Post-Trump Victory, California Remains An Economic Powerhouse… But His Policies Could Have Major, State-Specific, Effects

Did California Voters Shift Right Or Just Reject Some Worrisome Propositions?

LOS ANGELES, Dec. 18, 2024 /PRNewswire/ -- Post-election, a new outlook for California takes stock of the state's economic standing and concludes that the world's fifth largest economy is still home to high incomes, high economic output, and critically important global industries.

The new analysis from Beacon Economics finds that Californians continue to enjoy significantly higher household income than the national median and, due to unexpectedly high tax revenue from its booming corporations, the state has reduced its whopping $47 billion budget deficit down to $2 billion.

However, the new outlook also warns that some of President-Elect Donald Trump's proposed policies could hit California's economy particularly hard because they take aim at things the state relies upon. "Beyond the stock market rally, Donald Trump's election could have major ripple effects on California's economy in the near future—assuming certain policies come to pass," said Niree Kodaverdian, Research Manager at Beacon Economics and the outlook's author. "From international moves such as tightening immigration and imposing tariffs, to domestic shifts like eliminating EV tax credits, the impacts could be far-reaching."

Trump's promise to deport foreign migrants en masse may be the most immediate concern for California's economy as it would hit a job market that is already under strain from a shrinking workforce. The state's labor force has declined by 1% since 2020, and at 5.4%, California's unemployment rate is among the highest in the nation. "Trump's proposals to tighten immigration could worsen the state's existing challenges and place additional pressure on an economy reliant on migration," said Kodaverdian.

Despite these national policy concerns, California's rejection of state propositions that would have expanded rent control and raised the minimum wage were good news, according to the new outlook. "While well-intentioned, these propositions would likely have caused more harm than good – and to areas of the state economy, housing and labor, that face serious, uphill challenges," said Kodaverdian. "Whether the state has really shifted right on an ideological level, or whether this was simply a practical response by voters who didn't believe these propositions delivered the right solutions at this particular time, is yet to be seen."

View the new The Beacon Outlook California here.

Beacon Economics LLC is an independent economic research and consulting firm based in Los Angeles. Learn more at www.BeaconEcon.com 

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SOURCE BEACON ECONOMICS