Last updated on December 19th, 2023 at 10:26 am
The economy of California is among the ten biggest in the world. If California were to be an independent country, then its economy would be the fifth biggest in the world, ahead of countries like India ($2.9 trillion), Canada ($2.0 trillion), France ($2.9 trillion) and the United Kingdom ($3.1 trillion) among others.
Thus, the Gross State Product of California is the largest in the United States of America, comprising a large share of America’s economy (constituting about one-eight of the country’s entire prosperous economy). Although the unemployment rate in the Golden State was 3.9% according to data from U.S. Bureau of Labor Statistics in August 2022.
The economy of California is $3.4 trillion gross state product, according to 2021 data, making it higher than the whole of Africa. The nominal GDP of Africa, comprising 54 countries, is $2.6 trillion as at 2019.
California’s Prominent Economic Sectors
One of the core strength of the Californian economy lies in its versatility. A lot of sectors and industries are working vibrantly here, and they keep adding up to the impressive economic stats of The Golden State.
However, in California, services remain the dominant economic sector. The state has been able to put in place adequate structures to ensure consistent cash flow from tourism alone.
Technology
Interestingly, the economy of California isn’t just the largest, The Golden State is also the largest U.S. state by population density and with a concentration of global tech companies headquartered there.
Some of the top global tech companies in CA include Facebook (Meta), Apple, Google, Intel, Oracle, Hewlett-Packard (HP), Cisco Systems
Tourism
Every year, millions of people visit different parts of the state for recreational purposes. A large part of California’s land area is preserved as recreational areas and for similar functions.
There are thousands of parks spread across different parts of the State (including theme parks such as Disneyland). This is where you will find some of the most notable tourist attractions in the United States.
Some of the stunning places in California that attract millions of tourist enthusiasts around the world include Disneyland, Lake Tahoe, Yosemite National Park, San Francisco and the Golden Gate Bridge, and Redwood National and State Parks.
There are many more attractive places across The Golden State which have turned tourism into one of the mainstreams of revenue to the covers of the CA government, thanks to the government’s enabling policies.
In all, in 2019, tourism contributed over $144 billion to the Californian economy in travel spending alone. It added over $12 billion in tax revenue, and attracted over a million jobs.
Agriculture
Another sector contributing to the wealth of California is agriculture. It retained dominance in agriculture for many years now, and it is always a huge source of its income.
The state produces more than half of the whole vegetables and fruits in the United States of America. This is easy since there are above 25 million acres of farms in California.
Some of the biggest farms headquartered in California include Dole Foods (fruits and vegetables production) with over $10 billion in annual revenue; Wilbur-Ellis Co. (animal feed and beef production) with over $3 billion as annual revenue; and Hilmar Cheese (into cheese and lactose production) turning in over $2 billion in annually as revenue among other farms.
And it is also necessary to add that about one-tenth of the workforce in the CA is working in agriculture sector – just to place emphasis on how big agriculture is in the Golden State.
Amazingly, there are nearly 5,000 wineries in California alone, and the state makes well over half of all American wine. From wine export alone, it brings in $1.53 billion annually.
Manufacturing Sector
Additionally, the manufacturing industry is also very vibrant. Some of the major things manufactured in California include fabricated metals, computers and electronics, transportation equipment among others.
Some of the manufacturing firms that come to mind in California include California Fine Wire Co., Triodize, Pacific Bridge Products, Howmet Fastening Systems, Triad Magnetics and lots more. Most of these companies are employers of labour. They also turn in millions into the government covers in taxes.
It should be noted that the state’s top exports are computer and electronic products, adding significantly well to its economy.
Education
Also, education is playing well in the Golden State, even economically. The two major California university systems bring over $46 billion annually to its economy.
A lot of workers in California are graduates of the state university system, as many of them usually stay back in the state to indulge in different economic activities.
A report by Los Angeles Times says California has the highest new enrollments of international students despite the high cost of tuition fees.
Some of the world-class institutions that are contributing to this incredible phenomenal California education tourism include Stanford University, University of Southern California, University of California, Los Angeles, and Pepperdine University
Another report by statista.com say 132,758 international students came to California for studies for the 2020/21 academic year. The average tuition fee is $18,200 annually.
Education is a major sector of the Californian economy, thanks to the standard and quality of world-class teachers and researchers in CA.
Media sector
Media is also a big deal in California, contributing massively to its economy. The film industry in particular has been very profound (remember that the Golden State has been at the centre of the country’s movie industry for a while now). In 2015 alone, it contributed over $49 billion to the economy of California.
Among the tens of hundreds of global media companies headquartered in California include Autodesk, Metro-Goldwyn-Mayer (MGM), Walt Disney Parks and Resorts (WDPR), EMI Group Limited, and Sony Pictures Entertainment (SPE).
In addition to all of these, professional sports can also boast of a combined value that is over $33.5 billion. It is important to know that there are 19 sports teams in the five main professional North American sports leagues that are from California.
In all, tourism, agriculture, trade, media, and technology remain the largest economic sectors in the Golden State.
Productive Population
There are some 39.35 million people living in California, making the State the most populous in the United States of America. The unemployment rate is around 4.2 per cent, but it is a population that has more than 15 million people that fall under the productive age, according to data from the U.S. Census Bureau.
A State with the 5th largest economy in the world is definitely a rich one, with a lot of resources flying around. In certain industries (such as Tech), a lot of people are earning a lot of money, thereby pushing up the price of mortgages in California.
The state doesn’t come without its own challenges. These include income inequality. The high cost of living in California (it is the third most expensive State in the USA with a cost of living index of 142.2) makes things difficult for some folks.
The state doesn’t come without its own challenges. These include income inequality. The high cost of living in California (it is the third most expensive State in the USA with a cost of living index of 142.2) makes things difficult for some folks.
Nevertheless, California is still a prosperous State that abounds in pleasant opportunities. According to statistics, there are more than one million millionaires in the State alone. As if this isn’t enough, there are around 186 billionaires in California right now.
In fact, there are almost 4 million small businesses operating here (much more than any other place in the United States of America).
Between 2016 and 2018 alone, over $100 billion in venture capital was invested in various companies in the state (no other American state could come close).
It is easy to find something productive to indulge in California than in several other places. As of 2019, there were about 19 million employees in the state, working for the government (as full-time state/local government employees) as well as the private sector.
State for Rich People
Many millionaires in California are residing in Los Angeles, which is the state’s largest city that is home to many stars and celebrities.
The Google duo of Larry Page and Sergey Brin are presently among the top richest people in the Golden State ($111 billion and $107 billion, respectively).
It is also helpful to add that a very large amount of the economic activities happening CA are going on in large cities situated along the coast. One of these is San Francisco where investing in rental property is highly rewarding.
San Fransisco Bay Area alone can boast of a GDP of $535 billion. This means that it is well ahead of the national economies of many other countries around the world, which is pretty mind-blowing.
Its GDP per capita ($74,815) is ahead of that of London. Hence, the Bay Area is of great importance to the economy of the Golden State, contributing immensely to the overall reputation of the United States as an economic superpower.
Above all, the revenue for the government in form of taxes from the millionaires and billionaires residents in California is something that can sustain some of the smaller economies around the world.
Government Economic Policies
The Californian government has been active in ensuring the promotion of the state’s prosperous economy. One of the expressions to this revolves around the enacting of effective policies to promote economic growth. Between 2011 and 2016, the government has had over 50 pieces of legislation and policy implementations enforced.
They were crafted to deal with areas of workers’ rights, taxation, infrastructure and housing, attract investment and so on. Several policies had been helpful to employment and GDP growth, rise in wages for low-wage workers as well as overall health insurance rates, and so on.
Recap:
California is a key player in the economy of the U.S.
Its four cities like San Jose, San Francisco San Diego, and Los Angeles are the four most expensive metros to buy property in the U.S. Rent is also very high.
California is a top exporter in the U.S. Most exported products include computers (22.6% of all the state’s exports in 2021), chemicals, agricultural products, and transportation equipment.
If California were to be a nation, it would be one of the top five economy in the world.
