If California were a nation, it would be the world’s fifth largest economy. Soon, it may become the fourth.
The Golden State is on track to overtake Germany for the No. 4 spot, according to an opinion column from Bloomberg News editor-in-chief emeritus Matthew Winkler. It became the fifth largest economy in 2015, surpassing the United Kingdom, France and Brazil.
California Gov. Gavin Newsom was quick to take a victory lap Monday afternoon.
“While critics often say California’s best days are behind us, reality proves otherwise — our economic growth and job gains continue to fuel the nation’s economy,” Newsom said in a statement. “California’s values and entrepreneurial spirit have powered this ascent to becoming the fourth biggest economy in the world, and we’ll continue doubling down on industries of the future, like renewables and clean energy. I feel tremendous pride in California’s resilience, leadership, and our formula for success.”
Winkler’s column states that California’s trajectory of corporate revenues has risen 147%, while market capitalization has risen 117% over the last three years, compared to Germany’s 41% and 34%.
“The margin of Germany’s nominal GDP of $4.22 trillion over California’s $3.357 trillion last year was the smallest on record and is about to disappear, with Europe’s largest economy barely growing in 2022 and forecast to shrink in 2023,” Winkler wrote.
The Bloomberg column cited the difference between California’s top three industries (technology hardware, media and software) which all saw significant sales boosts over the last three years, while Germany’s top three (health care, consumer discretionary spending and industrial products) saw either marginal gains or declining sales over the same period.
The column notes that California “is punching above its weight on the world stage,” with job creation being a particularly strong area of growth for the state.
Unemployment fell to 3.9% in July, though it rose to 4.1% in August.
“The gap separating the state from the U.S. national rate of 3.5% is the narrowest since August 2021 and for the first time since 2006, California’s joblessness dipped below Texas (the largest two states for non-farm payrolls),” according to the column.
The column comes as California Republicans argue that Democratic policies are contributing to the downward decline of the state. They point to an exodus of middle income people from the state as evidence that California’s high tax burden and housing prices are driving people away.
The California Business Roundtable released its own analysis of the Bloomberg piece, arguing that the state’s high cost-of-living leaves residents behind.
It pointed to a Commerce Department index that analyzes buying power among different regions. In that so-called price parity index, California’s GDP by purchasing power would make it the 11th largest economy in the world.
“California’s competitiveness is hampered by its ongoing cost-of-living crisis. While the state’s GDP might be higher, the high and growing costs of housing, energy, food, and other essentials means the dollar here does not go as far as it does in other countries,” the roundtable statement read.
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