Newsom considers running for president … on what record?

California’s Governor Gavin Newsom recently announced that he’d consider running as the Democratic candidate for a 2028 presidential bid. If he does, Newsom will have a lot of explaining to do about the lackluster California economy that he’s presided over.

Newsom became the governor in 2019, just before the COVID recession hit. No one can blame Newsom for that, even though the draconian state response to the pandemic, such as closing K-12 schools for an extensive period, has been widely and legitimately criticized.

More to the point in considering Newsom’s presidential candidacy is his economic record as governor. Over the 2022Q2 to 2025Q2 recovery since the pandemic ended, California’s job growth was only 2.0 percent, less than half the national average of 4.4 percent. In a ranking of all 50 states over the same period, California’s 2.0 percent job growth placed the state at a rank of #48. Not surprisingly, California also ranks #48 in overall taxation according to the Tax Foundation’s 2024 State Business Tax Climate Index.

High relative state taxes not only drive out jobs, but they also drive out people. According to the U.S. Census Bureau, the net population outflow (inflow minus outflow) for California from 2021 to 2023 was more than one million people. The top five outbound destinations for people leaving California were states with zero or very low state income taxes: Texas, Arizona, Nevada, Idaho, and Florida. 

The most recent IRS data on net income inflows is 2022, where the average adjusted gross income (AGI) for those leaving California was $134,000 versus $113,000 for those entering the state. The total AGI leaving California in 2022 was $52.9 billion, as compared to an inflow of $28.9 billion, resulting in a net loss in California’s AGI of $24 billion, even greater than California’s net loss in AGI of $20.2 billion in 2021.

More unsettling for California’s economic future is the sharp decline in the number of Advanced Industries establishments in California as a percentage of all such establishments in the U.S. “Advanced Industries” refers to the number of establishments in high-value-added sectors, such as technology, software development, aerospace, and medical products. This Advanced Industry series for 50 different MSAs is tracked by the Chapman-University of California, Irvine Innovation Index. 

The percentage of advanced establishments in the 7 MSAs we track in California (Orange County, Los Angeles, Sacramento, Riverside-San Bernardino, San Diego, San Francisco, San Jose) dropped steadily from 17% of all advanced establishments in the U.S. in 2018Q1 to 14.9 percent in 2025Q1.

During that same seven-year period, the number of advanced industry establishments increased by 21.6 percent in California, about half the 42.7 percent increase in advanced jobs in the U.S. (net of California). For the MSAs located in the 10 states ranking lowest in overall state and local taxation, the disparity is even greater: California’s 21.6 percent increase from 89,300 to 108,600 advanced industry establishments was roughly half the increase of 52.2 percent for the low-tax states from 164,000 to 249,600 establishments over the same 2018Q1 to 2025Q1 period.

On the housing front, a major plank during Newsom’s first campaign for governor was to fix California’s housing shortage, a shortage Newsom blamed for the state’s high housing prices. He pledged as governor that he’d lead the change in building 3.5 million new homes by 2025. Although this goal was patently absurd (To meet the goal, annual new home construction would have to quadruple), Newsom said, “I realize building 3.5 million units is an audacious goal,” but he continued, “it’s achievable.”

It wasn’t. Instead of increasing new home construction to 400,000 units per year, the number remained in a narrow range of 100,000 to 125,000 units. Even the governor seems to have given up on his “audacious” goal. His budget now projects that annual new home construction through 2028 will remain in the 100,000 to 104,000 range.

Instead of bringing down housing prices, they continued to increase from $525,000 in 2018 to $773,000 in 2023. The median home prices were exceeded only by Hawaii in both years. In 2019, when Newsom became governor, the housing affordability index in California was 93, meaning that median family income in the state was 93 percent of that necessary to meet the principal and interest (P&I) payments on a median-priced home. By 2024, the affordability index in California had declined even more to 59 compared to an average affordability index in the U.S. of 121. Instead of median family income being 21 percent above that needed to buy a home, as it was in the U.S., in California, it was 41 percent below what was needed to cover P&I.

The list of California’s economic problems goes on and on. Homelessness in the state is the worse in the nation. Home insurance costs have skyrocketed. Instead of zeroing in on California’s rigid price controls in that industry as the culprit, the Newsom administration is blaming insurance companies. Same story for gasoline. According to the governor, it’s not California’s energy policy that’s at fault for its current $4.59 price per gallon of gas as compared to $3.40 in the U.S.: it’s the oil industry to blame.

Given the gravity of California’s economic woes, it’s difficult to see how Newsom will explain it all away in a run for the presidency. More likely, he’ll ignore it and focus instead on positioning himself as the candidate most Anti-Trump. Rather than following the phrase James Carville coined, “It’s the economy, stupid.” Newsom will likely be following his own dictum: “It’s Donald Trump, stupid.”

James L. Doti is president emeritus and professor of economics at Chapman University/