Why COVID didn’t break California’s economy

Texas had the nation’s second-worst economy at the start of 2021.

I mention that statistic — courtesy of the first quarter’s gross domestic product report — so we could collectively imagine that was California and how critics would crow about the state’s looming demise. To be honest, it’s also fun to toss a barb at the Lone Star State, a worthy competitor.

For the record, California’s business output grew at a 6.3% annual rate in the year’s first three months — a midrange performance as the state slowly reopened its economy. It ranked No. 29 among the states and was a smidgen below the nation’s 6.4% GDP growth.

The No. 1 state was tourism-dependent Nevada, with a 10.9% growth rate as it welcomed back visitors. Worst? The District of Columbia had a 2.9% growth amid a wild presidential transition. Texas, by the way, had 4.3% growth.

Now, no single quarterly economic benchmark paints a perfectly proper portrait. But this data — a broad measure of business output — gives significant hints as to why California’s economy didn’t collapse under pandemic-related limitations.

Some California industry niches bested peers in other states, and there were some laggards, too. Bottom line: California excelled at certain needs created by the pandemic era. Think technology, real estate and white-collar work.

When I ranked 22 economic niches that make up GDP, California’s best industry was information. It produced the third-biggest contribution to a state’s output growth. Is that any surprise?

California practically invented the tools powering remote work and schooling. The best information performer was another tech hub, Washington. Worst? Hawaii. Oh, and Texas? A commendable No. 11.

California did well with another white-collar niche, too. Professional services ranked No. 8. The industry that helps businesses operate — accountants, attorneys, architects, etc. — thrived in the pandemic era. Best? District of Columbia. Worst? Mississippi. Texas? No. 19.

And there is perhaps only one other sector as hot as tech: California’s real estate niche was fourth-best among the states. Low interest rates and pandemic fears ballooned demand for more living spaces. Best? Nevada. Worst? South Dakota. Texas? No. 25.

Hot properties require even more property — not to mention lots of road work. Califor