California in 2024 claimed the world’s fourth-largest economic system, by some curious math.
Whether or not the state stays at this excessive, bragging-rights perch may be very a lot unsure.
California companies produced $4.1 trillion price of products and providers in 2024, based on the newest gross home product estimates from the U.S. Bureau of Financial Evaluation. GDP is a broad measurement of financial manufacturing and is helpful for comparisons of enterprise heft.
When California’s economic system is placed on a worldwide scale, solely three nations had been extra productive final 12 months, based on GDP stats from biannual reviews from the Worldwide Financial Fund.
The U.S. is well No. 1 with $29 trillion, and it will nonetheless be tops with out California. Subsequent is China at $18.8 trillion. And there’s Germany at $4.66 trillion.
California is an financial powerhouse as a result of its 18-million-people-strong workforce isn’t simply the nation’s largest, it produces extremely valued merchandise. For all of the discuss of California’s “anti-business” insurance policies, no state comes near the Golden State in enterprise output.
Texas is the nation’s No. 2 in GDP at $2.7 trillion. My trusty spreadsheet, utilizing California’s bragging-rights calculations, discovered Texas ranks because the world’s No. 8 economic system, on par with Italy.
New York’s $2.3 trillion GDP is No. 9 globally. That’s Canada’s ballpark. Florida, at $1.7 trillion, is No. 16, or roughly the scale of Indonesia. And Illinois, at $1.1 trillion, is No. 19, comparable with Saudi Arabia.
Huge complications
Take into consideration the challenges California’s lofty international rating economic system faces.
Begin with the power of the U.S. greenback. Its rise has been a relative financial norm for over a decade.
These financial rankings are made attainable by changing the worldwide enterprise output into its prime forex, the American one. A powerful U.S. greenback makes home output pricier to our international buying and selling companions. It additionally devalues international manufacturing.
So ponder how forex gyrations affected the calculations of Japanese development.
All through 2024, the Japanese yen misplaced 11% of its worth in contrast with the U.S. greenback. That’s a key motive why Japan’s GDP development was 2.9% for the 12 months in yen, however solely 0.1% in {dollars}.
That story is completely different in the present day. In 2025’s first 4 months, the 2 currencies flip-flopped. The yen has appreciated 10% in opposition to the greenback as forex merchants weigh commerce wars began by the Trump administration and what they are going to do to the world’s enterprise manufacturing.
It’s attainable that California would lose the No. 4 spot on the GDP scorecard if output had been priced at in the present day’s forex charges.
Then there’s India, with an financial competitors I’ve beforehand talked about when writing about California’s GDP rank.
India is the world’s most populous nation with 1.46 billion folks. California has “only” 40 million. India is blooming into one of many world’s financial superpowers that may absolutely surpass California’s output some 12 months quickly.
India’s $3.91 trillion GDP in 2024, simply behind Japan. The IMF initiatives then Indian economic system to develop 6.2% in U.S. {dollars} in 2025. Assuming California’s GDP can develop on the estimated 1.8% U.S. fee, the Indian economic system may surpass the Golden State this 12 months.
In fact, the immense wildcard in any chat in regards to the world’s economic system in the present day is the enterprise turmoil created by the Trump administration. Its ever-changing makes an attempt to proper what it perceives because the world’s unfair buying and selling practices makes any enterprise forecast a uncooked guestimate, at finest.
We see new U.S. tariffs and ensuing retaliation by the focused nations – plus discuss of ripping up present commerce offers. Which nationwide economies will win or lose these commerce wars – to not point out California’s globally targeted enterprise local weather? Who finally ends up the place on the 2025 international GDP ladder?
It’s an enormous unknown.
Sluggish ending
California’s No. 4 international rating is a enjoyable truth, however it could’t cover a decidedly cooling economic system.
Have a look at the state’s GDP development in opposition to its home competitors.
Final 12 months, California’s enterprise output grew 6% utilizing the identical GDP math. That was ninth-best among the many states and topped the 5.3% nationwide growth.
Nonetheless, the 12 months’s finish was worrisome.
GDP development in California cooled to a 4% annual fee within the fourth quarter. A key issue is that the state’s info industries – from Silicon Valley to Hollywood – confronted steep challenges.
That end-of-the-year growth ranked No. 40 among the many states and trailed the 4.8% U.S. tempo.
So, California’s financial development cooled by 33% when evaluating all of 2024 to its end. The nation’s development shrank solely 9%. And solely 4 states slowed greater than the Golden State.
Initially Printed: Could 2, 2025 at 9:11 AM PDT
