Despite a recent slowdown, in a quarter-century’s time, California’s economic growth has outpaced that of the U.S. And, if compared to the citizens of any other country, the economic production averaged across each Californian surpasses them all.
The Public Policy Institute of California released a study looking at California’s gross domestic product. The state’s $3.9 trillion GDP places it fifth globally and the highest nationally. On a per capita basis, however, the state’s GDP is greater than any other country.
Its economic activity generates 14% of the nation’s, compared to Texas’ 9% and New York’s 8%.
“Over the long term, California’s economy has grown faster than the nation overall (111% vs 75% over the past 25 years) and faster than other large states except for Texas (128%),” the study stated. “On a per capita basis, California’s economic growth outpaces all other large states over the long term.”
Real Estate, Finance Biggest Contributors. Health Care, Tech Rising Fast
Real estate and finance reliably contribute the most to the economy, each adding 18%. But the state’s tech industry drove professional services and information quickly upward, which provide 16% and 14%, respectively. Manufacturing in the state has grown from 8% to 11%. Health care is one of the fastest growing industries, making up 7% of GDP in 2023.
The 2.3% average growth from 2020 to 2023, however, lags the 3.9% average in the four years before that. Florida and Texas grew faster than California at 4.6% and 3.9%, respectively.
The state’s reliance on government has decreased in the 25-year period from 1998 to 2023. Private industry makes up 90% of the economy, compared to 84%, in the first year of the study.
It’s that growth of employment that has driven California’s economy. Available jobs in the state grew 30% and the number of businesses with employees grew 72%, outpacing the state’s 18% population growth.
Income Inequality
Income growth, however, has not been equitable.
In 1998, the difference between the Bay Area’s per capita income and the Central Valley’s was $32,000. Today, that difference has extended to $131,000. But that income growth has been accompanied by a rise in the cost of housing and living along the coast. Whereas only 3% of full-time workers in the Central Valley live in poverty, 7% of full-time workers in L.A. live in poverty, the study states.
The state’s workforce is also aging. The year 2000 experienced the highest rate of labor participation, with 67% of people at least 16 years old working. That rate is now closer to 62%.
The state cannot overlook foreign contributions to the economy. The 18,000 foreign businesses — mostly in the manufacturing or professional services sector, and mostly from Japan, the U.K., and France — generate about 800,000 jobs.
The state’s export markets make up 9% of the nation’s exported goods and 20% of the state’s exported services. About 17% of exported ag products come from California. The figure is 18% for computer and electronic products.
