California Becomes the 5th Largest Economy in the World, Surpassing the UK
With the Brexit looming and the UK’s uncertain future when it comes to free trading, there’s no doubt that the formidable country has suffered a significant drop in its economy for the past few years. This was shown when the federal data was released in public last Friday stating that the United Kingdom had fallen from its rank as the 5th’s world largest economy, and was eventually replaced by California.
The State of Thriving Technology
According to the Federal data, California’s GDP (gross domestic products) rose by $127 billion from 2016-2017, surpassing its former $2.7 trillion mark. Meanwhile, the UK’ economy shrunk due to exchange rate fluctuations due to Brexit and its other economic and foreign policies. The said data only shows the sheer potential of the state which is home to 40 million people. Aside from being Hollywood’s capital, it’s also a home for thriving technologies in Silicon Valley. It also has a Central Valley Agricultural heartland that has helped the state’s economic turnaround since the Great Recession
The Professor for Economics at California State University says the state has an entrepreneurial spirit, which attracts talent and money. Despite its strict government regulations and high tax cut, more and more businesses and people still come to the state due to its attracting economic potential.
Furthermore, the chief economist of California Department of Finance Irena Asmundson stated that all business sectors contributed to California’s GDP for the past year. The financial services and real estate dominated the GDP growth with $26 billion, the information sector including technology companies followed at approximately $20 billion. The third major player in California’s company is the manufacturing sector with $10 billion.
California’s Booming Economy
California has been the state had steadily maintained its GDP growth by $700 billion for the past 6 years which generates 2 million jobs each year. It’s the first time California was able to regain its spot after a long time.
California’s current economic performance surpassed not only the UK, but also the total combined GDP of China, Germany, Japan, and the United States. California currently holds around 16% of the US population from the year 2012-2017, thus, contributing a significant impact to the national economy. In fact, its GDP grew from 12.8%-14.2% within the five-year period, according to financial experts and economists.
High Worker’s Morale
Aside from the booming business sectors, Lee Ohanian, an economics professor at California University and the head of Macroeconomic Research, said that California’s strong economy is driven by highly motivated workers and their productivity.
Most companies in California strive to give a great working environment free from stress and discriminations. This pushes the workers to achieve their full potential and contribute to the company more. The UK currently has 25 million more people than California’s population, but it only yields a smaller GDP compared to their state.
While this immense milestone is vital to the state’s success, California still has a long way to go to maintain its booming economy. Ohanian said they only noted a significant economic boom in major coastal metropolises, but not with non-coastal areas.
He encourages that Bureau of Economic Analysis and U.S. Department of Commerce to pursue investing in non-coastal areas to develop its economic growth. He believes that if California’s agriculture and rural areas will flourish, it will increase its rank further and become the world’s largest economic state in no time.
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