How long will California remain world’s 5th-largest economy?

The “Looking Glass” ponders economic and real estate trends through two distinct lenses: the optimist’s “glass half-full” and the pessimist’s “glass half-empty.”

Buzz: California easily remains the nation’s largest economy – but can it stay as the world’s fifth-biggest?

Source: My trusty spreadsheet compared new stats from the US Bureau of Economic Analysis and the International Monetary Fund on gross domestic product, a broad measure of business output used to compare the size of economies.

Debate: Will India surpass California on the theoretical GDP scorecard, looking at the state as an international economic force?

Glass half-full

California’s GDP grew at a 1.2% annual rate in 2024’s first quarter. That pushed the value of the state’s business output at $3.99 trillion a year.

So, just how big is that?

It’s 50% larger than Texas and its $2.66 trillion in GDP.

Only three other states are in the trillion-dollar club: New York at $2.23 trillion, Florida at $1.65 trillion, and Illinois at $1.11 trillion. Pennsylvania should join soon, as it’s only $1.6 billion short!

Or consider this: California’s output is larger than the nation’s 25 smallest state economies. Yes, half of the US.

Glass half-empty

But what about the Golden State’s bragging rights as the world’s fifth-largest economy, as measured by GDP?

It’s a spot California has held since 2017 behind the US, China, Germany and Japan. But it now appears likely that No. 6 India will soon top California on the GDP charts.

This year, India’s economy is projected by the IMF to grow 7% to $4.06 trillion.

California’s economy – if it can keep pace with the US economy, and it did not to start 2024 – would grow by 2.6%. That would value the Golden State economy at $4.05 trillion.

So for now, 2024 is a “too close to call” situation.

But in 2025, if the IMF’s crystal ball is correct, Indian will move up a notch.

Next year, India’s economy is projected to grow by 6.5% to $4.33 trillion.

California, if it can match the forecasted 1.9% US growth, would produce $4.12 trillion of output.

Bottom line

India has 1.44 billion residents – nearly 40 times California’s 39 million. So there’s little shame in becoming the world’s sixth-largest economy.

Or look at this over-hyped contest this way: India’s GDP equals $2,600 per person. Californians, by the same math, produce $101,000 per resident.

Jonathan Lansner is business columnist for the Southern California News Group. He can be reached at jlansner@scng.com