California’s growth pains

If California were an independent country, its economy would rank as the world’s fifth-largest. Last year’s GSP (Gross State Product) was $2.75 trillion, according to new data from the U.S. Department of Commerce. It represents a roaring comeback for the Golden State.

As recently as 2012, California was struggling with the impacts of a deep recession. The state’s GSP that year was just $2.003 trillion — still enough to make it the world’s 10th-largest economy, but not enough to combat deep budget cuts and general concern about the state’s economic future.

Now nearly every industry is booming.

According to the state Department of Finance, every economic sector except for agriculture has contributed to the state’s whopping growth. Even manufacturing, an industry so many in this country believe to be in decline, rose by $10 billion here.

What’s even more remarkable about this boom is California’s notoriety among U.S. states for its progressive income tax system, high minimum wage and dense thicket of government regulations. There are many different ways to expand the economy.

But even a state as dynamic as California faces challenges. Separate evidence suggests we may be bumping up against new limitations right now.

Last week, the state Department of Finance released its latest calculation of California’s population.

There are nearly 40 million people living in California. While that still makes us the most populous state in the Union, our population growth rate has slowed substantially.

Last year’s growth rate was 0.78 percent, down from the state’s 0.86 percent annualized growth rate since the 2010 census.

That’s also way down from the growth rates of the 1980s — California was then expanding by more than 2 percent a year.

Many Bay Area residents, fatigued by constant traffic and rising home prices, may greet this news with a cheer.

But there are costs to population contraction, too.

Wealthier residents are moving into California while young people with less money are moving out. That’s a dangerous dynamic that could eventually lead to less economic innovation and the hollowing out of the state’s middle class.

Demographic experts are also concerned that California may lose a congressional member after the 2020 census.

The answer is for California’s leaders to think about ways the state can tend to the needs of current residents as well as attracting new ones. Investments in housing production and continuing education will lower the state’s cost of living and ensure that every Californian has the opportunity to participate in the state’s remarkable economy.