California’s economy picks up speed but remains near the national average

California’s economy expanded at an annual rate of 4.5% in the third quarter, its fastest pace of growth in more than two years, according to federal data.

The state’s gross domestic product (GDP) during the three-month period ending in September marked the strongest performance for the Golden State since the second quarter of 2023. According to the Bureau of Economic Analysis, California’s growth narrowly exceeded the national GDP increase of 4.4%.

Despite the acceleration, California ranked 25th among all U.S. states for economic growth. However, it outperformed key economic rivals Texas, which grew by 4.2%, and Florida, which posted a 3.5% increase.

Kansas led the nation with a 6.5% growth rate, followed by South Dakota at 6.3% and Arkansas at 5.8%. At the bottom of the rankings, North Dakota recorded the weakest growth at 0.4%, while Washington D.C. and Minnesota posted rates of 1.3% and 2.7%, respectively.

The report noted a disconnect between state production and public sentiment. While economic output climbed, California’s consumer confidence index hit its lowest level in five years this January.

California’s third-quarter GDP figures present a macroeconomic paradox. While a 4.5% growth rate initially suggests a robust recovery, the data loses its luster when viewed through a national lens. Ranking 25th in the country, the Golden State is merely keeping pace with the national average rather than serving as the country’s primary economic engine—a notable departure from its historical role as a dominant growth leader.

The most critical friction point lies in the disconnect between headline figures and the lived experience of constituents. As the data suggests, top-line GDP expansion is failing to translate into healthier household balance sheets. In a state burdened by some of the highest cost-of-living and inflationary pressures in the U.S., moderate growth is quickly neutralized by rising overhead. This erosion of purchasing power explains why consumer sentiment remains at historic lows despite the positive direction of macro indicators.

Furthermore, California’s marginal outperformance of Texas and Florida this quarter appears more symbolic than structural. When measured against the two-year average, both rival states have consistently maintained a faster growth trajectory. This quarterly blip does little to alter the narrative of intense interstate competition for capital and labor. Ultimately, these figures serve as a cautionary tale for policymakers: headline economic data can be a trailing indicator that obscures the persistent financial strain facing small businesses and working-class residents.

For the vast Vietnamese-American community in California—particularly across the cultural hubs of Southern California and Little Saigon—the state’s economic climate has a direct and tangible impact. A strengthening economy typically fosters a more favorable environment for the community’s entrepreneurial spirit, supporting the growth of everything from the nail salon industry and local phở restaurants to specialized professional services. However, if general consumer sentiment remains disconnected from top-line growth, stagnant purchasing power will continue to strain bottom-line revenues. When coupled with California’s persistent high cost of living, this uneven recovery poses ongoing challenges for Vietnamese families and small business owners striving to maintain their footing.