With less than three months left in office, Gov. Gavin Newsom reflected on California’s economic successes over the years during a trip to Los Angeles County on Wednesday, Oct. 14.
In a fireside chat at the California Economic Summit in Long Beach, the outgoing governor rattled off statistics that set the state apart before touting an economic plan the state adopted last year and touching briefly on the mindset he believes the next governor should embrace.
California generates 18% of the world’s research and development — surpassed only by China and Germany — and offers wages that are 20% higher than the rest of the nation while producing about a quarter of the jobs in the country in August and boasting a 40% growth in gross domestic product since 2019, Newsom said.
“No other jurisdiction in the world can lay claim to that GDP growth, at least (a) developed nation. That’s greater than any other state and greater than the nation,” he said.
Newsom spent much of his roughly 25-minute chat with Lenny Mendonca, the governor’s former chief economic and business advisor, touting the California Jobs First Economic Blueprint.
The blueprint, released last year, is intended to guide investments in key sectors to spur economic growth, innovation and access to good-paying jobs in all 13 regions of California over the next decade.
The plan, which includes $245 million in state investments, was more than three years in the making and reflects ideas taken from 13 regional plans developed by stakeholders in different parts of California.
Newsom credited attendees at Wednesday’s economic summit for helping the state build its strategy.
“You cannot have an economic strategy that’s sent down from Sacramento. It’s got to be set up from these diverse regions,” he said.
Newsom’s overall optimistic reflection about California’s economy came in a moment when many people in the state and across the country are still struggling amid record-high gas prices and tariffs that have increased the costs of goods.
What economic reports say
Earlier Wednesday, the federal government’s latest inflation report dropped, showing consumer prices had risen by 3.7% in the past year. That was felt across many sectors, the report from the U.S. Department of Labor showed, including increased prices for gas and utilities. On a monthly basis, costs jumped 0.6% from August to September, the biggest gain in five months, up from a 0.4% increase the previous month.
The figures underscore the lingering impact of the Iran war on gas prices and the stubborn persistence of inflation, which has ticked higher since the war began in late February. The rise isn’t all linked to oil and gas, as surging investment in data centers and AI has also pushed up prices for computer chips and the consumer electronics that use them.
And according to the New York Times, data from the federal government also showed that while inflation surged, workers have not experienced any wage growth since January 2025.
Newsom avoided focusing his remarks on the negative aspects of the economy, though he acknowledged the state’s “stubborn” unemployment rate of 5.1%.
And some recent economic reports appear to underscore his relatively optimistic outlook for California.
The state’s economy has dodged the effects of tariffs imposed by the Trump administration since early 2025, as well as inflation and higher energy prices caused by the U.S. led war in Iran that disrupted the Strait of Hormuz. About a fifth of the world’s crude oil is moved through the narrow Middle Eastern waterway.
Despite all of the disruptions in the world, an economic forecast published last month by the UCLA Anderson School of Management found that the state’s economic growth has remained resilient.
The report said the forecast has shifted considerably over the course of the year, with the state’s economy boosted significantly by investments in artificial intelligence and a growing defense budget.
Earlier this year, economists at Chapman University said a war with Iran could have a positive overall impact on the U.S. economy, creating trickle-down benefits with a boost in military spending for Southern California’s military contractors.
The economists — including James Doti, Raymond Sfeir and Fadel Lawandy — noted that defense contractors in Southern California, including Costa Mesa-based Anduril Industries, Hawthorne-based SpaceX and several others, would benefit from the conflict.
UCLA said in its report that the state’s economy grew at an annual rate of 3.7% in the first quarter of 2026.
Still, the state’s economy has been hurt by a weak labor market, the university said.
California’s unemployment rate stood at 5.1% in August, the highest of any state. “The ’employment recession’ identified by the forecast six months ago has continued, even though California has outperformed the nation in the production of goods and services,” the UCLA report said.
What’s next
On the topic of his successor, Newsom said he hopes the next governor will approach the job with a mindset that embraces a “speed of change.”
Newsom, who is wrapping up his eighth year as governor, said he didn’t have the “political capital” in his first few years in office to move things along more quickly. But in the last two years, his administration, in working with the legislature, was finally able to make land-use zoning reforms and change regulations in order for housing to be built more quickly, he said.
“The first few years, we made a lot of good progress, but we were missing the Holy Grail. We finally just hit peak, and I rolled the dice,” Newsom said.
Last year, the state passed California Environmental Quality Act reform bills to speed up housing production while reducing costs.
Although the next governor will inherit a surplus in the budget, that money is one-time, Newsom said, adding that he’s worried about the state of the economy a year from now.
Newsom encouraged the business leaders assembled at Wednesday’s economic summit to demand from the next governor that the progress the state has already made with the California Jobs First blueprint continue.
“I would demand as part of the surplus that we continue to invest these one-time dollars in a lot of your work at the local level,” Newsom said. “I’d demand a big damn set aside in that.”
SCNG’s Kaitlyn Schallhorn and The Associated Press contributed to this report.
