Web Version [link removed] | Update Preferences [link removed] Press Release FACT CHECK: Is California Really Poised to Become the World’s 4th Largest Economy

California Likely to Remain 5th; When Cost-of-Living Taken into Account, It Falls to 11th

FOR IMMEDIATE RELEASE

October 24, 2022

CONTACT: Brooke Armour [mailto:[email protected]?subject=August%20Employment%20Numbers]

(916) 553-4093

SACRAMENTO—Recent reports, including an opinion piece from Bloomberg [[link removed]], have argued that California is poised to become the 4th largest economy in the world. However, the data shows that California will likley remain in 5th place, which it achieved not through growth of the state economy, but through contraction of the UK economy in the wake of Brexit.

The October 2022 World Economic Outlook Database from the IMF [[link removed]] and California Data from the Bureau of Economic Analysis [[link removed]] (BEA) show that California is still in 5th place. In fact, California’s economy would have to grow by more than a quarter to overtake Germany:

While Germany is expected to contract in 2022, largely due to high energy prices, it is expected to rebound in 2023. In the following table, California’s numbers are projected based on the annual growth rate in Q2 2022.

However, California’s competitiveness is hampered by its ongoing cost-of-living crisis. While the state’s GDP might be higher, the high and growing costs of housing, energy, food, and other essentials means the dollar here does not go as far as it does in other countries. Using the same sources and adjusting California’s GDP based on the BEA regional price parity index, GDP by purchasing parity sinks California to 11th place, struggling to stay above Turkey.

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