After surpassing United Kingdom’s economy, California has settled as the world’s fifth largest. According to USA Today, the achievement can be credited to the western state’s boom in financial and real estate services. The news came following a reveal via the new federal data made public on Friday.
California’s gross domestic has significantly risen from 2016 to 2017, and it now sits at $2.7 trillion from $127 billion. Apparently, the UK’s economic output has dipped down, contributing to the US state’s rise. The economic drop is said to be due to the recent exchange rate fluctuations.
The data also demonstrate the sheer power of the state’s economy, which is home to around 40 million people. It is also a haven for an ever-thriving technology sector (Silicon Valley), the world’s entertainment capital (Hollywood), and the United States’ salad bowl (Central Valley agricultural heartland). This economic output goes to show that the state has managed to develop a substantial turnaround ever since the infamous Great Recession.
All economic sectors – with agriculture being an exception – have contributed to California’s display of a higher GDP. This was revealed by none other than Irena Asmundson, the chief economist at the California Department of Finance. As mentioned above, the state’s finance and real estate services have been mostly credited for its economic boom, managing to accumulate a growth of $26 billion. This is then followed by the information sector, which already includes a plethora of technology-related companies, and sits at $20 billion growth. Manufacturing, on the other hand, was up for around $10 billion.
Interestingly, it was in 2002 when California acquired the world’s fifth largest economy title. Unfortunately, it fell low (10th place) two years later as soon as the Great Recession began. Since then, the state, which is the largest in the United States, has added 2 million jobs and increased its GDP by at least $700 billion.
In another perspective, California’s economic output is now surpassed only by the entire GDP of China, Japan, Germany, and the whole United States. State economists say that the state holds around 12 percent of the country’s population but was able to contribute over 16 percent of the job growth, which is between 2012 and 2017. This goes without saying that its share of the nation’s economy also rose from 12.8 percent to a whopping 14.2 percent, and this happened within the said five-year period.
California’s economic performance and prowess relative to any other industrialized economies is heavily driven by worker productivity, according to economics professor at the University of California, Lee Ohanian. It should be noted that he is also the Macroeconomic Research Director at UCLA’s Ettinger Family Program. In comparison, the United Kingdom has 25 million more people than California but the former still presents a smaller GDP, Ohanian explained.
He also said that the state’s economic juggernaut is focused in coast metropolises around Los Angeles, San Diego, San Francisco, and San Jose. As for the non-coast areas in California, they have not really generated that much when compared to the coastal areas.
The state calculates its economic ranking by simply comparing state-level GDP from the Bureau of Economic Analysis at the U.S. Department of Commerce, though the global data came from the International Monetary Fund.
Another economics professor, who is from the California State University Channel Islands, said that California and its people have “the entrepreneurial spirit.” And this could be the very reason why “more people are coming into the state to join the parade,” regardless of “high taxes and cumbersome government regulations.” This is definitely a high time for Californians to celebrate.