California Economy and Taxes
 


California New Car Registrations: August 2025 October 7, 2025

Third Straight Month of Growth. Seasonally-adjusted new car registrations grew 1.6 percent in June, 1 percent in July, and 5 percent in August, but they remain 3 percent lower than recent peaks in December and April. Sales are now somewhat higher than the average level over the last couple of years.


California Labor Market Showing Broad Signs of Weakness September 30, 2025

The state's topline jobs report paints a worrisome picture about the labor market: businesses have shed 20,000 jobs so far this year and more workers report being unemployed. This post brings in new data, including a rise in layoffs and the number of long-term unemployed workers, moderating recent wage growth, and a hiring slowdown in one key growth sector (government jobs), that show broader signs of softness and raise the possibility that the labor market has weakened further in the past few months. 


Monthly Jobs Report September 24, 2025

California's traditional jobs report suggests the state added 4k jobs in August, and the prior month's report was revised down from 15k to -300 jobs. The state's traditional jobs report has shown a net job decline since the start of the year. Employment numbers from a secondary source, a household survey, had been more encouraging this year but dipped in July and again in August. 


Cannabis Tax Revenue Update (2025 Q2) September 15, 2025

For cannabis excise tax returns filed for the second quarter of 2025, the total amount of tax due is $147 million. With this latest data, we currently project cannabis tax revenues of $603 million in 2024-25 and $773 million in 2025-26. 


California New Car Registrations: July 2025 September 9, 2025

Seasonally adjusted new car registrations grew 1.5 percent in June and 1 percent in July but remain 8 percent lower than three months prior. This moderate growth stands in contrast to the substantial volatility we had observed in the prior six months. Sales remained slightly lower than the average level over the last couple of years.


Updated "Big Three" Revenue Outlook August 21, 2025

Revenues Presently on a Path to Beat Budget Expectations. Our updated forecast anticipates revenues from the state’s three largest taxes (income, corporation, and sales) will come in above the level assumed in the recently adopted state budget. This upgraded outlook is entirely attributable to higher expectations for income tax collections. Income tax collections are being driven higher by enthusiasm around artificial intelligence, which has pushed the stock market to record highs and boosted compensation among the state’s tech works. Given this, we suggest approaching the improved revenue outlook with guarded optimism. Further, the state was expected to enter the next budget cycle with a sizable operating deficit. This fact, combined with the state's complicated Constitutional budget rules, means revenue improvements are likely to translate to smaller deficits, rather than new budget capacity.


Inflation Tracker August 21, 2025

July data for the US show annual inflation remained above pre-pandemic averages with the downward trend seen since mid-2022 slowing. Between June 2024 and June 2025, prices for US consumers grew by 2.7% and prices for CA consumers grew by 3.0%. There are some differences between the source of price changes for US and CA consumers: e.g., gasoline prices did not decline as much in CA over the last year as they did in the rest of the country. Consumer expectations about inflation in the next one to five years have fallen after spiking in April and May but remain elevated.


Firearms and Ammunition Revenue Update (2025 Q2) August 18, 2025

Beginning July 2024, Chapter 231 of 2023 (AB 28, Gabriel) imposed an 11 percent excise tax on retail sales of firearms, firearm precursor parts, and ammunition, with some exemptions. For firearm and ammunition excise tax returns filed for 2024-25, the total amount of tax due is $58 million—a bit lower than the budget package revenue assumption.


California New Car Registrations: June 2025 July 29, 2025

Seasonally adjusted new car registrations grew 1.5 percent from May to June. This moderate growth stands in contrast to the substantial volatility we had observed in the prior six months. Due to the sharp decline in May, however, sales remained somewhat lower than the average level over the last couple of years.


California Housing Affordability Tracker (2nd Quarter 2025) July 24, 2025

Our post provides an updated snapshot of housing affordability in California. Over the last few years, we have seen a rapid increase in California housing costs, led by the dramatic increase in the costs of purchasing a home. Monthly costs for a newly purchased home are about $2,700 higher than they were just a few years ago, driven both by increases in home prices between 2020 and 2022 and an increase in mortgage rates since 2022.

The rapid increase in mortgage rates in 2022 has also left most existing homeowners "locked-in" to mortgages with rates significantly lower than currently available. More than 80 percent of California homeowners have mortgage rates under 5 percent, compared to current rates of about 7 percent. These homeowners face a significant additional financial cost to moving, further limiting the number of homes available for sale. 


California New Car Registrations: May 2025 July 9, 2025

Seasonally adjusted new car registrations dropped 10 percent from April to May. As result, May’s monthly total was the lowest since June 2024. 


Early Data Revision Shows No Job Creation During 2024 Q4 June 24, 2025

Since mid-2022, the state's monthly jobs survey has tended to overestimate actual employment growth. The newest incoming data (from the fourth quarter of 2024) show the monthly survey again overstating employment. Specifically, the most recent match to administrative records shows the survey overestimated job creation from last September through December by roughly 100,000 jobs (preliminary survey gain of 102,000 relative to net loss of 1,000 jobs). 


California New Car Registrations: April 2025 June 10, 2025

Seasonally adjusted new car registrations grew 5 percent from February to March, then another 4 percent from March to April. With this strong growth, registrations reached their highest level in nearly three years. Although tariffs on imported vehicles went into effect in early April, seasonally adjusted new vehicle prices did not rise substantially.


Cannabis Tax Revenue Update (2025 Q1) June 3, 2025

For cannabis excise tax returns filed for the first quarter of 2025, the total amount of tax due is $141 million. With this latest data, we currently project cannabis tax revenues of $594 million in 2024-25 and $732 million in 2025-26. Both of these estimates are within $5 million of the administration's May Revision forecast. 


Firearms and Ammunition Revenue Update (2025 Q1) May 21, 2025

Beginning July 2024, Chapter 231 of 2023 (AB 28, Gabriel) imposed an 11 percent excise tax on retail sales of firearms, firearm precursor parts, and ammunition, with some exemptions. For firearm and ammunition excise tax returns filed for the first three quarters of 2024-25, the total amount of tax due is $44 million. Based on this data, the administration's estimate of $65 million for 2024-25 appears reasonable.