California’s economy grew at a 1.2% annual rate at the start of 2024, marking its slowest expansion since the fourth quarter of 2022. This modest GDP growth placed California 29th among the states and the District of Columbia.

For context, the median state GDP growth was just 1.4%, with 11 states experiencing economic contractions. The steepest declines were observed in South Dakota, which saw a 4.2% drop, and North Dakota and Kansas, each down 3.9%.

Idaho led the growth with a 5% increase, followed by Nevada at 4.4% and Oklahoma at 4.2%. In comparison, California’s major economic competitors fared better: Texas ranked 13th with a 2.5% increase, while Florida achieved 6th place with a 3% rise.

The Federal Reserve's strategy to temper an overheated economy with elevated interest rates appears to be dampening business output.

Consider how California's business expansion in early 2024 contrasts with the more robust growth seen at the end of 2023.

In the fourth quarter, California was also ranked No. 29 but experienced a yearly growth rate of 3.1%. National growth during that period was 3.3%, with every state reporting GDP increases.

Nevada led with the highest growth at 6.7%, followed by Idaho at 6.6% and Utah at 5.4%. The slowest growth was seen in Nebraska at 0.2%, Kansas at 0.6%, and Washington D.C. at 0.8%. Texas ranked 5th with a 5% growth rate, while Florida was 8th with 4.6%.

Comparing the past two quarters, you can see that the economy slowed in 46 states at the start of 2024, including a 1.9 percentage-point decrease in California's GDP growth. The national median decline was 2.2 percentage points.

The largest drops were in North Dakota and South Dakota, which saw a 6.4 percentage-point decrease, and Iowa, which experienced a 4.9 percentage-point drop. The states with growth were Oklahoma, up 1.5 percentage points; Hawaii and New York, both up 0.9 points; Washington D.C., up 0.5 points; and Arkansas, up 0.3 points.

Texas ranked 31st, with a 2.5 percentage-point decline, while Florida was 18th, with a 1.6 percentage-point drop.