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California Economy and Taxes
 
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Updated "Big Three" Revenue Outlook December 1, 2023

With the recent receipt of various postponed tax payments, the impact of recent economic weakness and last year's financial market distress on state revenues has become clearer. The postponed payments came in much weaker than anticipated. As a result, we now estimate 2022-23 revenues to be $26 billion below Budget Act projections. Historical experience suggests this weakness is likely to carry into this fiscal year and next. Overall, our updated revenue outlook anticipates collections to come in $58 billion below Budget Act projections across 2022-23 to 2024-25. We will release our Fiscal Outlook next week, which will discuss the ramifications of this revenue shortfall for the state's budget. 

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Monthly Jobs Report November 17, 2023

California businesses added just 40,200 in October, and the September total was revised up slightly.  Despite these gains, the state's unemployment rate climbed to 4.8 percent. The "Sahm rule," a real-time recession indicator that first triggered on in March, continues to signal the beginning of an economic downturn. 

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U.S. Retail Sales Update: October 2023 November 15, 2023

U.S. retail sales have grown 1.5 percent over the last 3 months and 2.5 percent over the last 12 months. Retail sales growth has outpaced inflation over the last 3 months, but not over the last 12 months.

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Inflation Tracker November 15, 2023

Inflation continued to decline in October, but core inflation remains above pre-pandemic levels.

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U.S. Retail Sales Update: September 2023 October 17, 2023

U.S. retail sales have grown 2.1 percent over the last 3 months and 3.8 percent over the last 12 months. Retail sales growth has well outpaced inflation over the last 3 months, but not over the last 12 months.

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Uptick in Unemployment Rate Triggered a Recession Indicator October 3, 2023

The recent uptick in the unemployment rate, from 3.8 percent to 4.6 percent, has triggered a state version of the "Sahm Rule," a real-time indicator of the start of an economic downturn.

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Did California Enter a Recession Last Fall? October 3, 2023

While recessions are not formally defined for state economies, economic data for the fourth quarter of 2022 and first quarter of 2023 appear consistent with California experiencing a mild recession. The apparent start of a recession in California last fall helps explain why the state faced a revenue shortfall in its most recent budget. How much the economy will continue to dampen the state's fiscal picture moving forward is unclear. However, the threat that the recent slowdown could persist will be a significant risk for the foreseeable future. 

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Early Data Revision Suggests Weaker Jobs Figures September 15, 2023

A newly released "early benchmark" of the official state jobs figures shows that payroll jobs declined at an annualized rate of 0.6 percent from September 2022 through March 2023, whereas the official state tally showed growth of 1.8 percent over that period. This amounts to a net decline of about 50k jobs over that period compared to the unbenched tally of +165k jobs. 

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U.S. Retail Sales Update: August 2023 September 14, 2023

U.S. retail sales have grown 1.2 percent over the last 3 months and 2.5 percent over the last 12 months. Retail sales growth has outpaced inflation over the last 3 months, but not over the last 12 months.

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U.S. Retail Sales Update: June 2022 July 18, 2023

U.S. retail sales have grown 1.1 percent over the last 3 months and 1.5 percent over the last 12 months. Retail sales growth has outpaced inflation over the last 3 months, but not over the last 12 months.

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U.S. Retail Sales Update: May 2023 June 15, 2023

U.S. retail sales have been roughly flat (0.2 percent decline) over the last 3 months and grown 1.6 percent over the last 12 months. 

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U.S. Retail Sales Update: April 2023 May 16, 2023

U.S. retail sales have dropped 0.9 percent over the last 3 months and grown 1.6 percent over the last 12 months. 

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U.S. Retail Sales Update: March 2023 April 14, 2023

U.S. retail sales have grown 1.9 percent over the last 3 months and 2.9 percent over the last 12 months. Sales have grown faster than inflation over the last 3 months but slower than inflation over the last 12.

Thumbnail for Updated 2022-23 "Big Three" Revenue Outlook

Updated 2022-23 "Big Three" Revenue Outlook March 15, 2023

Based on the most recent revenue and economic data, we currently estimate that collections from the state’s “big three” taxes—personal income, sales, and corporation taxes—are likely to fall below the Governor's Budget assumption of $200 billion in 2022-23. 

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U.S. Retail Sales Update: February 2022 March 15, 2023

U.S. retail sales have grown 2 percent over the last 3 months and 5.4 percent over the last 12 months.