A significant chill in consumer spending shows us that many Californians were feeling financially pinched in recent years.
The state saw the nation’s second-largest slowdown in spending growth over the past dozen years. Only Oregon had a bigger drop.
My trusty spreadsheet discovered this financial distress when comparing changes in total expenditures — the six years ending in 2025 vs. the previous six years through 2019.
Ponder data from the Bureau of Economic Analysis, which estimates how much consumers spend each year. Total consumer activity – involving goods and services, including housing – reflects each state’s overall economic growth, changes in population and jobs, and wealth creation.
Start with Californians. They spent $2.8 trillion in 2025, the most in America, accounting for 13% of the nation’s $20.9 trillion in expenditures.
That top ranking is not surprising, given the state’s massive population. Economic progress is measured by the change in consumer spending.
Adding perspective
Spending levels in 2025 were compared to what we might call the good ol’ days – 2019, just before the pandemic rearranged the economy.
And to put that growth in perspective, that span was compared with the previous six years, when consumers were recovering from the Great Recession’s economic wallop.
These two periods had very different inflation climates. So, spending growth was adjusted for inflation, as measured by the U.S. Consumer Price Index. This inflation gauge rose 26% over the past six years, compared with a 10% rise in the previous six years.
All this math shows California spending grew by 16% after inflation in the past six years. That was only the 29th-largest jump among the states and trailed national spending, which grew 19% over six years.
However, back in the pre-pandemic days, California was near the top of the charts.
Statewide spending grew by 24% after inflation. That ranked California’s growth as the seventh-fastest among states in the six years ended in 2019, as it also topped the nation’s 17% pace.
Steep drop
Look at the tumble for Golden State spending this way.
Contrast the recent 16% spending growth against the 24% jump over the previous six years. That’s an eight percentage-point drop.
And California was just one of 13 states with a declining growth rate.
Why did California shopping stall?
It’s a good guess it’s about challenged checkbooks. Many Golden Staters likely found themselves cash-strapped and pulled back on buying anything other than the essentials.
It’s probably also about the population, too. Other Americans, knowing California’s high cost of living, didn’t move here. So there was little growth in the number of shoppers.
Don’t forget that shrinking spending growth is also bad news for the folks who sell stuff to California consumers, the state’s merchants and service providers.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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