California Surpasses the U.K. as the Fifth-Largest Global Economy
May 8, 2018 | Source: Pacific Union Bay Area Real Estate Blog
- Robust 2017 economic growth in California helped push the state to the world’s fifth-largest economy, surpassing the United Kingdom. Only the U.S., China, Japan, and Germany now have larger economies than California. The size of California’s economy is a little more than one-tenth of the size of China’s economy.
- In 2017, California’s gross domestic product (GDP) reached $2.747 trillion, up by $127 billion from 2016. Table 1 ranks the world’s 25 largest economies.
- While California has the United States’ largest economy, contributing 14.3 percent to the total GDP, California’s GDP grew at a slower rate in 2017 than some other states. With a 3 percent annual growth rate, California ranked sixth in terms of annual percent change in inflation-adjusted GDP, following Washington, Colorado, Nevada, Arizona, and Utah. Washington had America’s fastest-growing economy, with the GDP increasing by 4.4 percent over the last year.
- Nevertheless, Washington’s GDP is one-fifth of California’s total GDP. Also, the total GDP of the five fastest-growing states is only slightly more than half of California’s GDP. Overall, those five states’ GDPs grew by a combined $80 million in 2017.
- Durable-goods manufacturing was the leading contributor to growth in California between the third quarter of 2017 and the fourth quarter of 2017, followed by other services (except government and government enterprises); professional, scientific, and technical services; and real estate and rental and leasing.
- Between 2016 and 2017, the leading contributor to California’s economic growth was the information sector, which accounted for one-quarter of the total gain, followed by durable-goods manufacturing; real estate and rental and leasing; and health care and social assistance. These industries were also the leading contributors to the national economic growth in 2017. Agriculture, forestry, fishing, and hunting and nondurable-goods manufacturing were the sectors which contracted in 2017.
- Real estate and rental and leasing were the leading contributors to real GDP increases in Colorado and Nevada. Health care and social assistance were the leading contributors to the increase in real GDP in Arizona. In Washington, retail trade and information drove the growth.
Table 1: The world’s 25 largest economies
Sources: International Monetary Fund, World Economic Outlook Database. California gross domestic product: BEA advance estimate as of May 4, 2018.
Selma Hepp is Pacific Union’s Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.
(Promotional photo: iStock/Voorheis)