarter of 2026. State officials said that was one of the fastest growth rates in the country and California’s strongest quarterly ranking since 2013.

By comparison, the analysis found that Texas posted 0.9% growth, while Florida recorded 1.6% during the same period.

Governor Gavin Newsom said the latest figures challenge long-standing claims that California’s economic policies have failed.

“For years, we’ve heard the same fairytale — California’s economic model doesn’t work, and Texas or Florida are the future. The facts say otherwise. California is the world’s fourth-largest economy, and we’re growing faster because we choose to invest in innovation, talent, entrepreneurship, and working people. While Republican-led states ask working families to shoulder more of the tax burden, California continues to find ways to cut costs for families and provide more support for everyone to succeed.”

California highlights growth across several industries

State leaders said California has continued to expand its economy over the past several years. Since Governor Newsom took office, the state’s annual gross domestic product has increased by more than $1.18 trillion, reaching $4.25 trillion in 2025. During the first quarter of 2026, California’s annualized economic output climbed to $4.4 trillion, following annual GDP increases of more than $200 billion in each of the previous two years.

Officials also said California remains the world’s fourth-largest economy while continuing to lead the nation in several key economic areas.

According to the state, California ranks first for new business starts, manufacturing, venture capital funding, high-tech businesses, and agricultural production. Officials added that California is home to more businesses than either Texas or Florida and continues to serve as the country’s leading startup hub.

The state currently has more than 4.3 million small businesses, which together employ approximately 7.6 million Californians.

Job creation also remained strong, according to the report. California added roughly 131,500 jobs over the previous year, the highest increase among all states. In addition, the state’s workforce recorded a 4.2% productivity increase during 2025, making California the largest contributor to overall productivity growth in the United States while accounting for about 14% of the nation’s total economic output.

The report also noted that California led the country’s four largest state economies in dollar growth during the fourth quarter of 2025, adding $44.5 billion in economic output, more than New York, Texas, or Florida during that period.

Meanwhile, officials pointed out that Texas tied for 36th place nationally with its 0.9% first-quarter growth rate, while Florida ranked 23rd with 1.6% growth.

State leaders point to long term investments

California leaders argued that the state’s economic performance reflects years of investment in education, workers, infrastructure, healthcare, housing, and innovation.

The state highlighted several major initiatives introduced under Governor Newsom’s administration, including the nation’s first universal school meals program, expanded transitional kindergarten, broader childcare access, record funding for public schools, increased support for community schools, expanded healthcare coverage, stronger protections for renters, and additional investments in affordable housing.

Officials also pointed to expanded paid family leave and paid sick leave, higher wages for millions of workers, new apprenticeship and career pathway programs, major clean energy investments, support for veterans and military families, and what the administration described as the largest infrastructure investment in modern California history.

California also emphasized that it has attracted nearly two-thirds of all U.S. venture capital investment while growing from a $3 trillion economy to one valued at more than $4.25 trillion.

The state further argued that lower-tax states do not necessarily provide a lighter tax burden for everyone. According to California officials, 16 states, including Texas and Florida, place a larger overall state and local tax burden on their lowest-income residents than California places on its wealthiest one percent.

By highlighting its recent economic growth, job creation, business development, and continued investments in public programs, California leaders say the state remains the nation’s economic engine and believe the latest figures reinforce its position as one of the strongest-performing economies in the United States and around the world.