California projected to have the third-best state economy in 2026, according to new analysis.

In a notable assessment of economic performance, a recent index by the Federal Reserve Bank of Philadelphia highlights that California’s economy continues to display robust growth in 2026. This index tracks a composite of job creation, income, inflation, and gross domestic product statistics across the 50 states. Notably, California has achieved the third-highest growth rate among states, expanding at an average annual rate of 3.3% up until August of this year.

Only Nevada and Ohio show stronger growth at 3.9% and 3.4%, respectively. For context, the median growth rate across all states stands at 1.8%. To further illustrate California’s economic position, major competitors such as Texas and Florida recorded growth rates of 2.5% and 1.8%, respectively, ranking 12th and 26th among states. Conversely, four states experienced economic downturns: West Virginia, Montana, Connecticut, and Delaware.

This year marks an improvement compared to California’s performance in 2025, when the state’s economy was ranked seventh with a growth rate of 2.8%, above the 1.7% median for all states. In 2025, the fastest-growing states included Nevada, Idaho, and Texas, which collectively outpaced California during that period. Currently, 27 states have shown growth in 2026 that exceeds last year’s performance, with California’s increase of 0.6 percentage points identifying it as a significant performer, ranking twelfth in this regard. Major gainers this year include Ohio, Missouri, and Iowa, while notable declines occurred in West Virginia.

Historically, California’s economic dynamism is underscored by long-term trends. Since 1980, the Philadelphia Fed’s indices indicate that California’s economy ranks as the 11th fastest-growing nationally, with an average annual growth rate of 3.2%. With the current growth rate of 3.3% slightly above this historical average, it suggests that although the state is not experiencing a boom year, it remains resilient amidst various challenges faced by other states.

As economic metrics continue to evolve, California’s relative strength, particularly in contrast to other significant economies like Texas and Florida, positions it as a state worth monitoring closely in terms of future economic policies and business developments. The overall picture demonstrates that California is navigating the complexities of the national economy with favorable results, ensuring it retains significance on the broader economic landscape of the United States.

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