CALIFORNIA INVENTIONINDEX | NOVEMBER 2025

November 2025: 2.08% (B+ grade)

California inventionINDEX November 2025: 2.08% (B+ grade)

The inventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

California inventionINDEX Scores – Last 12 months

The California inventionINDEX provides a clear, quantitative measure of the state’s inventive activity, reflecting an often volatile but generally strong performance over the last 60 months, spanning from November 2020 to November 2025. The historical data shows a significant range, fluctuating from a low of 1.52% in June 2022 (B-) to a peak of 4.05% in October 2023 (A+), with an overall average hovering at 2.40%. Recent performance, exemplified by the November 2025 score of 2.08% with a B+ rating, places the index below the historical average. This current positioning suggests a slight cooling from the higher A- and A+ ratings seen earlier in 2025, indicating that invention output has momentarily returned to a solid, albeit not elite, level.

The achievement of a higher inventionINDEX grade, particularly a score consistently above the 2.40% historical average and into the A or A+ range, brings with it substantial positive outcomes. A robust score, such as the peak 4.05% achieved in late 2023, signifies a powerful surge in innovation and successful commercialization of new intellectual property. This elevated performance is a critical signal that reinforces the state’s global position as a technology and invention leader, directly leading to greater attraction of venture capital and corporate investment. Fundamentally, a high score suggests a dynamic and healthy innovation ecosystem, which bolsters economic growth, supports the creation of high-value jobs, and enhances overall market competitiveness.

Conversely, a lower score and corresponding grade, such as the B or B- ratings associated with scores near the historical low of 1.52%, present potential negative implications for the state’s long-term economic outlook. A protracted decline in the index score can signal a period of stagnation in inventive output, which may be a precursor to a slowdown in future economic expansion. Lower scores can also be interpreted by external markets as a sign of diminishing competitive edge, potentially leading to a diversion of talent, capital, and key research activities to other jurisdictions. For an economy heavily reliant on intellectual property and technological leadership, a sustained downward trend in the inventionINDEX is a professional warning of challenges in maintaining a highly-skilled workforce and the pace of wealth creation.

In synthesizing the historical performance, the inventionINDEX demonstrates that California’s inventive capacity frequently oscillates, with A+ and B+ ratings being the most common outcomes. This pattern underscores a resilient but periodically volatile engine of innovation. The index is therefore more than a simple metric; it serves as a crucial barometer of the state’s economic vitality, distinguishing periods of exceptional inventive efficiency from moments of more moderate performance. Monitoring and strategically addressing the factors that influence these grades is paramount for policymakers and industry leaders seeking to ensure the enduring prosperity and technological preeminence of the Californian economy.

Discussion:

In November, the California inventionINDEX scored a positive sentiment which was lower than the previous year’s average and underperformed the upward trend for the year. This is in contrast to the prior 12 months, which experienced a slight downward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s California office provides R&D tax credit consulting and advisory services to Pasadena, Los Angeles, San Diego, San Jose, San Francisco, Fresno, Sacramento, Long Beach, Oakland, Bakersfield, Anaheim, Santa Ana, Riverside, Stockton, Chula Vista, Irvine, Fremont, San Bernardino, Modesto, Oxnard and Fontana.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.