During Gov. Gavin Newsom’s (D-CA) interview with Sean Hannity last week, he talked a strong game on California’s economy, claiming it is the best in the nation while rattling off a few quick statistics. But a look at the facts reveals that is simply not the case.
Let’s start with Newsom’s most important claims: namely, that California is “No. 1 in the nation for new business starts,” and that it has one of the best GDP growth numbers in the world.
GAVIN NEWSOM ADMITS CALIFORNIA IS FAILING
On new businesses, Newsom uses statistical sleight of hand by using raw numbers rather than per capita numbers. California has, by far, the largest population of any state. Consequently, it will, of course, have the most raw business starts. However, U.S. Chamber of Commerce data indicate that California was actually ranked No. 29 in business applications per capita in 2022. This is a superior measure because it adjusts the number to the population.
Newsom likes to compare California to Florida and Texas on subjects like this. But the numbers show Florida was ranked No. 3 in business applications per capita in 2022, and Texas was ranked No. 15.
So far, not so good for Newsom.
His claim that California has one of the best GDP growth rates in the world is similarly specious. To get to 7.8%, he had to go back to 2021, during the post-COVID recovery, when every state had abnormally high growth rates. It is true California had the second-best growth that year, only trailing Tennessee, but a broader look at the data show something less sunny.
In 2022, which is the most recent year for which data is available, California was in the bottom 10 in terms of GDP growth, rising only 0.4%. Similarly, in 2020 and 2019, California was nowhere near the top. In fact, in each of those years, the top of the list was dominated by red states such as Texas, Idaho, Tennessee, and Utah. In other words, in order to make the claim California’s GDP growth is historic and unique, Newsom had to cherry-pick one year out of the last four — when even then, his state was not at the top.
What are we to make of Newsom’s assertion that California is also No.1 for access to venture capital funding and No.1 for tourism spending? Both claims are correct. On the issue of venture capital, there is nothing more to add. It is the strong point in California’s economy and is what attracts people to the state. At the same time, it may not be the best measure of the health of a state’s economy.
But, on tourism, more context is certainly needed. Just as with the statistics related to business starts, we must look at the tourism numbers with respect to the size of the state. California, once again, is the most populous state in the country, which means it has an inherent advantage when it comes to raw numbers — which is what Newsom was referring to.
When looking at trends, though, we see something different. U.S. Travel Association data show that, since 2019, California’s tourism spending has declined by 12%. This is the worst decline of any state in the country. In contrast, Florida’s tourism industry has grown by 9%.
So our conclusion is pretty clear: California’s economy is certainly not in shambles, but it is also not accurate to claim it is the strongest in the nation. People vote with their feet, and the data overwhelmingly show that there is an exodus of people out of California. And there is a reason for it.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Newsom came off as confident and knowledgeable in the interview, which is why some believed he “destroyed” Hannity. However, that does not mean the things he said were actually true.
As we have seen, a deeper look at the facts suggests Newsom’s rhetoric gets high marks for style, but a failing grade on rigor.
Jack Elbaum is a summer 2023 Washington Examiner fellow.