A flag flying upside down is a signal of distress. The California state flag should be waving bottoms-up today. 

California, once a booming economic engine with its gross domestic product (GDP) ranking as the fifth largest in the world, is slipping.

The California Business Roundtable predicts the state’s real GDP will slip below India from the fifth largest to the sixth. In 2022 the Roundtable predicted California would spring to the fourth largest GDP above Germany. But the economic engine has stalled and California’s GDP was rated 32nd in the US in 2023.

Here’s why:

  • California’s upper tax rate of 14.4% is the highest in the country.
  • Unemployment rate in California is at 5.3%, the highest in the US.
  • California has the third highest cost of living in US, behind Hawaii and Massachusetts.
  • The Golden State has the highest cost for housing in the US and is 97% higher than the national average.
  • In the consumer categories of groceries, utilities, transportation and healthcare California is 102% higher than the national average.
  • The nation’s highest level of poverty. One-third of California’s population lives at or below the poverty line.
  • Californians carry the most debt in the US with residents owing $3 trillion of the nation’s $17 trillion mortgage loan debt.
  • California’s fast-food specific minimum wage of $20 per hour is the highest in the country; the state’s non-fast-food minimum wage of $16 per hour is second only to Washington.
  • Benefits and services for illegal immigrants cost California $31 billion a year. 
  • California is facing a budget shortfall of between $38 billion and $73 billion for the 2024-2025 budget.

Will California recover? Not anytime soon. The state is losing population. Census numbers show 750,000 to one million residents have left the state since 2020, many of them high-income earners. In California the top 1% pay 50% of the overall state taxes.

So, if you see a California flag flying upside down, you’ll know why.

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