Projecting California’s 2025 economy is like reviewing a movie sequel with familiar combatants.
The upcoming, second-edition Donald Trump presidency again pits a pro-business force against a pro-consumer state.
Ponder the massive chasms in policies – from immigration to business regulation to green energy. Add in personalities who don’t get along – the Republican president-elect vs. California’s high-profile Democratic governor, Gavin Newsom.
Yet, let me suggest a simple starting point from which to dissect the emerging plot. Remember, this is Round Two.
So, my trusty spreadsheet looked back to 2017, when Trump first entered the White House. The basic math goes like this: Using broad economic yardsticks, how did California’s economy fare when compared with the previous year?
Remember, economies don’t change on a dime just because there’s a new boss at 1600 Pennsylvania Ave. So, no matter who becomes president, the previous administration’s economic momentum – good or bad – is a factor in a president’s first year.
And no matter who gets the credit, the trend lines show us that 2016 and 2017 were pretty good years.
To help recall 2017, ponder some cultural trends.
The No. 1 song was “Shape of You” by Ed Sheeran. At the top of the box office was “Star Wars: Episode VIII, The Last Jedi,” and “The Big Bang Theory” was the most-watched TV show.
“Greenery” was the color of the year. Kombucha was the hot new drink, while meatless burgers were a fad.
OK, let’s get to the economics …
Statistically speaking, 2017’s White House switch didn’t upset California’s broad business climate.
That year’s business output sped up with a 4.5% increase in statewide gross domestic product compared with a 3.1% growth in 2016.
Confidence improved, too. A 16% jump in consumer optimism, as shown in the Conference Board’s California indexes, was a sharp contrast to a 2% increase in 2016.
The job market was solid in both years, too.
Yes, hiring chilled with 347,992 positions added statewide in 2017 vs. 429,775 in 2016. But the jobless count dipped, with a 4.8% unemployment rate in California for 2017 vs. 5.5% in 2016.
And salaries firmed with 5.1% per-capita growth in 2017, following 4.7% in 2016.
The state’s long-running affordability challenges got no better.
Owners cheered, and house hunters jeered, as California home prices gained 8.2% in 2017, as measured by Zillow. Prices were up 6.7% in 2016.
Rents moved higher, too, up 5.3% on average in 2017, based on price indexes for Los Angeles, San Francisco and San Diego. In 2016, Golden State rents rose 5.1%.
The state’s usually modest homebuilding activity increased, too, with 110,400 permits filed in 2017 compared with 100,900 in 2016.
Today, the cost-of-living is a major talking point. And it begs a bigger question: Are hefty economic growth and low inflation mutually exclusive?
Shoppers in 2017 saw a 2.9% increase in the California consumer price index, up from 2.3% in 2016.
California drivers paid $3.01 per gallon of gasoline at the pump vs. $2.73 in 2016.
Then there are the eggs — perhaps 2024’s hottest commodity controversy. In 2017, a dozen averaged $1.47 nationally, compared with $1.68 the previous year.
The caveat simmering below any economic grades for a presidency is how much direct sway the White House has on the business climate – especially when you get to regional measurements.
When Trump was first elected, as Democrat Barack Obama left after two terms, California’s economy had rebounded from the Great Recession’s devastation.
Somewhat similarly, today’s California business climate has shed almost all of its challenges from the pandemic era.
Still, an underlying argument in both periods was whether economic growth was robust enough. And viewed through partisan prisms, opinions are split.
For sure, these numbers don’t tell the entire story. And extrapolating 2017 stats into 2025’s reality could be a stretch.
However, this visit to the memory lane of California’s 2017 shows the business climate survived the previous Trump transition.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
My most-read columns of 2024 …
