California’s economy is on the brink of surpassing Germany and Japan to become the world’s third largest, according to Bloomberg News. This comes as Governor Gavin Newsom pushes to fortify international relationships and protect California’s goods from tariffs amidst global economic uncertainty.
Bloomberg News highlighted California’s robust economic performance, noting the state’s contributions to the U.S. economy. As columnist Matthew A. Winkler wrote, “California keeps making the US great — again,” while detailing the state’s economic dominance over other states.
“California is only a Nevada-sized economy away from supplanting Germany and Japan as soon as this year as No.3 in the world behind the US and China,” Winkler stated. The state contributes over 14% to the U.S.’s $28 trillion GDP, far outpacing Texas, the second-largest state economy.
California’s economy is a significant contributor to the federal government, sending approximately $83.1 billion more than it receives, making it the top donor state. In comparison, New Jersey, the second-largest donor state, contributes $28.9 billion more than it gets back.
The state’s economic sectors lead in various industries. For instance, its real estate, rental, and leasing industries generated $539 billion in GDP in 2023, surpassing Texas by 61%. The information sector, valued at $414 billion, overshadows New York’s by 128%, while the manufacturing industry beats Texas by 41% with $412 billion.
Economist Paul Krugman emphasized California’s importance, suggesting the state subsidizes other U.S. states through the federal budget. He noted, “Without California, America would be a lot poorer and weaker than it is.”
The state’s continued economic strength is evident in the projected growth of its companies. Those based in California that are part of the Bloomberg World Large & Mid Cap Index are forecast to see a 27% revenue increase in 2024, compared to 4.6% for German companies and 7% for Japanese firms.
California’s prominence in corporate research and development is unmatched in the U.S., with 18% of global R&D locations situated there, trailing only China and Germany.
Despite past adversities, California’s economic expansion shows no signs of abating. As Winkler concluded, “Make California Great Again? If anyone in Washington cared to look, they’d find it’s never been greater.”
