State’s Economic Growth to Moderate in 2024
California’s economic growth is projected to moderate in 2024 after rebounding strongly in 2023 from a near stall in the prior year. Ongoing spillovers from a slower-growing tech sector, a cooling labor market, and headwinds from high interest rates and high inflation underpin expectations for modest but still positive growth in 2024 for the Golden State’s economy.
The state’s population will recover further in 2024 after losses in 2021 and 2022 as job opportunities out of state become less plentiful and high national housing costs make moving elsewhere less appealing. Payroll growth is projected to slow markedly to 0.3% in 2024 from 2.1% in 2023. The Golden State’s job market will likely be under pressure from slower tech hiring and a cool housing market, especially in the first half of next year, before hiring picks up in the latter half. A cooler labor market will limit total personal income growth to modestly above the pace of inflation.
California’s housing market is expected to rebound next year from 2023’s sharp construction slump, especially in the second half of next year, as lower mortgage rates and limited supply spur residential construction. Single-family construction is expected to lead residential construction in 2024. Multi-family housing starts are expected to pull back after strong growth in the prior three years, but their impact on overall housing supply will be limited as they are a smaller share of the overall market. House prices are forecast to increase moderately as the housing recovery gains traction.
