California in 2024 claimed the world’s fourth-largest economy, by some curious math.
Whether the state remains at this high, bragging-rights perch is very much in doubt.
California businesses produced $4.1 trillion worth of goods and services in 2024, according to the latest gross domestic product estimates from the U.S. Bureau of Economic Analysis. GDP is a broad measurement of economic production and is useful for comparisons of business heft.
When California’s economy is put on a global scale, only three nations were more productive last year, according to GDP stats from biannual reports from the International Monetary Fund.
The U.S. is easily No. 1 with $29 trillion, and it would still be tops without California. Next is China at $18.8 trillion. And there’s Germany at $4.66 trillion.
The “big news” is that California managed to bump up from its long-standing No. 5 ranking on this global totem pole by edging past Japan, which produced $4.03 trillion in GDP last year.
California is an economic powerhouse because its 18-million-people-strong workforce isn’t just the nation’s largest, it produces highly valued products. For all the talk of California’s “anti-business” policies, no state comes close to the Golden State in business output.
Texas is the nation’s No. 2 in GDP at $2.7 trillion. My trusty spreadsheet, using California’s bragging-rights calculations, found Texas ranks as the world’s No. 8 economy, on par with Italy.
New York’s $2.3 trillion GDP is No. 9 globally. That’s Canada’s ballpark. Florida, at $1.7 trillion, is No. 16, or roughly the size of Indonesia. And Illinois, at $1.1 trillion, is No. 19, comparable with Saudi Arabia.
Big headaches
Think about the challenges California’s lofty global ranking economy faces.
Start with the strength of the U.S. dollar. Its rise has been a relative economic norm for over a decade.
These economic rankings are made possible by converting the worldwide business output into its top currency, the American one. A strong U.S. dollar makes domestic output pricier to our global trading partners. It also devalues foreign production.
So ponder how currency gyrations affected the calculations of Japanese growth.
Throughout 2024, the Japanese yen lost 11% of its value compared with the U.S. dollar. That’s a key reason why Japan’s GDP growth was 2.9% for the year in yen, but only 0.1% in dollars.
That story is different today. In 2025’s first four months, the two currencies flip-flopped. The yen has appreciated 10% against the dollar as currency traders weigh trade wars started by the Trump administration and what they will do to the world’s business production.
It’s possible that California would lose the No. 4 spot on the GDP scorecard if output were priced at today’s currency rates.
Then there’s India, with an economic competition I’ve previously mentioned when writing about California’s GDP rank.
India is the world’s most populous nation with 1.46 billion people. California has “only” 40 million. India is blooming into one of the world’s economic superpowers that will surely surpass California’s output some year soon.
India’s $3.91 trillion GDP in 2024, just behind Japan. The IMF projects then Indian economy to grow 6.2% in U.S. dollars in 2025. Assuming California’s GDP can grow at the estimated 1.8% U.S. rate, the Indian economy could surpass the Golden State this year.
Of course, the immense wildcard in any chat about the world’s economy today is the business turmoil created by the Trump administration. Its ever-changing attempts to right what it perceives as the world’s unfair trading practices makes any business forecast a raw guestimate, at best.
We see new U.S. tariffs and ensuing retaliation by the targeted nations – plus talk of ripping up existing trade deals. Which national economies will win or lose these trade wars – not to mention California’s globally focused business climate? Who ends up where on the 2025 global GDP ladder?
It’s a big unknown.
Slow ending
California’s No. 4 global ranking is a fun fact, but it can’t hide a decidedly cooling economy.
Look at the state’s GDP growth against its domestic competition.
Last year, California’s business output grew 6% using the same GDP math. That was ninth-best among the states and topped the 5.3% national expansion.
However, the year’s end was worrisome.
GDP growth in California cooled to a 4% annual rate in the fourth quarter. A key factor is that the state’s information industries – from Silicon Valley to Hollywood – faced steep challenges.
That end-of-the-year expansion ranked No. 40 among the states and trailed the 4.8% U.S. pace.
So, California’s economic growth cooled by 33% when comparing all of 2024 to its finish. The nation’s growth shrank only 9%. And only four states slowed more than the Golden State.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]
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