California is now the 4th largest economy in the world.
I don't know if Newsom is the guy we need in the White House, but we could do a lot worse in terms of the economy (yeah, I know it's a really low bar - not sure how we could do any worse that what we've got now), but I worry that a Newsom presidency would not be the kind of change we should be pushing for.
He appears to be pretty strong on moving away from dirty fuels, and he's not weak on social issues like healthcare, civil rights, etc.
But he's something of a rich legacy puke (
Wikipedia), so his pedigree may well lean him towards the ConservaDem thing where it always comes down to deferring to parasite billionaires and mega-corporations.
We'll see what we see.
Of all the prevailing media narratives around Gavin Newsom, the one that is most conspicuous by its absence is how under its two-term governor California became the top performing economy not just among its 49 siblings but also any developed nation. No wonderElon Musk quietly sought Newsom’s help when the world’s richest man sought to move a bunch of Tesla Inc. engineers back to the state after relocating them to Texas.
Amid the thousands of headlines referencing California failings with wildfires, droughts, floods, mass transportation, aging roads, education, homelessness, unaffordable housing, widening inequality and poverty along with the exodus of billionaires, corporate headquarters and longtime residents -- never mind the “slick” label whenever the betting favorite for the 2028 Democratic presidential nomination is mentioned in the press – the Golden State (population 39 million people), just supplanted Japan (123 million) as the fourth-largest economy.
Gross domestic product surged 40% to more than $4 trillion, accounting for more than 14% of US output, after Newsom took office in January 2019. China’s, the world’s second-largest economy, expanded 32% and No. 3 Germany increased 16%, according to data compiled by Bloomberg. (The US dollar's appreciation was as little as 1.6% since the end of 2018 as measured by the Bloomberg Dollar Spot Index, so the currency wasn’t a primary factor behind California’s performance.)
The US is an also-ran competing with California's prosperity, based on indexes compiled by the Federal Reserve Bank of Philadelphia that take state level nonfarm payroll employment, average hours worked in manufacturing by production employees, the unemployment rate and wage and salary disbursements that are then deflated by the consumer price index.
“We have had a theory” for California's superior performance “but it hasn't been validated in the way these numbers obviously provide,” said the 58-year-old Newsom during an April 1 Zoom interview. “So the timing could not be better.”
California's not-so-secret sauce happens to be the diversity between its citizens' ears instead of the fossil fuels generating the biggest share of Texas growth. Of the 10,000 companies in the Bloomberg World Large, Mid & Small Cap Index, the technology sector’s 20% share of their total value is the largest of any sector. And within that subset of technology, California leads with 41-based firms producing a 603% total return (income plus appreciation) over the past decade. That’s almost four times the gain of their global peers the past two, three and five years. Tech’s contribution to California’s GDP increased 59% since 2019, outperforming the 40% gain for states overall.
Healthcare shows a similar trajectory. The industry's contribution to California GDP increased by 52% since 2019 and including 2025, a year when President Donald Trump and Congressional Republicans enacted major cuts to Medicaid and reduced Affordable Care Act premium tax credits, resulting in an estimated 15 million people losing health coverage. California's uninsured rate declined to a record-low 6.4% in 2023, the largest drop in the US, from more than 17% a decade ago, helped by the Covered California and Medi-Cal expanded coverage programs.
Although “some of California's most prominent venture capitalists have a proclivity for slamming their state, arguing that fiscal mismanagement and high taxes will cause startups to form elsewhere,” the opposite is happening, according to Axios. “California startups raised a whopping 62% of all U.S. venture capital dollars in 2025,'' Axios notes, citing the PitchBook-NVCA Venture Monitor, more than either 2024 (54.2%) or 2023 (46.9%), as well as the decade-earlier mark of 47.2%.
Even when artificial intelligence giants OpenAI, Anthropic and DataBricks dominate, the state remained “home to 31.5% of US VC deals last year, compared to 31.7% in 2024 and 29.1% in 2023,'' according to data referenced by Axios. “In 2015, California's market share was 32.5%. For context, the runner-up in 2025 was New York with 13.3%. Massachusetts was next, just ahead of Texas — both below 6%. The bottom line: California's crown may be tarnished on social media. On spreadsheets, however, it still sparkles.”
California companies are similarly booming, spending $527 billion annually on acquisitions during Newsom’s tenure, almost three times the $179 billion spent annually in the 20 years prior to 2019, according to data compiled by Bloomberg. Software and technology services accounted for $1.9 trillion, including SpaceX's $250 billion offer for xAI. The healthcare industry initiated $410 billion of transactions, including Thousand Oaks-based Amgen's $27 billion purchase of Ireland’s Horizon Therapeutics PLC in 2023. The deal enabled the biotechnology medicines company to increase its market value 39% to $200 billion.
Even accounting for less than 12% of the US population, California contributed more than 40% of the growth in the value of nation's publicly traded equities as measured by the companies in the Russell 3000 Index, which returned 182% for investors since 2019. California accounted for 70 percentage points, more than triple No. 2 Washington (20 points), almost five times No. 3 Texas (15 points) and No. 4 New York (13 points) and almost 12 times No. 5 Ohio (6 points), according to data compiled by Bloomberg. California-based companies overall returned 328% to investors, crushing the equity returns from the world's largest economies: US, 182%; China, 89%; Germany, 110%; Japan, 96%; and India, 63%, data compiled by Bloomberg show.
None of this is accidental. Sixteen years after it became a state in 1850, California passed its first compulsory education law, requiring children aged eight to 14 to attend school. With more than 600 colleges and universities, California today has no peers in higher education, whether in the US or any of the world's developed economies. No. 2 New York has 423, Germany 420 and the UK no more than 300. California graduates more engineers than any state and pays the highest wages when they join the workforce.
California's relative value among investors is reflected in the municipal bond market, where two of the top 10 performing issuers tied to education are based. The University of California, No. 1 in total return, accounts for 12% of the 800 issuers' gains, and No. 3 California State University contributes 5%, according to data compiled by Bloomberg. That's another way of saying investors in California are getting 11% of their return from the University of California, the Los Angeles Unified School District and California State University. California's investment in education translates as one college or university for 64,000 citizens compared to 266,000 in the UK and 199,000 in Germany.
During the Covid-19 pandemic, Newsom became “the first sitting governor to visit the Ports of Los Angeles and Long Beach… since Ronald Reagan,” said Gene Seroka, executive director of the Port of Los Angeles, the biggest US gateway to global trade, handling more than $300 billion of cargo annually. “That’s a statement,'' Seroka said during an interview at Bloomberg headquarters in New York earlier this year. “In the line-item budgets of the last three fiscal years,” Newsom “has helped with additional infrastructure spending, hard infrastructure line-item budgets, our transition to zero emissions on both equipment and electricity.”
Whatever criticism Newsom receives from environmentalists for not doing enough to hold corporate polluters accountable, he still gets relatively high marks for promoting investments in resilience, clean energy and clean transportation. The eight California-based clean energy companies with a minimum market value of $100 million have seen the value of their stocks appreciate an average 56% since 2019, compared to 40% for their global peers. Their 7% average annual gain in revenue crushes the 5% global average. California renewable energy companies will see 17% revenue growth in the coming year, more than doubling the 7% increase of global peers, according to analyst estimates compiled by Bloomberg.
San Francisco, where Newsom began his political career and was its two-time mayor, is the only US city that reduced pollutants by more than 20%, according to the analysis of almost 100 cities around the world.
The global transition to zero-emission vehicles -- decreasing air pollutants such as nitrogen dioxide and greenhouse gases -- began in Fremont, California, with Tesla, the world's largest automaker with a market capitalization of $1.4 trillion, or more than four times perennial sales leader Toyota Motor Corp. Even after Musk, Tesla’s CEO, decried California as “a land of taxes, over-regulation and litigation” when he moved the company’s headquarters along with its research and development leadership to Texas in 2021, the world’s richest person admitted a year later that Tesla couldn’t succeed without California-based engineers.
“I will never forget” when Musk “called me,” said Newsom. “He said, `I'm surprised you're picking up the phone. I may actually ask you for some help” because “I can't find the talent in Texas. Don't say a word.’”
