Actual wars. Trade wars. Pricey gasoline. Reignited inflation. And rising interest rates, notably mortgage rates.
That 2026 summary doesn’t sound like a formula for California’s economy to fare better than the nation overall, according to some key business measures.
However, my trusty spreadsheet – filled with data from the state’s Employment Development Department, the federal Bureau of Labor Statistics, the Federal Reserve Bank of New York, and the Conference Board – discovered evidence of both a Golden State business slowdown and outperformance relative to the rest of America.
It’s certainly an against-the-grain result as California’s business climate has historically suffered when the national picture is dreary. But so far in 2026, California’s traditional secret sauces have added buoyancy to otherwise wobbly conditions.
How? Well, California’s wealthy keep spending. Especially because the state’s tech crowd is back in the spotlight as a battle for artificial intelligence supremacy rages.
But simpler crafts thrive, too. Tourism is hot as visitors flock to California’s many wonders. Medical care grows as the state ages. And certain educational niches expanded to serve the state’s large youthful population.
If nothing else, it could have been far worse for California’s high-cost, globally focused economy with so many dynamics – financial and political, domestic and international – in disarray. Also, don’t overlook the long-running resiliency of the Golden State’s companies and consumers.
Paycheck power
The top line for any economic scorecard is jobs. And while California bosses have pulled back on hiring, this staffing cooldown is less dramatic than what’s seen nationwide.
In July, 18.1 million Californians were on the job in July – up 112,700 workers in a year. However, compared with the average 161,600 workers added yearly over the past decade, 2026’s job creation pace runs 30% slower than usual.
Not so great, but better than what the typical American worker experienced.
U.S. employers had 159 million people working in July, up 316,000 from last year. That’s a far cry from the 1.4 million jobs added yearly since 2016. We’re talking about a 78% cut from what’s been normal.
You can eyeball the California job market’s outperformance this way: Statewide employment grew 0.6% in a year. Nationally, it was just 0.2%.
Or ponder the spread this way: California represented 11% of all American employment in July and 36% of all U.S. job creation in the past year.
Late payment
Are those paychecks paying the bills? Well, skipped payments are piling up in California – but that growth is slower than elsewhere in America.
The New York Fed’s second-quarter study of consumers’ credit files found a growing inability to make timely debt payments. The data tracks mortgages, credit cards, auto and student loans going back to 2003. These statistics only consider individuals with credit histories — roughly 90% of the adult population.
The spreadsheet identified a typical Californian with $1,900 in debt that was 90 days or more past due at mid-year 2026. This is the highest level since the first quarter of 2015. And this measure of tardiness is up 14% over the past year.
Before you shout “Recession!” please note this yardstick of financial stress is 28% below its 23-year average. Plus, it’s nowhere near the $10,480 debt peak in the second quarter of 2009, in the middle of the Great Recession. Yes, it was that bad for the economy in those dark days.
Plus, Californians have fewer bill troubles than other Americans.
The typical American’s unpaid debts run $2,100 per person – 10% more than a Golden Stater. It’s the highest since the first quarter of 2014 and up 10% year over year. Worse, this level of late payment is 15% above average.
Again, it’s not a crisis level, as it’s half of the Great Recession’s $4,350 high.
Shopping mood
Who knew that California consumer confidence would rise for four consecutive months after a war broke out?
Contemplate August’s consumer confidence index, created from public polling. The mood of shoppers is critical to the broader economy, as what shoppers spend accounts for two-thirds of all business activity.
California’s confidence index has climbed each month since April to a level that’s 10% higher than July 2025’s optimism. It’s the highest point since December, or 5% above the average from the last twenty years.
So, what’s driving this boost? Look inside the index.
California’s present situation measurement tells us that current conditions are viewed very favorably. This index is up 15% over the past year to its highest since December 2024 and runs 26% above its long-run average.
Californians’ financial hopes are up too, with the expectations index rising 6% over the year. But there’s still some worry since this number is 12% below the long-term average.
An oddly stable job market, a strong stock market, and home prices that refuse to budge seem to help most Californians feel better about their wallets. And yes, that’s most, but not everyone.
Once again, national numbers tell a different story.
U.S. consumer confidence fell 9% over the past year, reaching its lowest point since January, just before the war with Iran began. This optimism yardstick sits 3% below the average since 2007.
Now Americans felt good about August’s economic conditions, with the present situation index reaching a four-month high – that’s 14% above the long-term average.
When it comes to the future, however, Americans are gloomy. The expectations index fell 9% over the year to its second-lowest level since April 2025 and 17% below average.
Keep your eye on such gaps between California and national patterns, especially as an intriguing backdrop to the upcoming midterm elections in November.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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