Year in review: Danger signs for California’s economy

California is ending the year facing a multitude of economic challenges, including a budget deficit, flat tax revenue, sluggish job growth and massive unemployment insurance debt.

The state’s budget surplus turned into a $32 billion deficit in 2023 — a result of its heavy reliance on personal income taxes, which are tied to the ups and downs of the stock market. The governor revised the budget in May, shifting money around and delaying spending commitments. In October, the Legislative Analyst’s Office provided an updated outlook, saying the state could see a $9.5 billion boost in revenue due in part to increased income-tax withholding and an improving stock market. But the office still foresees flat revenue from personal income, corporate and sales taxes for the next three years, and a projected $68 billion deficit for the 2024-25 budget.

The state’s unemployment rate, which started the year at 4.2%, had climbed to 4.8% as of October, among the highest in the nation, compared with the U.S. unemployment rate of 3.9%.

Job growth slowed, with the legislative analyst pointing out that as of September, the state had added less than 10,000 jobs four months in a row. The last time that happened was during the Great Recession.

The types of jobs being added and subtracted are key in a state that depends on income-tax revenue. California’s vaunted tech industry continued to shed typically high-wage jobs, with at least 78,000 Golden State-based tech workers laid off for the year, according to, which tracks that information. The jobs that actually grew in the state were in the health sector and in accommodations and food services, with the Public Policy Institute of California noting that those typically pay lower wages.

Read more at CalMatters

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