California Gov. Gavin Newsom Faces Backlash After Boasting About California’s Economy

By: Alyssa Miller | Last updated: Jul 17, 2024

California Governor Gavin Newsom has received heavy criticism online after a recent social media post boasting that his state has the most Fortune 500 companies. 


Newsom’s post, intended to showcase the success of businesses in the Golden State, has underscored a growing disconnect. Many residents who face the daily challenges of life in California have found his comments dismissive and out of touch. 

Growing Problems in California

Once hailed as the pinnacle of the American allure, California has continued to decline in popularity in recent years due to a plethora of problems, including rising costs, increased homelessness and crime, and an unreliable supply of energy and water. 

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Yet, despite the problems on the streets, Gavin Newsom continues to allege the state is doing well and even recently took to social media to boast about their financial success, a decision he would soon come to regret. 

Newsom Boasts On X

At the beginning of June, Newsom took to X to share a short message about the state’s recent success with Fortune 500 companies. 

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“Huge — and something you definitely won’t hear on Fox News tonight. For the first time in 10 years, CA is officially home to the most Fortune 500 companies. More than Texas. More than Florida. 57 incredible and booming companies right here in the Golden State,” wrote the governor. 

Californians React to Newsom’s Comments

Californians wasted no time in responding to Newsom’s comments, with many alleging the governor misunderstood his priorities.

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According to the Daily Mail, state residents believe Newsom should be more concerned with crime, housing, drugs, and the enormous budget deficit than the stock market. 

Worse Off Than Ever

According to one X user, @MerrickGarlands “This is not the win you think it is. We’re bleeding residents and businesses every day. As a resident of CA, I can confirm we are even worse off than we’ve ever been in Southern CA.”

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They continued, “No water to use freely. We get notices about being fined if we simply water our lawn and this clowns sitting here yapping away about companies he has nothing to do with being on the Fortune 500 list who are probably simultaneously packing up to leave us.”

X Users Continue to Criticise Newsom

One X user even called Newsom a clown for his role in the state’s enormous $45 billion deficit. 

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“You clown, we’re in a almost $45B deficit— we have illegals pouring through our southern CA border, you’re giving away American resources to illegals, our hospitals are overrun, our social services, workers, and systems are overwhelmed, overworked and underpaid, and you’re sitting here popping off about something you have nothing to do with,” wrote @Liberacrat. 

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The Rich Get Richer

The prominent social media figure JD Sharp commented on Newsom’s statement, alleging that Newsom cares more about the rich than the middle and lower classes who are currently struggling. 

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“Cool, the rich are getting really, really rich and the middle class are becoming poor!’ wrote JD Sharp. ‘Welcome to sunny, socialist California!!”

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California Leads the Way For AI Companies

Despite the backlash online, Newsom continues to promote California as a state that ranks high when it comes to business. On his website, he claims the Golden State is home to 35 of the 50 largest AI companies in the world. 

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Source: techcrunch.com

He goes on to claim California sits as number one when it comes to new business startups, venture capital funding, and industries such as high-tech, agriculture, and manufacturing,

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5th Largest Economy in the World

There’s no denying California has a great track record when it comes to businesses, and it boasts one of the largest economies in the world. 

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In 2023, the state’s total GDP was around $3.9 trillion, an increase of around 6.1 percent from the previous year, making it the fifth-largest economy in the world. However, this economic success is not evenly distributed, with many Californians struggling to make ends meet.

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Fortune 500 Companies in the Bay Area

Of the 57 Fortune companies Newsom mentions as thriving in the Golden State, 44 are in the Bay Area, and most are in the booming tech industry. 

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California took first place as the state with the most Fortune 500 companies for the first time since 2014. This came in spite of five Californian companies falling off the list in 2024. However, they were replaced by nine others, including DoorDash, Clorox, and Workday. 

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Shrinking Population in the Golden State

Despite Newsom’s intention to promote California’s corporate success, critics continue to point out that the problems continue to outweigh the positives.

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One such problem is the Golden State’s declining population. Over 340,000 people have migrated to another state, reflecting their dissatisfaction with the current conditions in California. 

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More and More Businesses Are Leaving

While the governor boasts that the state is home to the most Fortune 500 companies, the California Policy Center has pointed out that more and more businesses are leaving the state for several reasons.

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Since 2005, at least 237 companies have left the Golden State, with half of them relocating to Texas, citing the state’s ever-expanding regulatory and taxation climate (via The Center Square).

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The Driving Force

This mass exodus of businesses started to take place after Newsom took office in 2019, and the list of businesses leaving has grown. The center states that the driving force behind this exodus is “California’s high tax burden, over-regulation that strangles businesses of all sizes, poor public schools performance and an ever-increasing cost of living.”

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For the first time, the state is experiencing its first population loss in recorded state history in 2020. Since then, the number has continued to decline.

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Texas Has Become the Land of Opportunity

After the 2020 Census, Texas gained more residents and businesses thanks to the rules and regulations (or lack thereof) established by Texas Gov. Greg Abbott.

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The state attracts the most business relocations and expansion projects in the US because of the tax policy, regulatory climate, and talent availability, according to a recent survey (via ARC Relocation).

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Texas By the Numbers

In comparison, Texas does not have the high tax rates, high housing costs, and strict regulations for businesses that have made it challenging to live and do business as California does.

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Instead, the state’s business taxes are on the lower side, and there is no personal income tax. Currently, Texas stands at 21% for combined state and federal corporate tax rates, which is the lowest in the country.

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The Pro-Business Lure

It also helps that Texas has a pro-business environment that is favorable for smaller and younger businesses. According to ARC Relocation, “The tax on businesses or franchise tax is just 0.375% for businesses with annual receipts between $1.18 million to $10 million.”

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This means that franchise owners who are making less than $1.18 million do not need to pay any franchise tax.

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“The Headquarters of Headquarters”

Abbott has talked about how Texas is the best place for businesses to relocate and flourish and has attracted the most business relocations and expansion projects in the US.

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He frequently calls the state the “headquarters of headquarters” because Texas hosts more Fortune 500 companies than any other state.

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Working to Make Texas Business Friendly

Since being in office, Abbot has worked with Republican-led legislature to reduce red tape and regulations for businesses, expand job creation programs and grants, skilled workforce training programs, and resources to help small businesses stay afloat.

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All these efforts, including working with businesses and public-private partnerships, seem to have paid off for Abbot and the state.

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The Thriving State 

In 2023, Texas led the US in job growth and creation, and economic expansion, and saw the biggest increase in new residents compared to any other state. Currently, the state is on track to break its own employment and economic records.

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Abbott argues that Texas has dominated the landscape because “of hardworking Texans and endless possibilities for success across our great state.”

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Allowing People to Thrive

“Corporate executives and business leaders across the nation continue to choose Texas because they know that the freedom and opportunity our state has to offer cannot be found anywhere else in the world. Companies are coming to Texas in droves because we offer attractive, pro-growth policies where businesses – and people – can thrive,” Abbott said.

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He continues: “With no state income tax, a reasonable regulatory environment, and a young, skilled, and growing workforce, Texas is at the helm of innovation and economic prosperity. Texas has, indeed, the No. 1 business climate in the nation.”

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The Striking Population Era

For decades, California has been looked at as the land of opportunity. Every decade from 1850 to 2010, the state’s population grew by 10% or more as people East of the Mississippi were lured by the state’s exceptional climate, geographical beauty, and economic opportunities.

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But with more and more opportunities drying up or relocating to states that offer more opportunities, the state is struggling to maintain its former glory.

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About Six Business a Month Are Leaving

Economist Lee Ohanian of the Hoover Institution at Stanford University and Joseph Vranich, president of the site selection consulting firm Spectrum Location Solutions, collected data on California businesses that relocated from January 2019 to June 2021.

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According to Forbes, the research shows that, on average, six relocations happen each month. To make matters worse, Ohanian says these numbers are an undercount since many relocations are not made public.

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Is There a Solution?

As the California economy continues to struggle as Newsom enters his final year in office, many residents and businesses are hoping for a chance to bring back prosperity, affordable living, and opportunities that don’t alienate lower-income residents.

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The state will need to reevaluate its business tax climate to lure businesses back to the state, helping to drive the Golden State’s economy out of its billion-dollar debt hole.

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Newsom Needs to Reevaluate

One X user suggested that Newsom should pay attention to the exodus of residents, writing, “Funny how many people have been voting with their feet and fleeing your state!” 

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Going forward, the Californian leader may need to reevaluate his priorities to ensure the state’s residents are content with his governance. If not, he may struggle to win back the support of many Golden State residents who firmly believe change is warranted in the region. 

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