California inventionINDEX September 2026: 2.53% (A 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).

Historical California inventionINDEX Scores

The California inventionINDEX score for the past 12 months is shown in the table below.

The California inventionINDEX registered a score of 2.53% with an A rating in September 2026, marking a continued upward trajectory following the 2.39% (A-) recorded in August 2026 and 1.91% (B) in July 2026. This performance reflects a significant recovery from the 60-month historical low observed in April 2026, when the score dipped to 1.04% alongside a C rating. While the current score demonstrates healthy operational momentum, it remains beneath the historic multi-year peak of 4.05% (A+) achieved in October 2023, as well as other notable highs such as August 2023 (3.54%) and July 2025 (3.34%). Nevertheless, stabilizing above the 2.50% threshold places the state in an encouraging position compared to the broader historical baseline. Contextualizing recent movement across the entire 60-month dataset reveals recurring cyclical patterns in California’s innovation momentum. Between September 2021 and September 2026, the index experienced distinct waves of expansion and moderation. Stronger stretches in mid-to-late 2022, late 2023, and mid-2025 regularly generated A and A+ ratings, driven by heightened commercialization activity and robust GDP-to-patent alignment. Conversely, periodic pullbacks occurred near year-ends or early spring quarters, such as the low readings in late 2021, mid-2022, and late 2023. The recent recovery in late 2026 demonstrates the state’s capacity to bounce back swiftly from temporary slowdowns, reaffirming its structural economic resilience over extended multi-year cycles. Sustaining higher scores and elevated grades, particularly those reaching A- to A+ levels, yields substantial economic and institutional advantages for the California economy. A strong inventionINDEX score signals high efficiency in translating economic growth into commercialized intellectual property and technological advancements. This dynamic boosts investor sentiment, attracts risk capital into local startup ecosystems, and accelerates private-sector research and development investment. Furthermore, high grades bolster employment opportunities in high-wage engineering and scientific disciplines, reinforce university-industry partnerships, and establish a competitive advantage over rival domestic and international technology corridors. On the other hand, lower scores or grade compressions to B- or C levels carry adverse economic implications for the regional marketplace. A declining index suggests a structural mismatch where broader economic activity outpaces patent output, indicating potential inefficiencies in operationalizing research initiatives or tightening access to early-stage capital. Prolonged downward trends risk dampening entrepreneurial confidence, stalling university technology transfer pipelines, and encouraging innovative enterprises to migrate capital toward locations with lower overhead or fewer operational constraints. Addressing these periodic dips remains essential for safeguarding long-term technological leadership and sustainable growth.

Discussion:

In September, the California inventionINDEX scored a positive sentiment which was higher than the previous year’s average and outperformed the upward trend for the year. This is similar to the prior 12 months, which experienced an upward 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.

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